Hurwicz was among the first economists to recognize the value ofgame theory and was a pioneer in its application.[4][5] Interactions of individuals and institutions,markets andtrade are analyzed and understood today using the models Hurwicz developed.[6]
Hurwicz was born inMoscow,Russia, to a family ofPolish Jews a few months before theOctober Revolution. Soon after Leonid's birth, the family returned toWarsaw.[7] Hurwicz and his family experienced persecution by both theBolsheviks andNazis,[8] as he again became a refugee when Germany invaded Poland in 1939. His parents and brother fled Warsaw, only to be arrested and sent to Sovietlabor camps. Hurwicz, who had graduated fromWarsaw University in 1938, at the time of Nazi invasion onPoland was in London, moved toSwitzerland then toPortugal and finally in 1940 he emigrated to theUnited States. His family eventually joined him there.[9][10]
Hurwicz hired Evelyn Jensen (born October 31, 1923), who grew up on aWisconsin farm and was, at the time, an undergraduate in economics at theUniversity of Chicago, as his teaching assistant during the 1940s. They married on July 19, 1944[11] and later lived at a number of locations inMinneapolis. They had four children: Sarah, Michael, Ruth and Maxim.[9]
His interests included linguistics, archaeology, biochemistry and music.[7] His activities outside the field of economics included research in meteorology and membership in theNSF Commission on Weather Modification. WhenEugene McCarthy ran for president of the United States, Hurwicz served in 1968 as a McCarthy delegate from Minnesota to theDemocratic Party Convention and a member of the Democratic Party Platform Committee. He helped design the 'walking subcaucus' method of allocating delegates among competing groups, which is still used today by political parties. He remained an active Democrat, and attended hisprecinct caucus in February 2008 at the age of 90.[11]
He was hospitalized in mid-June 2008, suffering from renal failure. He died a week later in Minneapolis.[12][13]
Hurwicz received aGuggenheim Fellowship in 1945–1946.[14] In 1946 he became an associate professor of economics atIowa State College.[11] From January 1942 until June 1946, he was a research associate for the Cowles Commission. Joining full-time in October 1950 until January 1951, he was a visiting professor, assuming Koopmans' classes in the Department of Economics, and led the commission's research on theory of resource allocation.[14] He was also a research professor of economics and mathematical statistics at theUniversity of Illinois, a consultant to theRAND Corporation through the University of Chicago and a consultant to theU.S. Bureau of the Budget.[18] Hurwicz continued to be a consultant to the Cowles Commission until about 1961.[19]
Back at Minnesota, Hurwicz became chairman of the Statistics Department in 1961, Regents Professor of Economics in 1969, and Curtis L. Carlson Regents Professor of Economics in 1989.[11] He taught subjects ranging from theory to welfare economics, public economics, mechanisms and institutions and mathematical economics.[8] Although he retired from full-time teaching in 1988,[10] Hurwicz taught graduate school as professor emeritus most recently in the fall of 2006.[10] In 2007 his ongoing research was described by the University of Minnesota as "comparison and analysis of systems and techniques of economic organization, welfare economics, game-theoretic implementation of social choice goals, and modeling economic institutions."[21]
Hurwicz's interests included mathematical economics and modeling and thetheory of the firm.[5] His published works in these fields date back to 1944.[22] He is internationally renowned for his pioneering research on economic theory, particularly in the areas of mechanism and institutional design and mathematical economics. In the 1950s, he worked withKenneth Arrow on non-linear programming. Hurwicz was the graduate advisor toDaniel McFadden,[23] who received the Nobel Prize in 2000.[24]
Earlier economists often avoided analytic modeling of economic institutions. Hurwicz's work was instrumental in showing how economic models can provide a framework for the analysis of systems, such as capitalism and socialism, and how the incentives in such systems affect members of society.[25] The theory ofincentive compatibility that Hurwicz developed changed the way many economists thought about outcomes, explaining why centrally planned economies may fail and how incentives for individuals make a difference in decision making.[23]
Hurwicz served on the editorial board of several journals. He co-edited and contributed to two collections forCambridge University Press:Studies in Resource Allocation Processes (1978, withKenneth Arrow) andSocial Goals and Social Organization (1987, with David Schmeidler and Hugo Sonnenschein). His most recent articles were published in the journals "Economic Theory" (2003, with Thomas Marschak), "Review of Economic Design" (2001, with Stanley Reiter) and "Advances in Mathematical Economics" (2003, with Marcel K. Richter).[26] Hurwicz presented the Fisher-Schultz (1963), Richard T. Ely (1972), David Kinley (1989) and Colin Clark (1997) lectures.[citation needed]
First presented in 1950, theHurwicz criterion is thought about to this day in the area of decision making called "under uncertainty."[29][30][31]Abraham Wald publisheddecision functions that year.[32] Hurwicz combined Wald's ideas with work done in 1812 byPierre-Simon Laplace.[33] Hurwicz's criterion gives each decision a value which is "a weighted sum of its worst and best possible outcomes" represented asα and known as an index of pessimism or optimism.[30] Variations have been proposed ever since and some corrections came very soon fromLeonard Jimmie Savage in 1954.[29] These four approaches– Laplace, Wald, Hurwicz and Savage– have been studied, corrected and applied for over fifty years by many different people including John Milnor,G. L. S. Shackle,[29]Daniel Ellsberg,[34]R. Duncan Luce andHoward Raiffa, in a field some date back toJacob Bernoulli.[35]
In 2010, the College of Liberal Arts at theUniversity of Minnesota launched theHeller-Hurwicz Economics Institute, a global initiative created to inform public policy by supporting and promoting frontier economic research and by communicating findings to leading academics, policymakers, and business executives around the world. Funds raised by the Institute are used to attract and retain preeminent faculty and, in part, to support graduate student research.
