On October 17, John F. Nash Jr.’s Nobel Prize medal for Economics will be sold to the highest bidder at Sotheby’s in New York. The estimated price is $2.5 million to $4 million.
This is the Nobel medal that John Nash received in 1994:
I wonder what a Nobel price tells us.
The Nobel Economics prize is slightly different from the other Nobel awards because it was first given in 1969 through an endowed gift from the Sveriges Riksbank. Made of 23-carat gold, the medal is worth $9000 or so. On February 26, 2015, Simon Kuznets’s medal was the only other economics prize that was auctioned.
Below you can see the sale prices ranged from close to $17,000 to just below $4.8 million:
Which is Worth More? The GDP or Game Theory?
Simon Kuznets (1901-1985) gave us the GDP.
Concerned that the country could not precisely answer “How are we doing?” during the 1930s he created the statistical approach for calculating annual U.S. production and economic growth. Handy during World War II, national income accounting illustrated our productive capacity. Once we knew what we we had, we could determine the land, labor and capital available for war production. The steel we had been using for cars told us how many airplanes we could make. Cotton shirt production provided the information we needed for making uniforms. People have said that Kuznets’s national income models were as important as the guns that won the war.
John Nash (1928-2015) gave us game theory.
Picture for a moment 2 (guilty) suspects. Questioned by the police, each one can confess or remain silent. When one confesses and the other does not, the talker gets a less severe sentence. If both are silent, then they are released; if both confess, then they get equal jail time. The prisoners have a dilemma because each one’s fate depends on what the other prisoner does. And yet, neither knows the other’s strategy.
Extending far beyond jail to corporate competition and disarmament negotiations, the prisoner’s dilemma (a non-cooperative game) is about game theory and the research for which John Nash won his Nobel Prize.
Our Bottom Line: Price System
Market generated prices convey a message. Two dollar gas says, “Buy me. I am cheap.”
For a Nobel Prize medal, the price might say something about the recipient. What is the message when a John Nash medal is projected to get so much more than the Simon Kuznets medallion?
My sources and more: For some auction history this WSJ article has the history while the NY Times has the update for the Nash auction. Meanwhile, econlib is always a handy source for bios. Please note that parts of this post were previously published at econlife.