# John Harsanyi

**John Charles Harsanyi** (May 29, 1920 – August 9, 2000) was a Hungarian economist, best known for his contributions to the study of game theory and economic reasoning in political and moral philosophy as well as contributing to the study of equilibrium selection. For his work, he was a co-recipient along with John Nash and Reinhard Selten of the 1994 Nobel Memorial Prize in Economics.

## Contents

## Quotes[edit]

- If somebody prefers an income distribution more favorable to the poor for the sole reason that he is poor himself, this can hardly be considered as a genuine value judgment on social welfare.
- Harsanyi, J. C. (1953). "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking". J. Polit. Economy 61 (5): p. 434

- Now a value judgment on the distribution of income would show the required impersonality to the highest degree if the person who made this judgment had to choose a particular income distribution in complete ignorance of what his own relative position... would be within the system chosen. This would be the case if he had exactly the same chance of obtaining the ﬁrst position (corresponding to the highest income) or the second or the third, etc. up to the last position (corresponding to the lowest income) available within that scheme.
- Harsanyi, J. C. (1953). "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking". J. Polit. Economy 61 (5): 434–5.

- If two objects or human beings show similar behaviour in all their relevant aspects open to observation, the assumption of some unobservable hidden difference between them must be regarded as a completely gratuitous hypothesis and one contrary to sound scientific method.
- Harsanyi, J. C. (1955). "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility". J. Polit. Economy 63 (4): p. 317

### "Games with Incomplete Information Played by “Bayesian” Players," 1967[edit]

Harsanyi, John C. "Games with Incomplete Information Played by “Bayesian” Players, I-III Part I. The Basic Model." Management science 14.3 (1967): 159-182.

- The paper develops a new theory for the analysis of games with incomplete information where the players are uncertain about some important parameters of the game situation, such as the payoff functions, the strategies available to various players, the information other players have about the game, etc. However, each player has a subjective probability distribution over the alternative possibilities.

In most of the paper it is assumed that these probability distributions entertained by the different players are mutually "consistent," in the sense that they can be regarded as conditional probability distributions derived from a certain "basic probability distribution" over the parameters unknown to the various players. But later the theory is extended also to cases where the different players' subjective probability distributions fail to satisfy this consistency assumption.- p. 159 : Abstract

- Following von Neumann and Morgenstern [7, p. 30], we distinguish between games with complete information, to be sometimes briefly called C-games in this paper, and games with incomplete information, to be called I-games. The latter differ from the former in the fact that some or all of the players lack full information about the "rules" of the game, or equivalently about its normal form (or about its extensive form). For example, they may lack full information about other players' or even their own payoff functions, about the physical facilities and strategies available to other players or even to themselves, about the amount of information the other players have about various aspects of the game situation, etc.

In our own view it has been a major analytical deficiency of existing game theory that it has been almost completely restricted to C-games, in spite of the fact that in many real-life economic, political, military, and other social situations the participants often lack full information about some important aspects of the "game" they are playing.- p. 163: Lead paragraph's

- We can regard the vector c
_{i}as representing certain physical, social, and psychological*attributes*of player*i himself*in that it summarizes some crucial parameters of player i's own payoff function U_{i}as well as the main parameters of his beliefs about his social and physical environment... the rules of the game as such allow any given player*i*to belong to any one of a number of possible*types*, corresponding to the alternative values of his attribute vector c i could take... Each player is assumed to know his own actual type but to be in general ignorant about the other players' actual types.- p. 171; As quoted in: Mertens, Jean-Francois, and Shmuel Zamir. "Formulation of Bayesian analysis for games with incomplete information." International Journal of Game Theory 14.1 (1985): p. 1-2

### "Games with Incomplete Information," 1997[edit]

John C. Harsanyi, "Prize Lecture: Games with Incomplete Information". From *Nobel Lectures, Economics 1991-1995,* Editor Torsten Persson, World Scientific Publishing Co., Singapore, 1997

- Game theory is a theory of strategic interaction. That is to say, it is a theory of rational behavior in social situations in which each player has to choose his moves on the basis of what he thinks the other players’ countermoves are likely to be.
- p. 136

- In principle, every social situation involves strategic interaction among the participants. Thus, one might argue that proper understanding of any social situation would require game-theoretic analysis. But in actual fact, classical economic theory did manage to sidestep the game-theoretic aspects of economic behavior by postulating perfect competition, i.e., by assuming that every buyer and every seller is very small as compared with the size of the relevant markets, so that nobody can significantly affect the existing market prices by his actions.
- p. 136

- In the period 1965 - 69, the U.S. Arms Control and Disarmament Agency employed a group of about ten young game theorists as consultants. It was as a member of this group that I developed the simpler approach, already mentioned, to the analysis of I-games.

I realized that a major problem in arms control negotiations is the fact that each side is relatively well informed about its own position with respect to various variables relevant to arms control negotiations, such as its own policy objectives, its peaceful or bellicose attitudes toward the other side, its military strength, its own ability to introduce new military technologies, and so on - but may be rather poorly informed about the other side's position in terms of such variables.

I came to the conclusion that finding a suitable mathematical representation for this particular problem may very well be a crucial key to a better theory of arms control negotiations, and indeed to a better theory of all I-games.- p. 138

### "John C. Harsanyi - Biographical," 1994[edit]

"John C. Harsanyi - Biographical". Nobelprize.org. Nobel Media AB 2013. Web. 17 Jun 2014.

- In November 1944 the Nazi authorities finally decided to deport my labor unit from Budapest to an Austrian concentration camp, where most of my comrades eventually perished. But I was lucky enough to make my escape from the railway station in Budapest, just before our train left for Austria. Then a Jesuit father I had known gave me refuge in the cellar of their monastery.

- Early in 1954 I was appointed Lecturer in Economics at the University of Queensland in Brisbane. Then, in 1956, I was awarded a Rockefeller Fellowship, enabling me and Anne to spend two years at Stanford University, where I got a Ph.D. in economics, whereas Anne got an M.A. in psychology. I had the good fortune of having Ken Arrow as advisor and as dissertation supervisor. I benefitted very much from discussing many finer points of economic theory with him. But I also benefitted substantially by following his advice to spend a sizable part of my Stanford time studying mathematics and statistics. These studies proved very useful in my later work in game theory.

- My interest in game-theoretic problems in a narrower sense was first aroused by John Nash's four brilliant papers, published in the period 1950-53, on cooperative and on noncooperative games, on two-person bargaining games and on mutually optimal threat strategies in such games, and on what we now call Nash equilibria.