A Beautiful Mind (73 page)

In the end, Nash and the two other candidates for the 1994 economics prize passed by a mere handful of votes — the first in the history to skirt so close to defeat.
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It is a peculiarity, indeed a major administrative and logistical headache, of the Nobel Prize process that no award can really be said to exist until the members of the full body of the Royal Swedish Academy of Sciences have had their say. They have “the sole right to decide,” as a Nobel Foundation booklet puts it: “Even a unanimous committee recommendation may be overruled.”
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Only when the plenary session has cast ballots and the votes are counted and the results announced do the secretary general and members of the prize committee march off to telephone the winners. They then proceed to the Sessions Hall to announce the winners’ names to the world press. Other prizes, like the Fields Medal for mathematics or the John Bates Clark medal for economics, by contrast, are settled months ahead of time, their winners notified after a leisurely interval and carefully instructed to sit on the secret until the awarding institutions get around to issuing their press releases or
holding their festivities. Presumably, the inconvenience of the last-minute Nobel vote is outweighed by the benefit of being able to avoid leaks before the official announcement.

The Nobel vote, moreover, is traditionally a mostly ceremonial affair, the final flourish after a lengthy selection procedure that is more or less completely dominated by the senior members of the prize committees. In the case of the economics prize, a few dozen random academicians — a fraction of the number who turn out for the physics or chemistry prizes, the other two Nobel awards administered by the academy — assemble in the second week of October largely for the pleasure of hearing a distinguished lecture on the proposed candidates’ contributions to scientific progress. As one academy member put it, “Members attend less for the vote itself than for a chance to hear the presentations.”
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In some recent years, the modest quorum of forty academy members has proved difficult to achieve.
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According to the rules, academy members have three options. They may vote for the candidate or candidates proposed by the committee and endorsed by the Social Sciences Class. They may vote for an alternative candidate of their own choosing. Or they may vote not to give a prize that year. The winner or winners must obtain a simple majority of votes. Until 1994, no candidates proposed by the committee had ever failed to gain a wide majority of votes.

The academy meeting that began promptly at 10:00
A.M.
on Tuesday, October 12, in a rather small, poorly lit auditorium tucked in a far corner of the academy’s ground floor,
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promised to be no more or less interesting than previous years’ meetings. Fewer than sixty members were scattered around the room, but, as the officials present noted with satisfaction, there was no question of not getting a quorum. (A couple of years earlier, thirty-nine members had sat in that room waiting for a fortieth — who did finally show up.)
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Kerstin Fredga, the astrophysicist who was the academy’s president, and Carl-Olof Jacobson were sitting side by side on the stage. The ballot box was perched at the end of the platform. The five members of the prize committee who belonged to the academy were sitting near the front of the room.

Lindbeck was at the podium in a few long strides. Wearing his thick blackrimmed glasses and usual frown of concentration, Lindbeck dove right into his subject, an overview of the entire process by which the committee had arrived at its recommendation for a prize in game theory. Always intense, Lindbeck stuttered with excitement, waved his long arms, and made a good many very dry jokes.
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He was followed by Jacobson, low-keyed by contrast, who gave the official endorsement of the Social Sciences Class. Both men claimed that the decisions by the committee as well as the Class were, as always, unanimous. Lindbeck added that unanimity had come about “as if by an Invisible Hand,” his standing joke. Finally, Mäler got up and launched the main presentation, a lecture on the contributions of the three candidates.

The lecture was quite disappointing. Mäler, never a brilliant speaker, was more nervous and unsure of himself than usual.
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He quickly became mired in technicalities and jargon. He read most of it. His wife had left him a few weeks
earlier, he was agitated and depressed, and he had had a terrible time preparing the talk.

All this took something like an hour. Had things proceeded as usual there would have been a few rather perfunctory and mostly polite questions from the floor, perhaps a standard monologue by one of the oldtimers about the dubiousness of the economics prize in the first place, before a general silence, a passing-out of plain squares of white paper and number two pencils, quick scribbles, folding, and the drifting down of academicians to the stage to stuff their ballots in the box.

Instead, all hell broke loose. Later the president of the Nobel Foundation remarked wryly that “Troy could only have been destroyed by someone inside the walls. And that’s what happened here.”
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No one recalls whether Stahl launched the first verbal grenade, but it was soon obvious to Lindbeck and Mäler that they were in the midst of an ambush. Stahl challenged Mäler to give a single major example showing that the theory had any empirical validity’ whatsoever. Mäler, who was in particularly poor shape to answer questions, fumbled. Stahl did not — contrary to a story six weeks later in
Dagens Nyheter,
one of Sweden’s two dailies — do anything as crass, or risky, as to urge the academy to withhold the prize to Nash because of the mathematician’s mental illness.
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Instead, he argued, forcefully and brilliantly, that a prize for non-cooperative game theory was too narrow, too insubstantial, too technical. He reminded the audience that Nash’s contribution had been made nearly half a century earlier and that it was more mathematics than economics. He derided Harsanyi and Selten for being “boring,” “mere technicians.” Other members of the audience soon chimed in.

Stahl did not make the mistake of merely criticizing the committee’s proposal, which, after all, he had signed. He had an alternative, he said.
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In light of the members’ unhappiness, in light of unanswered questions, in light of Mäler’s clearly unsatisfactory report, might it not be more prudent to postpone the prize in game theory? Why not vote instead to give the prize to Robert Lucas, the University of Chicago professor whom the committee had virtually decided to propose for the following year.
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Everybody, he reminded them, was enthusiastic about Lucas, who had invented a theory to explain why governments’ efforts to manage the business cycle were doomed to failure —“rational expectations” — and was clearly one of the most important economists of the century. It was an unassailable choice.

