ARE Mourns the Loss of Outstanding Scholar, Esteemed Colleague and Dear Friend Leo K. Simon

January 11, 2022

The Life and Times of Leo Simon

Family Life

Leo grew up in a Jewish family in Australia. His parents had escaped from Poland before the emergence of WWII. Leo’s father achieved meaningful commercial and financial success with his business, and the family promoted the musical education of both Leo and his older brother, Geoffrey. Leo became a concert pianist before pursuing an academic career while his brother continued with his musical pursuits, becoming a conductor. Later in his life, Leo’s father migrated to California to be closer to his younger son. Leo took on the responsibility of caregiving for his father while nurturing his immediate family.

Leo’s early marriage was to a wonderful woman, Margaret, who loved Leo deeply and gave birth to their daughter, Jenny Simon-O’Neil who is now 42. Jenny, in turn, gave Leo and Margaret two grandchildren. Margaret and Leo were together when he was finishing his master’s degree in economics at the London School of Economics. They subsequently moved to New Jersey where Leo completed his PhD at Princeton University under the tutelage of Hugo Sonnenschein. Once Margaret and Leo arrived in Berkeley in 1982, they purchased a home and began one of Leo’s many renovations at his extraordinary home on La Vereda Road. Two additional children arrived from a second marriage, Alex now 32 and Lindsey now 28.

As we all know, Leo was a compassionate father completely devoted to the well-being and happiness of his 3 children. He frequently agonized about their education, fretting about their acceptances at the best universities in the US. It was clear to Leo that they all had the necessary merits, but the actual acceptance was a “crapshoot.” They accomplished total success. Jenny was accepted at Mount Holyoke College, Alex at Princeton, and Lindsey at the University of Chicago. For the latter two children, he sought out the counsel and advice of his former PhD advisor, who had become the provost at Princeton and later the President at University of Chicago. Needless to say, Leo welcomed the opportunity to provide the financial resources for all three of his children to complete their degrees at elite universities.

The other critical family member of Leo is, of course, his wife Rachael, who was a PhD student at Berkeley when they met. While her PhD advisor was another faculty member, Leo was also actively involved in her mentoring. Surprisingly, their professional relationship did not emerge smoothly. In fact, at a major conference in Prague, Rachael and Leo were co-authors with another ARE faculty member and they had decided to present their paper jointly. While preparing for and practicing their presentation, Leo was extremely critical of Rachael’s performance, which clearly upset her, requiring the intervention of the ARE co-author. However, at the actual presentation, Rachael shined so brightly that Leo was pleasantly surprised. Rachael had many suitors, but Leo won her heart with his intellect, wit, and kindness. Perhaps, this may have been the professional foundation for their ultimate personal relationship.

Friends & Network of Relationships

Leo’s friendships and network of relationships found in Leo a trusted, engaging and rewarding friend, as we can all see from the document orchestrated by Sofia Villas-Boas (This document, “Tribute to Leo Simon, Messages to Rachael and Leo’s Family,” can be accessed here: https://docs.google.com/document/d/1P7ABlxycxhPmLmGD-D_xkimeOI59zEiPaN_2...). As this document clearly demonstrates, Leo was not only an admired and respected member of the ARE department, but also someone who actively followed the careers of many PhD students, providing advice and counsel as their careers unfolded. Outside of academics, Leo had a breadth of relationships, ranging from skiing buddies to members of his aerobics studio cooperative to investment professionals.

