Fun & Games

• Position: Editor-in-Chief of Finance & Development.

People in Economics

IT may seem strange that Avinash Dixit, who grew up in the tropical heat of India, has a shelf in his living room of neatly arranged books on icebound Antarctic expeditions. But the owlish Princeton University professor has a simple explanation: “They’re ideal for illustrating game theory strategies. Almost always an expedition had a fatal flaw that guaranteed defeat compared with the rival that succeeded.

“The Brits, for example, thought they knew it all, and had nothing to learn from anyone else,” he said, while slicing sandwiches for lunch in his sparsely equipped kitchen. “Scott of the Antarctic, for example, thought that the hierarchical structure of the British Navy was the right way to organize his team, when a more open participatory organization would have been better for his small group’s fateful attempt to reach the South Pole.”

Dixit, who compares academic research to rock climbing—it’s “the breathtaking view from the top” that makes it all worthwhile—is a passionate advocate of game theory and argues it has become part of the basic framework of economics.

He was drawn to it when he discovered The Strategy of Conflict by Thomas Schelling, one of the pioneers of the study of bargaining. “That, to me, made game theory come alive,” said Dixit, in an interview at his Princeton, New Jersey, townhouse. “As Schelling says, ‘When two trucks carrying dynamite meet on a single-lane road, who backs up?’”

Making learning fun

Teaching game theory, he insists, must be fun—he has won awards for his teaching prowess—and he tries to illustrate key concepts with tales from films, books, and real life.

Dani Rodrik, professor of international political economy at Harvard, says Dixit was the best classroom teacher he ever had—he never treated anything as silly or obvious. “No matter how stupid a question seemed, he would stop, raise his hand to his chin, narrow his eyes, and think a long time about it, while the rest of us in the classroom would roll our eyes at the stupidity of the questioner,” said Rodrik. “Then he would say, “Ah, I see what you have in mind . . . ,” and he would roll out an answer to a deep and interesting question the student had no idea he had asked.”

“What makes him special,” says former student Kala Krishna, now an economics professor at Penn State, “is that more than anyone else I know, he sees economics as an inescapable part of life: from books, movies, negotiating with a taxi driver—everything has economic content. He truly loves economics, and you can see how much he is enjoying himself doing it.”

Others praise his wit. “Avinash Dixit is one of my favorite economists, in part because he has a trait that is extremely rare among economists: a good sense of humor,” said Steven D. Levitt, coauthor of the best-selling book Freakonomics.

Dixit, who received his doctorate from the Massachusetts Institute of Technology (MIT), taught in Princeton’s economics department from 1981 to 2010. He attained recognition early on for his work with Joseph Stiglitz on imperfect markets and what is referred to by economists as monopolistic competition. This concept offers an intermediate theoretical ground between pure monopoly, in which one firm controls the market, and perfect competition, in which there are so many competitors none has any market power.

He is also famous for his textbook on trade with Norwegian economist Victor Norman, The Theory of International Trade, which was enormously influential, and his work on oligopoly and industrial organization.

Path-breaking model

What became known as the “Dixit-Stiglitz” model underpins a huge body of economic theory on international trade, economic growth, and economic geography—a model tapped by Paul Krugman, who won the Nobel Prize in 2008.

The model, first published in 1977, became a building block for others in the new fields of endogenous growth theory and regional and urban economics—what journalist David...