This conference abstract within a meeting report argues that game theory changes the treatment of both complementarity and substitution in economics. Morgenstern challenges an asymmetry in prevailing theory: complementarity is regarded as troublesome because value is nonadditive, whereas complete substitutability is presumed to assure identical values for interchangeable units. His argument moves from game theory’s capacity to describe complementarity to its more disruptive consequences for substitution.
Morgenstern locates the difficulty of complementarity in both Austrian imputation theory and the modern treatment associated with Hicks, while noting Samuelson’s recent denial of its great importance. Game theory instead makes the advantage of combination central:
The theory of games is designed to deal fully with nonadditive value which is found to be significant in all essential games, i.e., those where there is an advantage in combining.
The characteristic function of the n-person game is presented as a complete description of economically relevant complementarity. Nonadditivity thus becomes a constitutive feature of the analysis, rather than an obstacle to assigning separate factor values.
The sharper claim concerns substitution. Simple games supply examples corresponding to economic situations in which factors are substitutable, yet no values can be assigned to them. Morgenstern states that this difficulty emerges with six players or factors:
These are, therefore, counter-examples that serve to upset the above-mentioned belief that substitutability is an assurance that fully determinate equilibria of the type that economic theory is looking for can be found.
The conclusion redirects inquiry from determinate equilibrium toward the more complex game-theoretic notion of “solution.” The abstract announces rather than demonstrates the examples; its significance lies in separating substitutability from guaranteed valuation and equilibrium determinacy.
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