Oskar Morgenstern

Oskar Morgenstern (January 24, 1902 – July 26, 1977) was a German-born Austrian-American economist who, working with John von Neumann, helped found the mathematical field of game theory.

Life

Oskar Morgenstern was born on January 24, 1902 in Görlitz, Germany. His mother was an illegitimate daughter of Frederick III, German Emperor. He graduated from the University of Vienna, earning a doctorate in political science in 1925. He received a scholarship from Rockefeller Foundation to further his studies in the United States, where he spent the next four years.

Upon his return to Austria in 1929, Morgenstern started work at the University of Vienna, first as a lecturer and then a professor in economics. During that time he belonged to the so-called "Austrian circus," a group of Austrian economists who met regularly to discuss different issues in the field.

In 1938 Morgenstern traveled to United States as a visiting professor in economics at Princeton University in New Jersey. It was there that he heard the news that Adolf Hitler had occupied Vienna, and that it would probably be unwise to return to Austria. Morgenstern decided to stay in the United States, becoming a naturalized citizen in 1944.

After Morgenstern became a member of the faculty at Princeton, he started to work closely with mathematician John von Neumann, developing a theory of predicting economic behavior. In 1944, they wrote Theory of Games and Economic Behavior, recognized as the first book on game theory.

Morgenstern married Dorothy Young in 1948.

Throughout the 1950s and 1960s Morgenstern continued to write on different economic issues, publishing On the Accuracy of Economic Observations in 1950, Prolegomena to a Theory of Organization in 1951, and The Question of National Defense and International Transactions and Business Cycles in 1959. He retired from Princeton in 1970.

Morgenstern accepted the position of professor in economics at New York University in 1970, where he remained until his death in 1977. New York University appointed Morgenstern its distinguished professor of game theory and mathematical economics just before his death.

Morgenstern died in Princeton, New Jersey, on July 26, 1977.

Work

Oskar Morgenstern wrote, together with mathematician John von Neumann, the famous Theory of Games and Economic Behavior (1944), which used mathematics to analyze competitive business situations. They suggested that the outcome of a business situation, or as they called it - "game" – depends on several parties, or "players." Each player wants to maximize his own benefit, but to do so he must take into account and calculate what all of the other players will do. After he considers all the possible outcomes of the “game,” he determines his own strategy.

“Von Neumann-Morgenstern Utility” is named after Morgenstern and von Neumann. It is a method used to measure choice in situations of uncertainty. The utility of an agent facing uncertainty is calculated by considering utility in each possible state and constructing a weighted average. The weights are the agent's estimate of the probability of each state. The expected utility is thus an expectation in terms of probability theory.

Beside his work on game theory, Morgenstern studied the empirical validity of economic data. Unlike economists who relied on statistics as an indicator of economic tendencies and regarded statistical analysis as a powerful tool in predicting economic behavior, Morgenstern believed that statistical data contained significant fallacies. The main cause, according to Morgenstern, is that data-collectors do not receive truthful data to start with. Data is often fabricated for tax purposes, to protect trade secrets, or to deceive competition. For these reasons, Morgenstern was convinced that the results of statistical analyses cannot be fully trusted.

Legacy

Von Neumann and Morgenstern’s 1944 classic Theory of Games and Economic Behavior created the field of game theory and also the theory of choice under uncertainty. Morgenstern provided much of the economic analysis in that book.. Game theory played a major role in the social sciences in the second half of the twentieth century, and is still used in many academic fields. It has been applied to animal behavior, including evolutionary theory. Political science and ethics use different games, such as the prisoner’s dilemma, to illustrate situations in the field. Computer scientists also use game theory in cybernetics in working with artificial intelligence.

Publications

• Morgenstern, Oskar. 1951. Prolegomena to a theory of organization. Santa Monica, CA: Rand Corp.
• Morgenstern, Oskar. 1955. The validity of international gold movement statistics. International Finance Section, Dept. of Economics and Sociology, Princeton University.
• Morgenstern, Oskar. 1959. International financial transactions and business cycles. Princeton: Princeton University Press.
• Morgenstern, Oskar. 1959. The question of national defense and international transactions and business cycles. New York: Random House.
• Morgenstern, Oskar. 1976. Selected economic writings of Oskar Morgenstern. New York University series in selected economic writings. New York: New York University Press. ISBN 0814777716
• Morgenstern, Oskar. 1991 (original published in 1950). On the Accuracy of Economic Observations. Princeton University Press. ISBN 0691041512
• Morgenstern, Oskar & Knorr, Klaus Eugen. 1968. Political conjecture in military planning. Princeton: Center of International Studies, Princeton University.
• Morgenstern, Oskar, & Schwödiauer, Gerhard. 1976. Competition and collusion in bilateral markets. Wien: Institut für Höhere Studien.
• Morgenstern, Oskar, & Smith, Vera C. 1937. The limits of economics. London: W. Hodge.
• Morgenstern, Oskar, & Thompson, Gerald L. 1976. Mathematical theory of expanding and contracting economies. Lexington, Mass: Lexington Books. ISBN 0669000892
• Morgenstern, Oskar & Von Neumann, John. 2004 (original published in 1944). Theory of games and economic behavior. Princeton: Princeton University Press. ISBN 0691119937

References

ISBN links support NWE through referral fees

• BookRags.com. Oskar Morgenstern. Retrieved on May 21, 2007, <http://www.bookrags.com/Oskar_Morgenstern>
• Byrns, Ralph. 2007. Game theory and Austrian perspective – Oskar Morgenstern. On University of Northern Carolina http://www.unc.edu/. Retrieved on May 21, 2007, <http://www.unc.edu/depts/econ/byrns_web/EC434/HET/Notables/morgenstern.htm>
• Damme, E.E.C. van. 2004. Oskar Morgenstern. Discussion paper, No. 2004-42. Tilburg: Tilburg University. Retrieved on May 20, 2007, <http://greywww.kub.nl:2080/greyfiles/center/2004/doc/42.pdf>
• Schottter Andre R. 1978. Selected Economic Writings of Oskar Morgenstern. New York University Press. ISBN 0814777716
• Weintraub, E. Roy. 1992. Toward a history of game theory. Durham: Duke University Press. ISBN 0822312530

External links

• Oskar Morgenstern – Biography on CEPA New School website. Retrieved May 24, 2007.
• Oskar Morgenstern Papers - Inventory of the Oskar Morgenstern Papers, 1866-1992 and undated. Retrieved May 24, 2007.
• Prolegomena to a theory of organization – Full-text online edition of Oskar Morgenstern’s (1951) book. Retrieved May 24, 2007.
• The von Neumann-Morgenstern Expected Utility Theory – On the expected utility hypothesis of John von Neumann and Oskar Morgenstern (1944). Retrieved May 24, 2007.
• World of Mathematics on Oskar Morgenstern – Biography on BookRags.com Retrieved May 24, 2007.

Credits

New World Encyclopedia writers and editors rewrote and completed the Wikipedia article in accordance with New World Encyclopedia standards. This article abides by terms of the Creative Commons CC-by-sa 3.0 License (CC-by-sa), which may be used and disseminated with proper attribution. Credit is due under the terms of this license that can reference both the New World Encyclopedia contributors and the selfless volunteer contributors of the Wikimedia Foundation. To cite this article click here for a list of acceptable citing formats.The history of earlier contributions by wikipedians is accessible to researchers here:

• Oskar_Morgenstern  ^history
• Expected_utility_hypothesis  ^history

The history of this article since it was imported to New World Encyclopedia:

• History of "Oskar Morgenstern"

Note: Some restrictions may apply to use of individual images which are separately licensed.