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Frontier Journal (FJ): Frontier Journal is at an interview with Professor Robert J. Aumann at Hebrew University of Jerusalem. He's a Nobel Prize co-winner in Economics in the year of 2005 for his joint contribution. On understanding cooperation and conflicts through game-theory. Professor Aumann, my first question would be¡­ You've been conducting research on a variety of fields in economics and mathematics. Could you provide us with some context on which part of your work made you being awarded for the Nobel Prize?

Professor Robert J. Aumann (RA): Well I think the Nobel committee cited the federal works but I think what they were most interested in, is my work on repeated games. And roughly speaking, that work showed that when you long term interaction with another party, then it is more likely that you will work out a cooperative behavior than in a situation where you meet another party and you interact with them once, and then you don't see each other again. So the basic message is that repeated games, or less technically, long-term interaction, leads or enables cooperative behavior.

FJ: I see, so no theory is perfect. Neither is game theory. So how structured should a problem to be solved precisely by game theory?

RA: Well, I mean, like you say, we have precise models and then the actual situation is a little different. But once you get insight into a real situation from looking at mathematical models.

FJ: I see. I did some research days ago on one of your previous interview by another gentleman. And you believe in that science is different to truth or theory is different to real life observation. Now, the world is a puzzle. If people say, real life observation, say, some economical social phenomenon to scientific theory, mathematical formulation, something like that. The world is quite straightforward once we understand that. Now from scientific theory to universal truth, how far away? Is that a possible, either from economic point of view or from a philosophical point of view, how far away is the distance between scientific theory and the universal truth?

RA: Well, you know, I think science is more about the way we perceive the world. It's more about us than universal truth. I think that maybe it's a little difficult to speak about the universal truth as scientific theories are changing all the time. They evolve. A hundred years ago is no longer what we think now and even what we thought ten years ago is no longer what we think now. Our conceptions of the world keep changing and so I think it's a little difficult to speak about absolute universal truth. Science is more about the way we see the world and we are able to make use of this and to apply it in our lives. In making various products, I think the universal truth is something illusive.

FJ: Yes. Okay, so Professor Aumann, in Game Theory, game players whether as individual teams or organizations even as countries, seek for relational utilization maximization and aspiring co-achieving. And in real life world, many problems are actually very very complex. For example, world peace and war. And even for a much smaller problem such as US elections, it's highly structural, but it's still very difficult to predict using such a theory. What is your opinion about this -- on applying game theory on real life problems?

RA: Well that's what we do all the time, we try to apply it into real life problems whether it's in economics or in politics or in law or in psychology, and even in biology we apply Game Theory. It's very applied science and I think we succeed in using it in many different applications. You mentioned a matter of war and peace, it's something which the Nobel committee cited in making the award. And to me, it is one of the major matters of concern and I think that being with civilization for thousands of years, all of mankind have been fighting wars, ever since the dawn of civilization, war is something very very prevalent. And I think that maybe the current ways that we have trying to achieve peace and dealing with war, are not really adequate. Because, what we try to do is to resolve specific conflicts. We have a conflict, let's say, between Russian and Czech, let's say, between the United States and Korea, or in United Stated and Iraq, or between let's say, Taiwan and China, and also in the Middle East between Israel and the Arabs. So we have conflicts all over and all the effort that people put in to trying to resolve these conflicts, is to look at the specific issues in each case and see what one can do to bridge the differences between sides in each of these conflicts. And I think that maybe this is the laudable thing to do when one is trying to cure disease, like cancer. One way of going about it is that you look at the patient in front of you and he or she has cancer. And then you ask, how should we treat it? Should operate or should we use chemotherapy, or should we use radiation or some other method of dealing with the disease and you look at the specific patient and you deal with it as best as you can with the tools that you have. But there is a totally different approach to cancer is that you simply study what developed. What happens in a cell, you don't worry about trying to cure the disease in the specific person. You do what we call basic research on cancer, you try to understand what is it that makes cancer develop. And I think that this second kind of approach is something that we have not done sufficiently in dealing with war. I think that we should have institutes that study war, without trying to necessarily resolve the specific conflict. Without saying, how can we resolve the war, how can we resolve the conflict, just try to understand what it is that makes a nation go to war. Because war is not just something that is caused by individual conflict. It is a phenomenon which is one of the most basic phenomena in human history. People all the time go to war, they fight all the time. Thousands of years, we've had many thousands of conflicts in human history. I think we should simply try to understand what it is that makes people go to war, and once we understand it we will be much better able to deal with it. But if we simply try to look at issues in a local way, this conflict and that conflict, then I'm afraid that our progress will be very limited and we will not be able to really solve the problems. What makes it happen, why does it happen? And then address those problems. And that's what we have not done yet and that. And I think that Game Theory has a lot to say on this. Because Game Theory is something that is of a general major here, it deals with all kinds of interactive situations. It does not only deal necessarily with some specific situations. So I think that if you ask about war, I think we should take a different attitude towards studying war.

