A Beautiful Mind: Chapter 8 Summary & Analysis

At Princeton, Nash becomes interested in game theory, invented by von Neumann in the 1920s. Game theory can be defined as “an attempt […] to construct a systematic theory of rational human behavior by focusing on games as simple settings for the exercise of human rationality.” Von Neumann is the first to suggest that the theory of games might have wide applications, including to economics. Oskar Morgenstern, an Austrian economics professor at Princeton, convinces von Neumann to collaborate with him on a treatise arguing that game theory is the “correct foundation for all economic theory.” The Theory of Games and Economic Behavior, von Neumann and Morgenstern’s treatise, argues that the “prevailing paradigm in economics”—an emphasis on individual incentives and behavior—is inadequate, proposing that math (and especially a new theory of games) should form the basis of economic logic. 

Though “the bible”—as von Neumann and Morgenstern’s book was referred to by Princeton’s graduate students—is ground-breaking, Nash and other students realize that von Neumann and Morgenstern’s work does not contain any new theorems, other than one von Neumann formulated (the min-max theorem). Nash is especially intrigued by von Neumann and Morgenstern’s focus on “zero-sum two-person games,” a problem they left open to further research.