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Theory of Games and Economic Behavior
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<h2 id="overview">Overview</h2> <p>The book is based partly on earlier research by von Neumann, published in 1928 under the German title "Zur Theorie der Gesellschaftsspiele" (<i>"On the Theory of Board Games"</i>).<a class="footnote-ref" id="fnref:6" href="#fn:6"><sup>6</sup></a> </p><p>The derivation of <a href="/facts/Expected_utility/EboBlw1D">expected utility</a> from its axioms appeared in an appendix to the Second Edition (1947). <a href="/facts/John_von_Neumann/aUk6urof">Von Neumann</a> and <a href="/facts/Oskar_Morgenstern/ShXosToj">Morgenstern</a> used objective probabilities, supposing that all the agents had the same probability distribution, as a convenience. However, Neumann and Morgenstern mentioned that a theory of <a href="/facts/Subjective_probability/Cvn7WWfG">subjective probability</a> could be provided, and this task was completed by <a href="/facts/Leonard_Jimmie_Savage/qlmq7Uaq">Jimmie Savage</a> in 1954 <a class="footnote-ref" id="fnref:7" href="#fn:7"><sup>7</sup></a> and <a href="/facts/Johann_Pfanzagl/17PHRTcj">Johann Pfanzagl</a> in 1967.<a class="footnote-ref" id="fnref:8" href="#fn:8"><sup>8</sup></a> Savage extended von Neumann and Morgenstern's axioms of rational preferences to endogenize probability and make it subjective. He then used <a href="/facts/Bayes%27_theorem/wQqFB2Dt">Bayes' theorem</a> to update these subject probabilities in light of new information, thus linking rational choice and inference. </p> <h2 id="see-also">See also</h2> <ul><li>Pfanzagl, J (1967). "Subjective Probability Derived from the <a href="/facts/Oskar_Morgenstern/ShXosToj">Morgenstern</a>-<a href="/facts/John_von_Neumann/aUk6urof">von Neumann</a> <a href="/facts/Expected_utility/EboBlw1D">Utility Theory</a>". In <a href="/facts/Martin_Shubik/J44755Sp">Martin Shubik</a> (ed.). <a href="https://archive.org/details/essaysinmathemat0000shub"><i>Essays in Mathematical Economics In Honor of Oskar Morgenstern</i></a>. Princeton University Press. pp. <a href="https://archive.org/details/essaysinmathemat0000shub/page/237">237–251</a>.</li> <li>Pfanzagl, J. in cooperation with V. Baumann and H. Huber (1968). "Events, Utility and Subjective Probability". <i>Theory of Measurement</i>. Wiley. pp. 195–220.</li> <li><a href="/facts/Oskar_Morgenstern/ShXosToj">Morgenstern, Oskar</a> (1976). "Some Reflections on <a href="/facts/Expected_utility/EboBlw1D">Utility</a>". In Andrew Schotter (ed.). <i>Selected Economic Writings of Oskar Morgenstern</i>. New York University Press. pp. 65–70.</li> <li>Morgenstern Oskar (1976). "The Collaboration Between Oskar Morgenstern and John von Neumann on the Theory of Games". <i>Journal of Economic Literature</i>. 14 (3): 805–816. <a href="/facts/JSTOR_(identifier)/YTeVmaJ7">JSTOR</a> <a href="https://www.jstor.org/stable/2722628">2722628</a>.</li> <li><a href="http://press.princeton.edu/titles/7802.html">Commemorative edition of the book <i>Theory of Games and Economic Behavior</i></a></li> <li>Copeland A. H. (1945). <a href="https://doi.org/10.1090%2Fs0002-9904-1945-08391-8">"Review of 'The Theory of Games and Economic Behavior"</a>. <i>Bulletin of the American Mathematical Society</i>. 51: 498–504. <a href="/facts/Doi_(identifier)/muM9Etpq">doi</a>:<a href="https://doi.org/10.1090%2Fs0002-9904-1945-08391-8">10.1090/s0002-9904-1945-08391-8</a>.</li> <li><a href="/facts/Leonid_Hurwicz/qANJTw48">Hurwicz Leonid</a> (1945). "The Theory of Economic Behavior". <i>American Economic Review</i>. 35 (5): 909–925. <a href="/facts/JSTOR_(identifier)/YTeVmaJ7">JSTOR</a> <a href="https://www.jstor.org/stable/1812602">1812602</a>.</li> <li><a href="/facts/Carl_Kaysen/bv8NcNe8">Kaysen Carl</a> (1946). "A Revolution in Economic Theory?". <i>Review of Economic Studies</i>. 14 (1): 1–15. <a href="/facts/Doi_(identifier)/muM9Etpq">doi</a>:<a href="https://doi.org/10.2307%2F2295753">10.2307/2295753</a>. <a href="/facts/JSTOR_(identifier)/YTeVmaJ7">JSTOR</a> <a href="https://www.jstor.org/stable/2295753">2295753</a>.