Explaining Southern California's economy

FAQ: All you need to know about Al Roth and Lloyd Shapley's economics Nobel Prize

Nobel Economics

Reed Saxon/AP

Shortly after being awakened and learning the news, Lloyd Shapley, one of two Americans who were awarded the Nobel economics prize, talks to a reporter from his home in the Pacific Palisades area of Los Angeles. A giant of "game theory," Shapley, retired from UCLA, shared the prices with Al Roth, who's coming to Stanford from Harvard.

Harvard Business School Professor Alvin Roth, now a visiting professor at Stanford University, and UCLA mathematician-economist Lloyd Shapley have been awarded the 2012 Nobel Prize for Economics (which isn't exactly like other Nobel Prizes; being awarded only since 1969).

They didn't really work together but developed complementary insights into something called "game theory" and its real-world applications.  

Q: What is game theory?

A: Game theory is a branch of mathematics that was developed by ultra-super-mega genius John von Neumann. It concerns, in a vulgar nutshell, decision-making in a competitive framework. Ever heard of a "zero-sum game?" That's game theory — two players, one total winner and one total loser, as in a chess match. The math is 1 + -1 = 0, hence a "zero-sum game," with one point up for grabs. The dynamics of this type of reasoning were immediately attractive to Cold War strategists, who had to figure out how to "win" a nuclear war. Shapley, 89, is at UCLA now but based on a statement that the university released, is retired. He spent nearly 30 years at the RAND Corp. in Santa Monica, which was the global epicenter of game theory as a geopolitical discipline. Ever seen the movie "War Games?" It's the most famous example ever of (simplified) game theory in pop culture:

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New Yahoo CEO Marissa Mayer gives liberal arts grads hope

Google Previews New Search Technology

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Marissa Mayer speaks during an announcement in San Francisco, California. She says verbal skills are just as important as math ability for future programmers.

Marissa Mayer, the new, 37-year-old CEO of Yahoo, is a computer scientist through and through. She graduated from Stanford and was officially Google employee number 20. Okay, so maybe she doesn't program day-to-day anymore. But she's a reliable source of insight about the craft. 

Or is it an art? A liberal art? Here she is in a Daily Beast interview, talking about what makes a good programmer:

“One of the more interesting things they’ve found is that programming aptitude and excellence is more tied to verbal SAT scores than to math SAT scores,” she explained. “Beyond basic mathematical aptitude, the difference between good programmers and great programmers is verbal ability.”

Interesting. And maybe something the hardcore programmer community, with their all-night hackathons, doesn't want to hear. Could it be that Mayer is a more radical chief executive, in terms of how she thinks about preparation for the Silicon Valley life, than we've been led to think?

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LA startups: Tech makes all the difference

Gaikai Screen Shot

Gaikai, an L.A.-based gaming startup, just sold to Sony. It was engineering talent that made the company successful.

Nate Redmond, the managing director of L.A.'s Rustic Canyon, an early stage venture capital firm, had a must-read piece at TechCrunch over the weekend. Taking as his jumping-off point Sony’s purchase of of gaming startup Gaikai for $380 million (Rustic Canyon was an investor), he makes a case that something important is happening on the Los Angles startup scene:

LA has once again become a hotbed for technical leadership, as indicated by the flurry of investment activity. Entrepreneurs in the LA region attracted $567 million in venture capital in the first quarter of this year, 50% greater than the NY Metro area in the first quarter of the year, according to PriceWaterhouseCooper’s Money Tree report. Between the outstanding technical talent and the passion and vision of great founders, those dollars are being invested into technology-driven companies that break the stereotype of startups in LA.

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