CS and ECON
RAKESH VOHRA
KELLOGG SCHOOL OF
MANAGEMENT
N O R T H W E S TE R N U N I V E R S I T Y
Brief History of Interactions
Brief History of Interactions
So, 5 minutes?
What is CS?
What is CS?
 Conception has changed over time
 Subjects once central have moved to the periphery, e.g.,
Numerical Analysis
 Subjects once on the periphery are closer to the center, e.g.,
statistics (data mining, clustering, classification, inference)
 Border is porus; Combinatorial Optimization, Graph Theory,
Combinatorics, Logic
 Even with subfields there is enormous variance, e.g., AI.
What is ECON?
What is ECON?
 Debate about it's definition, scope and label since
inception.
 Whatley: Catallactics (Science of Exchange)
 Robbins :
`is the science which studies human behavior as a
relationship between ends and scarce means which
have alternative uses.'
Obvious Similarities
 Vintage (Victorian)
 Employment of Mathematics (discrete vs.
continuous)
 Imperial: each holds a perspective that is believed
to have universal application
John von Neuman
 Game Theory
 Duality theorem of linear programming.
 Cellular automata.
 Merge Sort algorithm (according to Knuth)
 Pseudorandom numbers
Gaspard de Prony (1755-1839)
 Charged to produce log and trig tables
to between 14 and 29 decimal places.
 Inspired by Adam Smith's analysis of
division of labor
Gaspard de Prony (1755-1839)
`I conceived all of a sudden the idea of
applying the same method to the
immense work with which I had been
burdened, and to manufacture
logarithms as one would manufacture
pins'.
de Prony’s Machine
Hierarchy of 3 levels
 Top:
Adrien Legendre and Lazare Carnot:
decided on the formulas to be used in
the calculations.
de Prony’s Machine
 Middle: Given the mathematical formulas
to be used, organized the computations and
compiled the results ready for printing.
 Bottom: 60-80 unemployed hairdressers
who performed the actual computations
that required only addition and subtraction.
Babbage
 On the Economy of Machinery and
Manufactures (1835)
 Introduces notion of economies scale.
 Division of labor impacts not just
output, but wages.
Babbage
“The present volume may be considered
as one of the consequences that have
resulted from the Calculating-Engine,
the construction of which I have been
so long superintending.”
Algorithms
Algorithms in Economics
Procedure, Process, Protocol,
Tatonnement and Mechanism
 Proposal algorithm
 Top Trading Cycle Algorithm
Algorithms in Economics
Ascending Auctions
 Fictitious Play
 Backward Induction
 Rationalizability
Algorithm as Existence Proof
 Stable Matching and House Allocation
 Rationalizability of Preferences
Algorithm as Mechanism
 Auctions
 Preference Aggregation - Consensus
methods
Algorithm as Model/Dynamic
 Hannan Theorem/Experts Theorem
 Approachability
 Reinforcement learning
 Search Models in Matching Markets
 Replicator Dynamics
Complexity
Complexity: Bounded Rationality
 Herbert Simon
 Bounded Depth Automata
 Incomplete Contracts
 Imitability
 Organizational Design (Babbage and de Prony!)
Complexity: Communication
 Organizational Design
 Size of Message Spaces
Complexity: Computation
 Hardness of Computing Equilibrium
 Hardness of Manipulation (voting,
forecasting)
 MDP's
 Groebner basis
Complexity: Description
 Kolmogorov-Entropy
 Strategies in Repeated Games
Complexity: Learning
 VC dimension
 Vapnik-Chervonenkis
Mediation, Trust & Privacy
 Reputation/Repetition
 Implementation without a mediator
 Multiparty computation
 Preference revelation
 Indirect vs. Direct mechanisms
Epistemology
 Role of Knowledge in Games
 e-mail game, general's dilemma
 TARK
Social Networks
 Formation
 Information Transmission
 Distribution of wealth, income