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Mon Jun 8, 2015, 06:08 PM

Varoufakis' Tribute to John Nash, Ideal Money


In conversation with John Nash Jnr on Ideal Money

Posted on June 2, 2015 by yanisv

A conversation I was privileged to have with John Nash in June 2000 is posted below as a small tribute to a great man.
(The conversation was motivated by a talk John Nash Jr gave in Athens in 2000 entitled IDEAL MONEY. The text of the conversation below was published in 2001 as a chapter in a volume, available only in Greek, entitled Game Theory: A volume dedicated to John Nash, edited by K. Kottaridi and G. Siourounis)
Yanis Varoufakis: Professor Nash, in your talk on Ιδεώδες Χρήμα (Ideal Money, June 2000) at the Old Parliament House in Athens, you commented, in relation to the Eurozone, that membership of a club makes sense only if it is exclusive. (Greeks know this well enough since the earlier consensus among experts that Greece would not be allowed in, made the project of entry into the Eurozone particularly popular here.) Then you strengthened your claim by suggesting that if everyone joins an alliance, the alliance is absurd. But is it? Does a Grand Alliance not gain meaning if its establishment entails unanimous agreement by all members regarding its institutions? Is it not akin to a Grand Bargain over the precise mechanism for distributing gains? (Something like agreeing on the properties a cooperative solution should possess?) And if so, does a Grand Alliance not make sense as a framework for conflict resolution?
John Nash Jr: The words ‘club’ and ‘alliance’ do not have the same meaning. This is why in game theory we use a third word which also differs conceptually from the first two words: ‘coalition’. It is of course true that it is possible to have a coalition between all the nations (or the states) of the world. The Universal Postal Union, with its Berne headquarters, is a good example. Mind you, it would be far fetched to refer to this union as a ‘club’. I am not sure I can recall the precise phrase I used in my talk. Nevertheless, a truly Grand Coalition, that includes ‘everyone’, is an important and natural concept of game theory. It is the means by which an efficient (in the context of Pareto’s definition) agreed resolution to disputes can be imagined following mutual concessions.
Yanis Varoufakis: Regarding your specific proposal (that is, a new Gold Standard based not on Gold but on a basket of suitably weighted material commodities), is your ‘ideal money’ meant as a proxy for transferable utility (such that the outcome of exchanges can become genuinely independent of the way payoffs are calibrated)?
John Nash Jr: The value of effective transferable utility is obvious. However, as far as contemporaneous transactions within the ‘walls’ of a domestic economy are concerned, the transferability of values can be eased equally well by ideal and non-ideal money. But when it comes to inter-temporal, long-term transactions, e.g. mortgages, the difference between ideal money and typical European currencies would be somewhat intense, if not dramatic.

(For more, see link above.)


Mathematician John Nash spoke of tweaking Einstein’s theory of relativity days before death


Three days before Nash and his wife, Alicia, were killed in a car accident on the New Jersey Turnpike, the famed mathematician discussed his changes to Einstein’s theory in Norway on May 20.

“There’s nothing secret about the equation Nash was studying,” French mathematician Cédric Villani told the Daily News.

Nash, 86, had been working on a modified equation for general relativity — which describes movement relative to space and time — for decades, Villani said. Nash even discussed his ideas with Einstein in the ’50s, but their talk was “not productive.”

The Nobel Prize winner “thought he had a better model” for the theory first devised in 1916, said Villani, a Fields Medal winner.

There are some discrepancies between the theory of relativity and other areas of physics, Villani said.


John Nash, ‘A Beautiful Mind’ Laureate, Dies in Crash

John Nash, the Princeton University mathematician and Nobel laureate whose towering intellect and descent into paranoid schizophrenia formed the basis of the Academy Award-winning movie “A Beautiful Mind,” has died. He was 86.
Nash and his wife, Alicia, were killed when the taxi they were riding in crashed on the New Jersey Turnpike Saturday afternoon, ejecting the couple, New Jersey State Police Sergeant Gregory Williams said Sunday.
The Royal Swedish Academy of Sciences awarded the 1994 Nobel Prize in economics to Nash, John Harsanyi of the University of California-Berkeley and Reinhard Selten of the University of Bonn in Germany for their work in game theory, which seeks to understand how people, governments and companies cooperate and compete.
“John’s remarkable achievements inspired generations of mathematicians, economists and scientists who were influenced by his brilliant, groundbreaking work in game theory, and the story of his life with Alicia moved millions of readers and moviegoers who marveled at their courage,” Christopher Eisgruber, president of Princeton University, said in an e-mailed statement.

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