TheUniversity of Michigan has an endowed chair named for Hurwicz, the Leonid Hurwicz Collegiate Professor of Complex Systems, Political Science, and Economics, currently held byScott E. Page.
In October 2007, Hurwicz shared theNobel Memorial Prize in Economic Sciences withEric Maskin of theInstitute for Advanced Study andRoger Myerson of theUniversity of Chicago "for having laid the foundations ofmechanism design theory."[36] During a telephone interview, a representative of the Nobel Foundation told Hurwicz and his wife that Hurwicz was the oldest person to win the Nobel Prize. Hurwicz said, "I hope that others who deserve it also got it." When asked which of all the applications of mechanism design he was most pleased to see he saidwelfare economics.[37] The winners applied game theory, a field advanced by mathematicianJohn Forbes Nash, to discover the best and most efficient means to reach a desired outcome, taking into account individuals' knowledge and self-interest, which may be hidden or private.[38] Mechanism design has been used to model negotiations and taxation, voting and elections,[3] to design auctions such as those for communications bandwidth,[23] elections and labor talks[38] and for pricing stock options.[39]
Unable to attend the Nobel Prize ceremony in Stockholm because of his poor health,[40] Hurwicz received the prize in Minneapolis. Accompanied by Evelyn, his spouse of six decades, and his family, he was the guest of honor at a convocation held on the campus of the University of Minnesota presided over by university presidentRobert Bruininks. Immediately following a live broadcast of the Nobel Prize awards ceremony,Jonas Hafström, Swedish ambassador to the United States, personally awarded the Economics Prize to Professor Hurwicz.[41] His wife died in 2016 aged 93.
Hurwicz, Leonid (July 1947). "Some problems arising in estimating economic relations".Econometrica.15 (3). The Econometric Society:236–240.doi:10.2307/1905482.JSTOR1905482.
Hurwicz, Leonid;Arrow, Kenneth J. (1953).Hurwicz's optimality criterion for decision making under ignorance. Technical Report 6.Stanford University.
and as:Hurwicz, Leonid;Arrow, Kenneth J. (1977), "Appendix: An optimality criterion for decision-making under ignorance", in Arrow, Kenneth J.;Hurwicz, Leonid (eds.),Studies in resource allocation processes, Cambridge New York: Cambridge University Press, pp. 461–472,ISBN9780521215220
Hurwicz, Leonid (1960), "Optimality and informational efficiency in resource allocation processes", inArrow, Kenneth J.;Karlin, Samuel;Suppes, Patrick (eds.),Mathematical models in the social sciences, 1959: Proceedings of the first Stanford symposium, Stanford mathematical studies in the social sciences, IV, Stanford, California: Stanford University Press, pp. 27–47,ISBN9780804700214{{citation}}:ISBN / Date incompatibility (help)
Hurwicz, Leonid (May 1969). "On the concept and possibility of informational decentralization".The American Economic Review: Papers and Proceedings.59 (2). American Economic Association:513–524.JSTOR1823704.
Hurwicz, Leonid (May 1973). "The design of mechanisms for resource allocation".The American Economic Review: Papers and Proceedings.63 (2). American Economic Association:1–30.JSTOR1817047.
^abcdeClement, Douglas (Fall 2006)."Intelligent Designer"(PDF).Minnesota Economics. Department of Economics, University of Minnesota College of Liberal Arts:6–9. Archived fromthe original(PDF) on 2007-10-25. Retrieved2007-10-16.
^"Report for 1942". Cowles Foundation, Yale University. 1942. Retrieved2007-10-16.
^Simon, Herbert A. (28 September 1998) [1997].An Empirically-Based Microeconomics (Raffaele Mattioli Lectures). Cambridge University Press. p. 193.ISBN978-0-521-62412-1.
Clement, Douglas (Fall 2006)."Intelligent Designer (cover story)"(PDF).Minnesota Economics. Department of Economics, University of Minnesota College of Liberal Arts:6–9. Archived fromthe original(PDF) on 2007-10-25. Retrieved2007-10-16.
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