Harsanyi is best known for his contributions to the study ofgame theory and its application to economics, specifically for his developing the highly innovative analysis of games of incomplete information, so-calledBayesian games. He also made important contributions to the use of game theory and economic reasoning in political and moral philosophy[1] (specificallyutilitarian ethics[2]) as well as contributing to the study ofequilibrium selection. For his work, he was a co-recipient along withJohn Nash andReinhard Selten of the 1994Nobel Memorial Prize in Economic Sciences.
He moved to the United States in 1956, and spent most of his life there. According toGyörgy Marx, he was one ofThe Martians.[3]
Harsanyi was born on May 29, 1920, inBudapest,Hungary, the son of Alice Harsányi (née Gombos) and Károly Harsányi, a pharmacy owner.[4] His parents converted from Judaism to Catholicism a year before he was born.[5] He attended high school at theLutheran Gymnasium in Budapest. In high school, he became one of the best problem solvers of theKöMaL, the Mathematical and Physical Monthly for Secondary Schools. Founded in 1893, this periodical is generally credited with a large share of Hungarian students' success in mathematics. He also won the first prize in the Eötvös mathematics competition for high school students.[6]
However, in 1944 (after the fall of theHorthy regime and the seizure of power by theArrow Cross Party) his military deferment was cancelled and he was compelled to join a forced labor unit on theEastern Front.[6][8] After seven months of forced labor, when the German authorities decided to deport his unit to aconcentration camp in Austria, John Harsanyi managed to escape and found sanctuary for the rest of the war in aJesuit house.[6][7][9]
After the end of the war, Harsanyi returned to the University of Budapest for graduate studies in philosophy and sociology, earning his PhD in both subjects in 1947. Then a devoutCatholic, he simultaneously studied theology, also joining lay ranks of theDominican Order. He later abandoned Catholicism, becoming anatheist for the rest of his life.[7] Harsanyi spent the academic year 1947–1948 on the faculty of the Institute of Sociology of the University of Budapest, where he met Anne Klauber, his future wife. He was forced to resign the faculty because of openly expressing his anti-Marxist opinions, while Anne faced increasing peer pressure to leave him for the same reason.
Harsanyi remained in Hungary for the following two years attempting to sell his family's pharmacy without losing it to the authorities. After it became apparent that the communist party would confiscate the pharmacy in 1950, he fled with Anne and her parents by illegally crossing the border into Austria and then going to Australia where Klauber's parents had some friends.[6][7][10]
The two did not marry until they arrived in Australia because Klauber's immigration papers would need to be changed to reflect her married name. The two arrived with her parents on December 30, 1950, and they looked to marry immediately. Harsanyi and Klauber were married on January 2, 1951. Neither spoke much English and understood little of what they were told to say to each other. Harsanyi later explained to his new wife that she had promised to cook better food than she usually did.[10]
Harsanyi's Hungarian degrees were not recognized in Australia, but they earned him credit at theUniversity of Sydney for a master's degree. Harsanyi worked in a factory during the day and studied economics in the evening at the University of Sydney, finishing with a M.A. in 1953. While studying in Sydney, he started publishing research papers in economic journals, including theJournal of Political Economy and theReview of Economic Studies. The degree allowed him to take a teaching position in 1954 at theUniversity of Queensland inBrisbane.[7] While in Brisbane, Harsanyi's wife became a fashion designer for a small factory.[10]
In 1956, Harsanyi received aRockefeller scholarship that enabled him and Anne to spend the next two years in the United States, atStanford University and, for a semester, at theCowles Foundation. At Stanford Harsanyi wrote a dissertation ingame theory under the supervision ofKenneth Arrow, earning a second PhD in economics in 1959, while Anne earned an MA in psychology. Harsanyi's student visa expired in 1958 and the two returned to Australia.
After working for a short time as a researcher at theAustralian National University inCanberra, Harsanyi became frustrated with the lack of interest in game theory in Australia. With the help of Kenneth Arrow andJames Tobin, he was able to move to the United States, taking a position as professor of economics at theWayne State University in Detroit between 1961 and 1963. In 1964, he moved toBerkeley, California; he remained at theUniversity of California, Berkeley, until retiring in 1990. Shortly after arriving in Berkeley, he and Anne had a child, Tom.
While teaching at Berkeley, Harsanyi did extensive research in game theory.Harold Kuhn, who had beenJohn von Neumann's student inPrinceton and already had game theory publications encouraged him in this. The work for which he won the 1994 Nobel Prize in economics was a series of articles published in 1967 and 1968 which established what has become the standard framework for analyzing "games of incomplete information", situations in which the various strategic decisionmakers have different information about the parameters of the game. He resolved the problem of how players could make decisions while not knowing what each other knows by modelling the situation with initial moves by Nature using known probabilities to choose the parameters, with some players observing Nature's move but other players just knowing the probabilities and the fact that some players have observed the actual realized values. This relies on assuming that all players know the structure of the game, which means they all have "common priors", knowing the probabilities Nature uses in selecting parameters values, an assumption known as the Harsanyi Doctrine.[11]
From 1966 to 1968, Harsanyi was part of a team of game theorists tasked with advising the United States Arms Control and Disarmament Agency in collaboration with Mathematica, a consulting group fromPrinceton University led by Harold Kuhn andOskar Morgenstern.[6][7]
John Harsanyi died on August 9, 2000, from a heart attack in Berkeley, California, after developingAlzheimer's disease.[7]
Harsanyi began researchingutilitarian ethics in the mid-fifties at theUniversity of Queensland inBrisbane. This led to two publications explaining why, before understanding moral problems, the difference between people's personal and moral preferences must be distinguished.[10] As he says at the beginning of his essay included in the book edited by A. Sen and B. Williams (see below), he tries to reconcile three traditions of Western moral thinking, those ofAdam Smith,Immanuel Kant and the utilitarians (Bentham,Mill,Sidgwick andEdgeworth). He is considered one of the most important exponents of the "rule utilitarianism".
After moving to the US on aRockefeller Fellowship where he was supervised byKenneth Arrow, Harsanyi was influenced by Nash's publications on game theory and became increasingly interested in the topic.[10]
Harsanyi, John C. (November 1967). "Games with incomplete information played by "Bayesian" players, I–III. part I. The Basic Model".Management Science.14 (3):159–182.doi:10.1287/mnsc.14.3.159.JSTOR2628393.
Harsanyi, John C. (Winter 1977). "Morality and the theory of rational behavior".Social Research.44 (4):623–656.JSTOR40971169.
Reprinted as:Harsanyi, John C. (1982), "Morality and the theory of rational behaviour", inSen, Amartya;Williams, Bernard (eds.),Utilitarianism and beyond, Cambridge: Cambridge University Press, pp. 39–62,ISBN978-0511611964.
Harsanyi, John C. (1982).Papers in game theory. Dordrecht, Holland; Hingham, Massachusetts, US: D. Reidel Pub. Co. Sold.ISBN978-9027713612.reprint. Springer. 2013.ISBN978-9401725279.
Harsanyi, John C.;Selten, Reinhard (1988).A general theory of equilibrium selection in games. Cambridge, Massachusetts: MIT Press.ISBN978-0262081733.[12]
^Binmore, Ken (September 1989). "Reviewed Work:A General Theory of Equilibrium Selection in Games by John C. Harsanyi & Reinhard Selten".Journal of Economic Literature.27 (3):1171–1173.JSTOR2726785.