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New light on the games nations, and people, play

Possessing a long, snow-white beard and a quick wit, Robert Aumann cuts a classic Jewish grandfather figure. And he credits study of the Talmud with instilling the concepts that made him this year's co-winner of the Nobel Prize in economics.

As a "yeshiva boy from New York," he says, "studying the Talmud" - replete with conflicts between rabbis trying to work out their disputes - "shapes your mind."

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Professor Aumann, along with Thomas Schelling, a professor emeritus at the University of Maryland, were awarded the prize Monday for using game theory to analyze how individuals move from conflict to cooperation.

Game theory is considered the "science of strategy," an interdisciplinary field that studies how to calculate all the possible outcomes of a move by any of the players. Game theory can be used to determine what actions the players are likely to take to attempt to secure the best outcome for themselves in a trade war, a labor dispute, or a shooting war.

One of Aumann's contributions, said the Nobel committee, was taking "behavior which used to be classified as irrational" and making it "understandable and rational."

Born in 1930 in Frankfurt, Germany, Aumann went to America with his parents at the age of 8. He earned a PhD in mathematics from the Massachusetts Institute of Technology and then joined the MIT math department. Today, he's a professor emeritus of the Hebrew University of Jerusalem.

Aumann, according to the Nobel Prize committee, was the first researcher to conduct a full-fledged mathematical analysis of "repeated games" - how parties interact many times over a long period.

"The theory of repeated games enhances our understanding of the prerequisites for cooperation: Why it is more difficult when there are many participants, when they interact infrequently, when interaction is likely to be broken off, when the time horizon is short, or when others' actions cannot be clearly observed," the Nobel committee said in making its announcement. "Insights into these issues help explain economic conflicts such as price wars and trade wars, as well as why some communities are more successful than others in managing common-pool resources. The repeated-games approach clarifies the raison d'ĂȘtre of many institutions, ranging from merchant guilds and organized crime to wage negotiations and international trade agreements."

During his press conference Monday, Aumann offered an example of the power of patience and continued interaction by citing a labor dispute at his own university in the early 1990s.

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The university faculty - including the professor - was on strike for two months while embroiled in a funding battle with the government. When a deal was finally brokered, many critics deemed it a shame that so much time had been wasted when clearly, a solution was possible.

But the economist and mathematician says that the time was necessary for differences to be worked out - and for each side to prove to the other how serious it was about its demands.

Aumann's work also shows that it may be useful to have a mediator who speaks to the parties separately, and in some cases gives different information to each party. He and other game theorists have found that given time, the parties can get to peaceful cooperation - or "an equilibrium" in game-theory speak - that offers benefits to all sides, even when they still have short-term conflicts of interest.

Asked about how his theories apply to the conflict between Israelis and Palestinians, Aumann says he doesn't have a prescription for peace here.

"A war is a parallel of a strike," he says. "And the sooner we see that war is rational, the better we will understand it. We have to understand it first and what drives it - and see that it's driven by people who are doing it for legitimate reasons. To deem those people extremists - that is the mistake."

But he told the Associated Press that the unilateral Israeli pullout from Gaza in August sends "a bad signal to our cousins" that "all you guys have to do is to increase the terror ... and we will capitulate."

Other academics in Israel have long talked of Aumann as a quasi-genius deserving of a Nobel Prize. And yet, at least according to some, his theories have not had a great influence to date. Moshe Lissak, who is the winner of the Israel Prize and Hebrew University's most noted sociologist, says that most people in the social sciences here lean in an opposite direction - against rationality.

"The post-modern sociologists, who are quite strong now in Israel, reject these rationality models. Professor Lissak points out that another Israeli academic - Prof. Daniel Kahneman of Princeton University - won the Nobel prize in economic sciences in 2002, and his model "is exactly the opposite - it proves the nonrationality of conflict."

"The application of these abstract theories is very hard to do," adds Lissak. "But more and more, the concept of his [Aumann's] models are penetrating into economic thinking. It works in high-level, long-term thinking, not in the day-to-day."

To some extent, Aumann might agree. He isn't particularly optimistic about the Israeli-Palestinian conflict. "It's been going on for at least 80 years and as far as I can see it is going to go on for at least another 80 years. I'm sorry to say it," he told reporters. "This is an ongoing conflict. We study ongoing interactions."

But he says that game theory can help people understand the patterns of the conflict better, and be part of a solution. Apparently, Palestinian leader Mahmoud Abbas agrees.

After the prize was announced, Mr. Abbas called Aumann to congratulate him and asked for his help. "The Israeli government has not asked for my help," Aumann said with a chuckle, "but I got several calls from Ramallah."