Alvin E. Roth
Two of the most important developments in Economics in the latter half of the twentieth century are surely the extraordinary progress in game theory and in experimental economics. Reinhard Selten is one of the pioneers in both of these endeavors, and he has been a leader in each of them throughout his career. This makes him unique: no one else in the world has made such important or such sustained contributions to both fields.
This is all the more noteworthy because game theory and experimental economics have been intertwined since their beginnings. Indeed, Professor Selten cites the 1953 experimental paper by Kalish, Milnor, Nash, and Nering as one of the inspirations for his own first paper, his 1959 paper with Sauermann on an oligopoly experiment. But while several other pioneers of game theory were at least briefly involved in early experiments, only Selten was instrumental in developing both kinds of research to the point where, first game theory and more recently experimental economics too, have become part of the mainstream of economic research.
The historical connection between game theory and experimental economics is a natural one, because game theory brought to economics a kind of theory that lent itself to experimental investigation, and in some cases demanded it. The reason is that game theory seeks to provide precise models of both individual behavior and of economic environments. This concern with the "rules of the game," the institutions and mechanisms by which transactions are made, together with precise assumptions about the behavior of individuals given the information available to them, gave rise to theories that could be tested in the laboratory.
But theories precise enough to be clearly tested under controlled conditions can also be found wanting. The reason Selten's contributions to game theory and to experimental economics constitute one scientific career, and not two separate ones, is that he has been a leader in developing the theoretical implications of how games might be played by ideally rational players, and also, when these theories fail to be descriptive of observed behavior, in undertaking the related endeavor of proposing more descriptive theories. Thus Selten, the philosopher of ideal rationality who observed that equilibrium alone may not be a sufficient condition to rule out irrational play, was also the scientist who examined the limitations of perfect equilibrium (as in his chain store paradox) and even of any kind of equilibrium (as in his experimental study with Stoecker of the finitely repeated prisoner's dilemma), and he proposed novel theories of boundedly rational behavior to explain what he observed.
As economics prepares to enter the twenty first century, we will certainly need to explore further both the implications of rationality and their limitations, both normative theory and descriptive theory, and new methods of both theoretical and empirical research. In this enterprise we will have the proverbial advantage of standing upon the shoulders of giants. As his collected papers make clear, on Selten's shoulders we will find solid support for both legs.