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“Economics I think is sort of like accounting — you know, it doesn’t immediately have any morals. You could go into welfare economics, you try to think of some human values or you go into variations.” – John F. Nash Jr. , The University of Scranton, November, 2011.

This quotation from John Forbes Nash Jr. is taken from a lecture Nash gave on “Ideal Money and the Motivations of Savings and Thrift”, some 61 years after the publication of his first game theory paper simply named “The Bargaining Problem” (1950).

“The Bargaining Problem” is significant because it is believed to be one of the first examples where an axiomatic approach is introduced into the social sciences. Nash introduces “The Bargaining Problem” as a new treatment of a classical economic problem — regarding it as a nonzero-sum, two-person game, where a few general assumptions and “certain idealizations” are made so that values are found for the game.

The genealogy from “The Bargaining Problem” to Nash’s later works on Ideal Money is established, where in “The Bargaining Problem” Nash remarks upon the utility of money:

“When the bargainers have a common medium of exchange the problem may take on an especially simple form. In many cases the money equivalent of a good will serve as a satisfactory approximate utility function.” John F. Nash Jr., The Bargaining Problem (1950). Click the image above to subscribe!

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