The Collaboration Between Oskar Morgenstern and John von Neumann on the Theory of Games

This file is a single-author retrospective article by Oskar Morgenstern in the Journal of Economic Literature. Its scope is the intellectual, personal, and institutional history behind Theory of Games and Economic Behavior (1944). Morgenstern’s thesis is that game theory emerged from a convergence: his own dissatisfaction with prediction, perfect foresight, and equilibrium economics met von Neumann’s mathematical theory of games, producing a new framework for interdependent rational action.

Morgenstern first reconstructs the prehistory in his 1928 work on forecasting. Economics, he argues, differs from mechanics because its variables may include other agents’ decisions. His “dead” and “live” variables anticipate the strategic core of game theory:

This states exactly one of the basic tenets of game theory where one can maximize only in the first case when the variables of nature are "dead," but one is confronted with a conceptually different matter in the second case, since the "live" variables represent other "wills," other "economic acts," which may interfere with, or enhance, one's own plans, as I expressed the matter then.

This move leads into his critique of perfect foresight. The Sherlock Holmes–Moriarty example matters because it shows that reciprocal anticipation cannot be solved by simple prediction or optimization.

I showed that the assumption of perfect foresight leads to paradoxes and is inadmissible for general equilibrium theory, which was thus found critically wanting.

The narrative then turns from Vienna’s philosophical and mathematical milieu to Princeton. Čech, Menger, Wald, Gödel, Schlick, and the Vienna Circle form the background; von Neumann’s 1928 paper supplies the missing mathematical instrument. Morgenstern presents the later Princeton encounter not as accident but as the meeting of two unfinished programs.

There was an instantaneous meeting of minds and a spontaneous empathy between us.

The article’s central section follows the transformation of an intended explanatory paper into a large book. Morgenstern emphasizes genuine joint authorship: the work grew through walks, lectures, drafts, and longhand collaboration. A major conceptual move was the introduction of expected utility, needed because payoffs could not simply be treated as money.

It did not take us long to construct the axioms on which the present theory is based that gave us a firm utility concept, that of an expected utility, numerical up to a linear transformation.

The composition history also explains the mathematical style of the book. The turn to convexity, prompted by Morgenstern’s discovery of Ville’s treatment of minimax in Borel, helped replace less elementary fixed-point methods. The collaboration was both technical and intimate:

We wrote virtually everything together and in the manuscript there are sometimes long passages written by one or the other and also passages in which the handwriting changes two or three times on the same page.

Morgenstern’s account of publication—title, subsidy, wartime printing, revisions—serves a larger claim about the book’s place in economics. It did not merely add tools to existing theory; it challenged the assumption that economic problems are ordinary maximization problems. Its relevance therefore extends beyond economics narrowly conceived.

Thus the scope of the book extends far beyond economics, reaching into political science and sociology, but economics was of more immediate concern and interest to us.

The final pages trace reception: early reviews by Hurwicz, Marschak, and Wald; the second and third editions; translations; conferences; and the explosion of game-theoretic literature. Morgenstern also connects the collaboration to von Neumann’s expanding-economy model, later generalizations, statistics, computation, and automata. The essay closes as both origin story and memorial: game theory appears as a new science of strategic interaction, but also as the product of friendship, shared style, and intellectual urgency.

We did an enormous amount of work in a very short time, but it was unceasing pleasure and never a time of drudgery.