FJ: I see, so you mentioned that Game theory becomes more and more successful and popular and in physics, many physicists, they are aspiring to have a grand unified field theory to unify all kinds of physical phenomenon, both in the universe and in the micro way such as particles. Now in economics, at least in Micro-economics, would such a grand unified theory appear? In some way, someday?

RA: I think it's very interesting that you mentioned that because it's something that I've been saying for years. Game theory itself is a kind of unity of social sciences and in economic theory we have as an example, the theory of monopoly, and then we have a different theory of duopoly and we have a different theory of general equilibrium. And we have a whole variety of different questions and different answers which people suggest each one of the situations to different theories. And to politics, of course, there's the theory of elections and the theory of coalition formation and the theory of international relations which always seemed very ad-hoc and very different. And in law again we have different game theory specifically, it can be a unified field theory which covers a large part of the social sciences. Also even in Biology, it is also applicable. And in computer. So it is the theory that takes a single paradigm and applies it to all kinds of different situations or wherever we have interaction whether it's a monopoly or duopoly or general equilibrium or when you have many players or when you have elections or when you're in politics or international relations. The same methodology, the same one applies to all those situations. So Game Theory is the, I propose unified field theory of the social sciences.

FJ: I see. So, now my next question. In physics, as you know, we have theoretical physics and experimental, what you call observational physics. In Biology, we have only experimental biology because many phenomena in biology cannot be precisely formulated mathematically. Now in economics, my opinion, understanding right now the state of the art of economics is quite theoretical. Would it be possible someday that experimental or empirical economics could be as strong as theoretical economics as of today?

RA: Well, you mentioned two different kinds of¡­ you mentioned really three kinds of economics. You mentioned theoretical economics, experimental economics, and empirical. The empirical economics is very widespread, in other words, there's tremendous amount of work on empirical economics. I would not at all say that there's more work on theoretical economics than empirical economics. There's a tremendous amount of work on empirical economics and it fits the theory quite well. It doesn't dissent but that doesn't happen in physics or chemistry. There are often differences between the work one finds and predicts. Sometimes I remember reading someplace that people are very happy because they measured the mass of some elementary particle and it turned out to be closer to the theoretical prediction than had been thought before and in fact it turned out to be a half of what the theoretical prediction had been, whereas before it was only theoretical. So somehow we were getting closer, and this was considered to be a good result. Very often I think also in the physical sciences when I have some kind of disparity between theory and empirical.

FJ: Talking about complexity, any science, including economics, are trying to discover theories to real life problems, trying to find solutions. Now some problems actually are not easy to be¡­

RA: Let me just interject. You asked also about experimental economics. Now experimental economics is something which has in fact for the last ten years or so, has become quite prominent it's a whole school of what is called behavioral economics, which has been¡­ they do experiments. But in fact, unlike the work in empirical economics, the work in experimental or behavioral economics does not accord very well with theory. And then I think there's a fundamental difference between the social sciences and the physical sciences. Because I think when you try to do experiments with people, you are taking them out of the natural environment and you are removing them. And the results that you get from the experimental economics therefore are quite unreliable. I think in real life, which is what people study in empirical economics, people behave much more in accordance with the predictions of theories than they do in¡­

FJ: Okay, I see. I understand. Now let me get to another question. So you and your students and your co-workers are conducting research at your center of rationality so what's your perspective of¡­ what's your unique definition of rationality in an economical way. Whether it's a win and lose, how do you interview rationality economically?

RA: The way we define rationality¡­ a person is rational if he tries to use effectively given the information he has. In other words, the person does the best he can for his own purposes, for advancing his goals, given what he knows. This is my definition of rationality. And I think people usually do that. Not always, but I think on the whole, I think we can assume that people are advancing their own interests as best as they can given the information.

FJ: Okay, I see. Now I'll get to my next question. I have two or three more questions to go. So Professor Aumann, in terms of complexity, economics like other sciences is actually is trying to discover theories and apply those theories to real life problems try to find solutions. Now some problems are computationally hard, which means that they are not solvable even given infinite time. For example in social sciences, in the problem of wealth and poverty, the gap between the wealthy and the poor cannot be easily bridged. And also the problem war and peace we cannot stop war, at least nowadays. So what's your perspective on these complexity issues in Micro- economics?

