'How Bad Things Can Happen'.(Review)

A key scene in the movie "A Beautiful Mind" purports to show how mathematician John Nash came up with the equilibrium theorem that won him the 1994 Nobel Prize. Attempting to pick up women at a Princeton bar in 1948, the young Nash realizes that he and his four friends will have a better chance of scoring should none of them approach the most beautiful woman in the room. Instead, he suggests, they should turn to less sought-after dates, boosting their chances of success. "If none of us goes for the blonde, we all win," muses Nash. What's so revolutionary about that? To find out, NEWSWEEK's Anna Kuchment spoke with Stanford game theorist Paul Milgrom, as "A Beautiful Mind" prepared to compete for the best-picture Oscar. Excerpts:

KUCHMENT: How accurately did "A Beautiful Mind" portray Nash's ideas?

MILGROM: I thought the movie did a horrible job.

How so?

First, let's go back before Nash. [Until the early 1900s] economists had abstract solutions for markets, but no role for people and strategy. They would say, "Supply equals demand." Well, what happens if the price is not one where supply equals demand?

[In the 1920s, mathematicians John] von Neumann and [Oskar] Morgenstern were the first to study two-player games like chess, but most economic transactions are not zero-sum games. They're situations, like bargaining, where all the players hope to end up better off.

What was Nash's breakthrough?