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Game Theorist Lloyd Shapley Wins Nobel Prize in Economics

Lloyd shapley
Lloyd Shapley (Source: American Mathematical Society)

American economist Lloyd Shapley, an affiliated member of Stony Brook University’s Center for Game Theory, has won the 2012 Nobel Prize in Economic Sciences jointly with Alvin Roth. Shapley used cooperative game theory to study and compare different matching methods, analyzing how to efficiently match different economic agents. Shapley’s work is theoretical, but it has been applied by other scholars (including Alvin Roth) to many real world situations: matching students with school or organ donors with patients are two examples.

Shapley, a professor emeritus at UCLA who held joint appointments in the departments of Mathematics and Economics, has been a regular participant in the International Summer Festival on Game Theory at Stony Brook — a renowned academic gathering of researchers from all over the world. Started in 1990, approximately 200 participants attend the conference each year from Asia, Europe, and North and South America, among them six Nobel Laureates in economics: Kenneth Arrow, Robert Aumann, Gerard Debreu, John Nash, Thomas Schelling and Reinhard Selten.

Shapley now joins this elite group, earning a Nobel Prize for his work with the late economist David Gale. During the 1950 and 1960s the two men used game theory to study different methods of matching up individuals. In 1962 the two came up with the “Gale-Shapley algorithm,” a set of rules that could be applied in any market where people on each side need to be paired.

Shapley earned his AB from Harvard University in 1948 and his PhD from Princeton University in 1953, when the founders of game theory, John von Neumann and Oskar Morgenstern, were part of the Princeton faculty. After serving in the U.S. Army from 1943 to 1945, he then worked as a research mathematician at Rand Corporation from 1948 to 1949, and then from 1954 to 1981. He taught at Princeton University from 1952 to 1954 before going to UCLA in 1981.

Shapley is a fellow of the American Academy of Arts and Sciences and the National Academy of Sciences. In 1981 he won the John von Neumann Theory Prize. He is also a member of the American Mathematical Society, Econometric Society, Mathematical Programming Society and Operations Research Society of America.

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