Lindbeck, who had at first seemed stunned by the audacity of Stahl’s surprise attack, told the members in no uncertain terms what Stahl was implying. He reminded the members that Stahl had signed on to the game-theory prize and accused Stahl of wishing to scuttle the prize because of Nash’s illness. He told the membership that it would be a grave injustice to withhold the prize. He did not tell them that, in an absolute breach of the Nobel rules, he had already informed Princeton University’s president, Alicia Nash, and Nash himself that he was getting the prize. But those facts were very much in his mind as he appealed to the members.
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By the time Carl-Olof Jacobson called for the vote, the atmosphere in the room was tense and bitter. An unusually large number of academicians stayed to
hear the vote count. Two members of the academy chosen by the president and Jacobson removed the ballots in front of the audience and tallied the votes. The paper was handed to Jacobson, and Jacobson read the votes one name at a time. For Lindbeck it was, as he later said, a moment of unbearable suspense. Mr. Nash … Mr. Harsanyi … Mr. Selten … Mr. Lucas … no prize… .

A few moments later, Fredga, Jacobson, Lindbeck, and Mäler, very much shaken, were the only ones left in the room. Their candidates had gotten all that they needed: a slim majority of the votes.

Later, in public, these individuals would all deny that anything extraordinary had happened. They would pretend that Mäler’s report had been unusually long, that there had been a great many questions, that the Laureates had been difficult to reach, or simply state baldly that the delay had never occurred. But behind closed doors, within the academy, there would be shock, consternation, and finger-pointing. “It was a unique event. It had never happened before,” said one member of the academy. “It’s not good for the academy to have close votes,” said Kiselman.
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The very next day the council hastily appointed an ad hoc committee “to study the future of the economics prize.”
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Afterward, a committee member friendly to Stahl would say that Stahl had been “used by the physicists.”
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Stahl’s double-cross had backfired. Instead of being regarded as the man who saved the prize committee from an embarrassing mistake, he had set into motion the very consequences he feared. Like players in So Long Sucker, the game that Nash and his friends at Princeton had invented forty years earlier, Lindbeck and Mäler formed a temporary coalition with the critics of the economics prize. They threw themselves behind the rules changes. They were determined to punish Stahl and get him off the committee — even if the new rules meant that they had to step aside as well. One prize committee member called their strategy “elegant.”
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Had Nash known about it, he would have appreciated it as a textbook execution of McCarthy’s Revenge Rule, especially because Lindbeck could reasonably expect to get elected to the committee again after a three-year interlude, but Stahl, who had provoked the scandal and compounded his sin by talking to a reporter, was out for good.

The consequences did not end there. According to several members of the academy, the ad hoc committee went on record to recommend changing the very nature of the economics prize. In its report, issued a few months later, in February 1995, the committee issued an instruction that essentially redefined the economics prize as a prize in social sciences, open to great contributions in fields like political science, psychology, and sociology.
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It also ordered the committee membership to be opened to two non-economists. No public announcement of these far-reaching changes was made. But within a year, Lindbeck, Mäler, and Stahl were gone; two social scientists who weren’t economists — a statistician and a sociologist — were
members of the prize committee; and among the top candidates for the prize was Amos Tversky, an Israeli psychologist who works on irrationality in decision making.
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In the auditorium on October 12, the three men rushed over to a small committee room.
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Jacobson was armed with a page of telephone numbers for the Laureates. It was he who would inform the Laureates of the honor that was about to grace them.

They tried to reach Selten first since Selten was in Germany and, unlike Nash or Harsanyi, would not necessarily be asleep. It was early in the morning for Nash in New Jersey and the middle of the night for Harsanyi in California. As it turns out, Selten was out grocery shopping. Jacobson then tried Harsanyi and, when he got him, quickly put Mäler, who knew Harsanyi well, on the line to quickly assure him, with much joviality, that Jacobson was not some student or, worse, reporter playing a trick on him.
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Nash was the last to be called. Jacobson waited expectantly as the telephone rang. Unbeknownst to most of Jacobson’s colleagues at the academy, he had a brother who, like Nash, had been diagnosed with schizophrenia as a young man in the 1950s and had been institutionalized ever since.
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It was a moment of incredible poignancy for Jacobson, “the greatest moment,” he later said, of his twenty-year tenure at the academy.

“He was unusually calm,” he said afterward. “That was my thought. ’He is taking this very calmly.’ ”
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49
The Greatest Auction Ever

Washington, D.C., December 1994

O
N THE AFTERNOON
of December 5, 1994, John Nash was riding in a taxi headed to Newark Airport on his way to Stockholm, where he would, in a few days’ time, receive from the King of Sweden the gold medal engraved with the portrait of Alfred Nobel.
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At around the same time, a few hundred miles to the south, in downtown Washington, D.C., Vice-President Al Gore was announcing with great fanfare the opening of “the greatest auction ever.”
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There was, as
The New York Times
would later report, no fast-talking auctioneer, no banging gavel, no Old Masters.
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On the auction block was thin air — airwaves that could be used for the new wireless gadgets like telephones, pagers, faxes — worth billions and billions of dollars, enough licenses for every major American city to have three competing cellular phone services. In the secret war rooms and bidding booths were CEOs of the world’s biggest communications conglomerates — and an unlikely group of blue-sky economic theoreticians who were advising them. When the auction finally closed the following March, the winning bids totaled more than $7 billion, making it the biggest sale in American history of public assets and one of the most successful (and lucrative) applications of economic theory to public policy ever.
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Michael Rothschild, dean of Princeton’s Woodrow Wilson School, later called it “a demonstration that people thinking hard about a problem can make the world work better … a triumph of pure thought.”
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