Game theory orginated from the book Theory of Games and Economic Behavior (1944) written by John von Neumann and Oskar Morgenstern's. This was the first actual book in which game theory is discussed as a topic. The authors tried to find solutions in a scientific way. Before this book, game theory consisted of some ideas/problems that weren’t discussed thoroughly; scientists, among which Waldegrave, Bernouilli and Cournot, didn’t try to come to a solution in an organized way. One example is given by Darwin in his book The Descent of Man, and Selection in Relation to Sex in which he states that “If births of females are less common than males, then a newborn female will have better mating prospects than a newborn male and therefore can expect to have more offspring. Thus parents genetically disposed to produce females tend to have more than the average numbers of grandchildren and thus the genes for female-producing tendencies spread, and female births become commoner. As the 1:1 sex ratio is approached, the advantage associated with producing females dies away. The same reasoning holds if males are substituted for females throughout. Therefore 1:1 is the equilibrium ratio.”.
In 1950, John Nash introduced the concept of “Nash Equilibrium” which meant a breakthrough for game theory. During the next twenty years, a lot of scientists tried to refine this concept in order to come up with solutions to different problems (R. Duncan Luce and Howard Raiffa (1957), H.W. Kuhn (1953), Reinhard Selten (1965), and many more).
Further refinements and insights were realized in 1970. John C. Harsanyi (1973) came up with a new interpretation of the “mixed strategy” concept. Robert J. Aumann (1976) introduced “Common knowledge” concept, whereas “Correlated Equilibrium” for Bayesian Games was discussed by Reinhard Selten (1975).
Three Nobel Prizes have been given to economists in the field of Game Theory. John Nash, J.C. Harsanyi and R. Selten in 1994; William Vickrey and Jamers Mirrlees in 1996; finally, Herbert Simon won the Nobel Prize in 1979.
Source:
- http://www.econ.canterbury.ac.nz/personal_pages/paul_walker/gt/hist.htm
- http://homepage.newschool.edu/het//schools/game.htm
- http://www.stratgaming.com/game_theory.html