RA: Well I don't think that the problems of war and peace or poverty are necessarily¡­ is not one of complexity¡­ I think there are other things going on, I don't think we have studied the matter of war before but I already discussed this matter of war and peace in my previous remarks¡­ I think the disparity between the poor and the rich¡­ that also, I don't think is a matter of complexity. Complexity is not the problem over there. I think that people has to be motivated¡­ there are two answers, I think, to the matter of poverty: one is motivation, and one is education. I think that education is really the key to well-being. I think people who are educated, you give them a tool to advance themselves then they will advance themselves. That is, I think people have to have the right tools and the key there is education. And the other part of the key is motivation. So you really have to have people motivated. You have to¡­ it's not enough to give them the tools to advance themselves, but you also have to give them a good reason for advancing themselves. You know, I was in Vietnam a few months ago, last summer. And Vietnam is really an amazing place. China also in an amazing place. I've been to China now 3 or 4 times it really is a place which is absolutely amazing on the way that it is jumping forward in its abilities and technologies. I think the key to that is education and motivation. Vietnam is a communist country, China is also a communist country, but Vietnam about 20 years ago, saw that the people there was starving and they decided, in-spite of being a communist country, to go to a market economy. And they are making a big step forward because they went to a market economy. And they also have education. I was told that they have a very high literacy rate -- over 95% of the people in Vietnam know how to read and write. And so they are doing what they can to educate the people, to give them the tools. And then also, by going to a market economy, they are motivating them. For each person to try to advance himself. They've given them the tools to advance themselves and they've given them the motivation. And that is what is making the economy of Vietnam surge forward. Now China I think is trying to advance like Vietnam in fact, they've really done a tremendous amount to go to a market economy, and to educate its people ¨C those are the two keys. I don't think complexity is a problem¡­ I mean, complexity is a problem in many areas but I think in the area of poverty and in the area of war and peace, I don't think the main problem is one of complexity.

FJ: Yes, I agree. Actually this probably has some relation with Game Theory because as you know, two individuals, or two businesses, if they are both highly motivated, and also two individuals both receive high education¡­ are highly educated¡­ in several decades, in 40 or 50 years, those two individuals may have radically different achievements business-wise or personally. So, what happens in this phenomena¡­ in adapting Game Theory, what happens to this case?

RA: Well I mean, I can't give you an answer to that unless you specify the problem a little more precisely. It could happen that one individual does better than another, of course there's some luck involved and some people don't have access to the information which they require. You know the ups and downs¡­ you know you wouldn't have everybody being precisely equal. But I think we can strive through this situation, there will be¡­ people will be¡­ (FJ: too many variables) ¡­some people are better off than other people. The gap itself¡­ I don't think the gap is something so incredibly undesirable, I think we do need to eliminate it as much as possible¡­ I don't think we can eliminate it completely, by the way. Even the bible says that there will always be poor people. It's something that cannot be eliminated entirely. And poverty is also something relative. I mean you can have situations where people are poor but they still have a television set¡­ so that's not so bad. If you have a place to sleep and you have clothing, and you have food to eat¡­ then maybe somebody else has more money than you do, but that's not so terrible. I think that everybody has to have the basic needs for life¡­ but I don't think one has to strive for equality as an end in itself. People don't have to be equal. People have to have basic necessities, and they have to be given the tools to improve their situation, and they have to improve their situation. But if somebody has the basic necessities of life, and he prefers to stay where he is, I don't think that that is a terrible situation. I think equality as a goal is not something that I would give the highest priority to.

FJ: Yes, I agree. Especially in the Game Theory competition. So before I let you go, I have two more questions. So Professor Aumann, during the past two decades, global-wise have been advancing in a great pace. Of course this is due to technical breakthroughs and business innovations. Do you think it is being driven by grass roots?

RA: I mean, they think leadership¡­ but you can't make this kind of progress without grass roots being involved also. It's like what we were saying before. People go out and they take some kind of enterprise, they take some kind of initiative. Some people take initiative, other people follow along, it's a combination.

FJ: My last question would be¡­ could you extend any clear advice to those people who are working on basic science and also on engineering¡­ professionals?

RA: In fact that's one of the things, when I was in China last spring¡­ and in May I was in China. And it's something that I said several times and I'm glad you're picking up to that. China has put in a lot of investments into infrastructure. Physical infrastructure ¨C roads, railroads, buildings¡­ and also intellectual infrastructure -- tremendous amounts of new university, institution of higher learning, schools, those things are very very important. And I was really very struck by them. But I think there's something that could still be improved, and that is ¨C infrastructure on basic science. In other words, I believe that engineering is extremely important but I think the real advances in engineering are driven by advances in basic sciences. And if you do not have a big investment in basic sciences, then I think you actually will also lag behind. So I think if you really want innovation in engineering and applications, then at the same time, you have to have a very strong investment in basic sciences. It's like what I was saying before about war. First we have to understand at the same time that we try to resolve specific conflict, we also have to understand war. We have to simply understand that without a view to anything specific about it. And in science also, while it is very important to have engineering advances, the engineering advances will be second place, unless at the same time you have a very strong drive to advance basic sciences.

FJ: Yes, I agree. So this interview with Professor Robert J. Aumann at Hebrew University of Jerusalem. He's a Nobel Prize winner of year 2005. Professor Aumann, thank you for your time. Highly appreciate it.

RA: Thank you very much.

FJ: Okay bye-bye.


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