# Leonid Hurwicz

Leonid "Leo" Hurwicz (August 21, 1917 – June 24, 2008) was a Polish-American economist and mathematician. He was among the first economists to recognize the value of game theory and was a pioneer in its application. Hurwicz shared the 2007 Nobel Memorial Prize in Economic Sciences with Eric Maskin and Roger Myerson for their work on mechanism design.

## Quotes

* Had it merely called to our attention the existence and exact nature of certain fundamental gaps in economic theory, the Theory of Economic Behavior by von Neumann and Morgenstern would have been a book of outstanding importance. But it does more than that. It is essentially constructive: where existing theory is considered to be inadequate, the authors put in its place a highly novel analytical apparatus designed to cope with the problem. It would be doing the authors an injustice to say that theirs is a contribution to economics only. The scope of the book is much broader. The techniques applied by the authors in tackling economic problems are of sufficient generality to be valid in political science, sociology, or even military strategy. The applicability to games proper (chess and poker) is obvious from the title. Moreover, the book is of considerable interest from a purely mathematical point of view.
** Leonid Hurwicz. "The Theory of Economic Behavior," The American Economic Review, Vol. 35, No. 5 (Dec., 1945), pp. 909: Lead paragraphs of the article
* Traditionally, economic analysis treats the economic system as one of the givens. The term "design" in the title is meant to stress that the structure of the economic system is to be regarded as an unknown. An unknown in what problem? Typically that of ﬁnding a system that would be, in a sense to be speciﬁed, superior to the existing one. The idea of searching for a better system is at least as ancient as Plato’s Republic, but it is only recently that tools have become available for a systematic, analytical approach to such search procedures. This new approach refuses to accept the institutional status quo of a particular time and place as the only legitimate object of interest and yet recognizes constraints that disqualify naive Utopias.
** Leonid Hurwicz, "The design of mechanisms for resource allocation," The American Economic Review, (1973): 1-30.
* Since I shall be indicating my disagreement with some of the points made by Professor Israel Kirzner, let me stress that I am in complete sympathy with his point of departure, namely, the emphasis on the dispersion of information among economic decision-making units (called by him, "Hayek's knowledge problem") and the consequent problem of transmission of information among those units. Much of my own research work since the 1950s has been focused on issues in welfare economics viewed from an informational perspective. The ideas of Hayek (whose classes at the London School of Economics I attended during the academic year 1938-39) have played a major role in influencing my thinking and have been so acknowledged.
** Leonid Hurwicz, in "Economic Planning and the Knowledge Problem" : A Comment" in Cato Journal Vol. 4, (Fall 1984), p. 419
* My work in this area started around 1950 when I was still with the Cowles Commission. I was writing a more or less expository paper dealing with activity analysis…and happened to use the term “decentralization,” which was then often applied to the market mechanism as a sort of a selling point. But when I used the word “decentralization” I thought I should explain what I meant. So I made a footnote mark, went to the bottom of the page, and began writing, “By decentralization we mean…” But then it struck me that I did not know what we meant by decentralization. That was the beginning of many years of work trying to clarify the concept, because I thought that if we think this property is so important, we should be able to define what it is.
** In: David Warsh, "The Road to a System that Works (Without Shooting People)" at economicprincipals.com, October 21, 2007.
* My interest had been in a broad class of situations, broader than the advanced industrial market economies, including situations in third world countries, and in countries attempting to have some kind of socialist approach to their problems. I have been interested in how one can construct efficient mechanisms that have the decentralization features similar to a market but that do not necessarily resemble a market. For this purpose, I formulated the notion of an informationally-decentralized economy in which perfect competition was just a very special case...
** In: David Warsh, "The Road to a System that Works (Without Shooting People)" at economicprincipals.com, October 21, 2007.
* There were times when other people said I was on the short list, but as time passed and nothing happened, I didn’t expect the recognition would come because people who were familiar with my work were slowly dying off.
** Quoted in: William Grimes, "Leonid Hurwicz, Nobel Economist, Dies at 90" at nytimes.com, June 26, 2008.

## Quotes about Hurwicz

* Hurwicz talked in 1949 about the need to model strategic behavior. He said that Keynesian models were ignoring the fact that individuals aren't just stupid players who responded passively to what the government did, but that they had the option to change their strategy when the government changed its strategy. That's the rational expectations program. He was ignored for 20 years or more.
** Thomas J. Sargent, in Conversations with Economists (1983) by Arjo Klamer