Monday, October 10, 2005

The Prize in Economic Sciences 2005 - Press Release

The Prize in Economic Sciences 2005 - Press Release: "In many real-world situations, cooperation may be easier to sustain in a long-term relationship than in a single encounter. Analyses of short-run games are, thus, often too restrictive. Robert Aumann was the first to conduct a full-fledged formal analysis of so-called infinitely repeated games. His research identified exactly what outcomes can be upheld over time in long-run relations.

The theory of repeated games enhances our understanding of the prerequisites for cooperation: Why it is more difficult when there are many participants, when they interact infrequently, when interaction is likely to be broken off, when the time horizon is short or when others' actions cannot be clearly observed. Insights into these issues help explain economic conflicts such as price wars and trade wars, as well as why some communities are more successful than others in managing common-pool resources. The repeated-games approach clarifies the raison d�être of many institutions, ranging from merchant guilds and organized crime to wage negotiations and international trade agreements."

Yep. That's why I wrote my MSc about repeated games. I'm glad the Nobel prize committee has finally
come round.

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