</li> <li><a href="/facts/Jacob_Marschak/8Qzg4XAb">Marschak Jacob</a> (1946). <a href="http://cowles.econ.yale.edu/P/cp/p00a/p0013b.pdf">"Neumann's and Morgenstern's New Approach to Static Economics"</a> (PDF). <i>Journal of Political Economy</i>. 54 (2): 97–115. <a href="/facts/Doi_(identifier)/muM9Etpq">doi</a>:<a href="https://doi.org/10.1086%2F256327">10.1086/256327</a>. <a href="/facts/S2CID_(identifier)/ldJsHa2Y">S2CID</a> <a href="https://api.semanticscholar.org/CorpusID:154536775">154536775</a>.</li> <li><a href="/facts/Richard_Stone/6Ac2TMtn">Stone Richard</a> (1948). "The Theory of Games". <i>Economic Journal</i>. 58 (230): 185–201. <a href="/facts/Doi_(identifier)/muM9Etpq">doi</a>:<a href="https://doi.org/10.2307%2F2225934">10.2307/2225934</a>. <a href="/facts/JSTOR_(identifier)/YTeVmaJ7">JSTOR</a> <a href="https://www.jstor.org/stable/2225934">2225934</a>.</li></ul> <h2 id="external-links">External links</h2> <ul><li><a href="https://archive.org/details/in.ernet.dli.2015.215284">Theory of Games and Economic Behavior</a>, full text at archive.org (public domain)</li></ul> <h2 id="references">References</h2> <ol> <li id="fn:1"><p>Copeland, A. H. (1945). "Review: Theory of Games and Economic Behavior by John von Neumann and Oskar Morgenstern" (PDF). Bull. Amer. Math. Soc. 51 (7): 498–504. doi:10.1090/s0002-9904-1945-08391-8. <a href="/wiki/Arthur_Herbert_Copeland" target="_blank">/wiki/Arthur_Herbert_Copeland</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li> <li id="fn:2"><p>Mirowski, Philip (1992). "What Were von Neumann and Morgenstern Trying to Accomplish?". In Weintraub, E. Roy (ed.). Toward a History of Game Theory. Durham: Duke University Press. pp. 113–147. ISBN 0-8223-1253-0. <a href="0-8223-1253-0" target="_blank">0-8223-1253-0</a> <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li> <li id="fn:3"><p>Kattsoff, Louis O. (1945). "Review of Theory of Games and Economic Behavior". Social Forces. 24 (2): 245–246. doi:10.2307/2572550. ISSN 0037-7732. JSTOR 2572550. <a href="https://www.jstor.org/stable/2572550" target="_blank">https://www.jstor.org/stable/2572550</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li> <li id="fn:4"><p>K., M. G. (1944). "Review of Theory of Games and Economic Behaviour". Journal of the Royal Statistical Society. 107 (3/4): 293. doi:10.2307/2981222. ISSN 0952-8385. JSTOR 2981222. <a href="https://www.jstor.org/stable/2981222" target="_blank">https://www.jstor.org/stable/2981222</a> <a href="#fnref:4" class="footnote-back-ref">↩</a></p></li> <li id="fn:5"><p>Barna, T. (1946). "Review of Theory of Games and Economic Behaviour". Economica. 13 (50): 136–138. doi:10.2307/2550081. ISSN 0013-0427. <a href="https://www.jstor.org/stable/2550081" target="_blank">https://www.jstor.org/stable/2550081</a> <a href="#fnref:5" class="footnote-back-ref">↩</a></p></li> <li id="fn:6"><p>von Neumann, John (1928). "Zur Theorie der Gesellschaftsspiele". Mathematische Annalen. 100: 295–300. doi:10.1007/bf01448847. S2CID 122961988. <a href="/wiki/Mathematische_Annalen" target="_blank">/wiki/Mathematische_Annalen</a> <a href="#fnref:6" class="footnote-back-ref">↩</a></p></li> <li id="fn:7"><p>Savage, Leonard J. (1954). The Foundations of Statistics. New York: Dover. <a href="#fnref:7" class="footnote-back-ref">↩</a></p></li> <li id="fn:8"><p>An axiomatization for subjective expected utility appeared in Pfanzagl (1967, 1968) and was endorsed by Morgenstern (1976): "Von Neumann and I have anticipated" the question whether probabilities "might, perhaps more typically, be subjective and have stated specifically that in the latter case axioms could be found from which could derive the desired numerical utility together with a number for the probabilities (c.f. p. 19 of The Theory of Games and Economic Behavior). We did not carry this out; it was demonstrated by Pfanzagl . . . with all the necessary rigor" (page 65). <a href="#fnref:8" class="footnote-back-ref">↩</a></p></li> </ol>