NEWS

Robert Aumann, Professor at Stony Brook University Wins Nobel Prize in Economics

New York, October 10, 2005

Robert Aumann, who has been on the faculty of the Department of Economics at SUNY Stony Brook since 1989 was awarded the Nobel Prize in Economics today for his contributions in Game Theory. He is currently a Visiting Leading Professor of Economics at SUNY Stony Brook and emeritus professor of Mathematics at the Hebrew University in Jerusalem.

Robert Aumann is a founding member of the Center for Game Theory in Economics at Stony Brook. Aumann has been an organizer and participant in the Summer Festival in Game Theory held for the last 16 years at Stony Brook. Other Nobel Prize winners who have participated in the Summer Festival include Kenneth Arrow, Gerald Debreu, John Nash (the subject of the movie A Beautiful Mind), Reinhard Selten, and Vernon Smith. Aumann has been a principal investigator on National Science Foundation grants to the Center for over a decade and a half.

Aumann's fundamental contributions have been numerous. He was the first to explain the concept of perfect competition with rigorous mathematics. This enabled him to show the equivalence of competitive, stable and fair allocations in this setting. His formulation was at once both precise and elegant.

Together with Lloyd Shapley (an affiliated member of the Center), he developed a theory of cooperative interactions among large groups of participants. It has numerous applications including cost allocations in complex systems. He is also well known for his generalization of the Nash equilibrium in non-cooperative environments, which induces correlated behavior among individuals and yields, in many cases, even better outcomes.

Aumann was the first to introduce the concept of "common knowledge" into Economics and to show its effects on the strategic behavior of people. He also invented and developed the theory of repeated games with incomplete information, in which the evolution of subtle relationships between the players over time could be analyzed. This shed light on how reputations are formed and demonstrated how cooperative behavior could emerge.