Chapter 5: War and Peace
* Robert J. Aumann Prefatory Note: In 1994, John Nash, Reinhard Selten and John Harsanyi were awarded the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for their pioneering analysis of non-cooperative games. Fundamental to their work is the concept of strategic equilibrium, an idea initiated by Augustin Cournot in 1838 in connection with duopolies. In 1996, William Vickrey was awarded the Prize for applying this concept to the theory of auctions. In 2005, Robert Aumann shared the Prize with Thomas Schelling; in large part, Aumann’s share was for applying the equilibrium concept to repeated games. According to Aumann, if Augustin Cournot had still been alive, he could have won the prize on at least three different occasions. In the text that follows, Robert Aumann illustrates the roles that different sorts of strategic equilibria play in repeated games applied to war and peace. ‘Wars and other conicts are among the main sources of human misery.’ Thus begins the Advanced Information announcement of the 2005 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, awarded for Game Theory Analysis of Conict and Cooperation. So it is appropriate to devote this lecture to one of the most pressing and profound issues that confront humanity: that of War and Peace. I would like to suggest that we should perhaps change direction in our efforts to bring about world peace. Up to now all the effort has been put into resolving specic conicts: India–Pakistan, North–South Ireland,...
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