Jack Hirshleifer: A Nobel Prize left unbestowed

Abstract

Jack Hirshleifer contributed to investment theory, information economics, conflict, and bioeconomics, clarified the foundations of investment and capital theory in the spirit of Fisher, and made basic contributions to the analysis of covariance risk, gambling and insurance, the Modigliani-Miller Theorem, and public investment through a focus on time, uncertainty and information. He formulated new models of public goods, added to understanding of contest success functions, and explained the paradox of power. He developed a general equilibrium approach to conflict jointly encompassing production, exchange, appropriation and defense. He analyzed the emotions as guarantors of threats and promises, proposed alternatives to the tit-for-tat strategy, considered the bioeconomic causes of war, and investigated the truthful signaling hypothesis. Jack Hirshleifer was a leading scholar and original thinker of the 20th century. His scientific contributions have left a Nobel Prize unbestowed.Keywords: Investment and capital theory; Information economics; Applied theories of the firm; Uncertainty and information; Price theory; Economics; Political economy; The economic theory of conflict; Public goods; Production; Appropriation; Fighting; Combat; War; Bioeconomics; Biology; Evolutionary economics; Evolutionary psychology; Water supply and resource economics Beginning in 1950, Jack placed the theory of investment, interest, and capital on a firm theoretical foundation. He was also a founding father of the information economics revolution. In particular, he felt that investment theory was a confused mass of ill-defined concepts that were in dire need of a clear integrative framework. He found the basis for that framework in the work of Irving Fisher, and was thereby able to dispel controversies and distinguish lucidly between past ideas that were sensible and those that were confusions.From the late 1970s and thereafter, he was a leading economist contributing to our understanding of phenomena that had been usually studied within disciplines such as political science and biology. Jack was an economic theorist with broad-ranging interests. His fields of specialization included investment and capital theory, information economics, applied theories of the firm, uncertainty and information, price theory economics, political economy, the economic theory of conflict, public goods, production, appropriation, combat, war, bioeconomics, biology, evolutionary economics, evolutionary psychology, water supply and resource economics. During the period 1950-2005 he authored 7 books, some 75 articles, and 7 book reviews.Section 2 sets out Jack Hirshleifer's background and career. Section 3 discusses investment theory and the information economics revolution. Section 4 proceeds with the expanding domain of economics, conflict and sociobiology. Section 5 considers the provision of public goods. Section 6 is on conflict and Section 7 on biology. Section 8 provides a concluding evaluation of Jack Hirshleifer's scientific contributions.

Inheritance is a Surjection: Description and Consequence

“…Hirshleifer was an economist who showed that the logic of economic evolution (in effect, classical physical dynamics, as used in the computations of the Section 3 predictions) could allow biology to favor "sacrificial" individuals-"altruistic evolution" was thus found to be favored by ordinary classical mechanics devices. Indeed, much of our current understanding of how Darwinian theory explains human culture and how human creativity using mental processes causes social evolution, are fundamentally due to Hirshleifer [99]; see also [100].…”

The paradox of power revisited: internal and external conflict

“…As previously mentioned, Hirshleifer (1991) introduced the notion of the POP, while Skaperdas (1992) and Skaperdas and Syropoulos (1997) further developed and refined his analysis. Discussing the empirical relevance of the POP, Hirshleifer (1991) assigns a fundamental role to the effectiveness of conflict (see also Hausken 2005). However, to the best of our knowledge, none of these works consider the possibility that the POP operates at different levels, simultaneously holding within groups and failing for conflict across groups.…”

“…These theoretical predictions are in line with several well-known empirical regularities on international conflict. For example, Haas (1965) and Zinnes (1972) document that developed countries are more prone to engage in foreign conflicts than developing countries. Hazlewood (1973) and Kegley et al (1978) show that countries' internal turmoil correlates negatively with external conflict engagement.…”