Academic & Professional Life

In his academic life, a question that often arose was whether Leo was an exceptional scholar. You’re damn right he was! His publications did not emerge until 1984. Up to that point, his CV was very simple. It showed his undergraduate degree in political science from the University of Melbourne along with a concert diploma of music from the same university, and his subsequent master’s and PhD degrees. The only entry under the accomplishment section of his CV was that he was a concert pianist. However, he quickly made up for the accomplishment section by publishing many single-authorship papers in the top 5 journals for economists and, if you’re an economics theorist like Leo was, in the top 6 journals (including the Journal of Economic Theory). In this segment of the economic journal universe, few academic economists had published as frequently as Leo. He started with two papers published in the Review of Economic Studies and two papers in the Journal of Economic Theory, all single-authored. He followed these with five joint publications in Econometrica, all focusing on theoretical applications of game theory, local perfection, and discontinuous games of incomplete information. Among economists on the Berkeley campus, how many have had this number of publications in the top 6 journals of the economics profession? For those colleagues that believe that all that matters is how many publications in top 5 (or 6) journals must acknowledge that Leo “knocked the ball out of the park.”

In his initial appointment in the ARE department, Ken Arrow, a Nobel Prize winner and arguably one of the top 3 economists since Adam Smith, stated:

“I know enough about Simon’s work to be sure of his importance as a scholar. I first encountered him through his papers on Bertrand oligopoly in a General Equilibrium Context, papers which through their logical and analytical power introduced a new dimension to the subject. More recently, I read with great excitement his joint paper with William Zame on game theoretic equilibrium with sharing rules. I have long been discontented with the standard modeling of Bertrand equilibrium where firms which charge the same price share the market in some undetermined way using an arbitrary sharing rule led usually to a lack of equilibrium, even in situations where the equilibrium was fairly evident. But I did not know how to formalize an alternative. Simon and Zame not only did so, but showed their formulation led to existence of equilibrium in a wide variety of cases. I consider this to be a major achievement.”

Although Leo secured a tenured appointment at Monash University later in his career, ARE was very fortunate to benefit from Leo Simon’s unwillingness to leave his wonderful home and relationships that had been forged over the course of his UC Berkeley career. Initially in the negotiations between the department and Leo about his faculty appointment, Leo made it clear that he wanted to move beyond much of his earlier theoretical work in the direction of applied economics, focusing largely on agricultural policy, political economy, and environmental and natural resources economics, especially water resource management. He honored his commitment by working closely with various faculty members in the ARE department. One of his papers emerging from this collaboration with another ARE colleague and former PhD student published in Ecological Economics compared agra-environmental policies in the EU and United States, which has achieved approximately 400 citations. This paper now has more citations than his most-cited theoretical paper in Econometrica. Here again in a later merit evaluation of Leo in advancing his appointment within ARE, Ken Arrow noted in 1997:

“His current work represents an extension of his range of interests and shows still more strikingly both his analytical power and his sense of real-world problems to which theory can be fruitfully applied. I’ve read several of his recent papers in the field of environmental economics and the economics of transition. These included “Modeling Multilateral Negotiations: An Application to California Water Policy,” “Regulating Multiple Polluters: Deterrence and Liability Application,” “Information Asymmetries, Uncertainties and Cleanup Delays in Superfund Sites,” and “Privatization, Marketization and Learning and Transition Economies.” All four show a careful and insightful concentration on specific aspects of a real-world problem, upon which light is cast by a theoretical analysis.”

Subsequent to 1997, Leo continued to focus largely on applied economics, always with a sound theoretical foundation. There are many applications of the so-called Rausser-Simon multilateral bargaining and negotiation framework. For Leo, one of the more exciting applications of this framework was his capture of the nexus between his family’s history in Poland and the economic and political transitions throughout Eastern Europe, following the collapse of the Soviet Union. Given the special relationship with the Department of State and the Agency for International Development, Leo, along with his co-author, was able to meet with governmental leaders in Czechoslovakia, Hungary, Poland, and Bulgaria. After running miles through much of Poland and visiting his family’s hometown, Leo and his co-author conducted interviews of presidents and prime ministers in a number of these countries. In these interviews, the adage that “you can tell how wise someone is by their questions, not the answers to the questions, which reveal how clever someone might be,” occurred to his co-author on numerous occasions. Throughout this entire process, his co-author never saw Leo happier and more engaged. All of this work culminated in the publication, “The Political Economy of Transition in Eastern Europe: Packaging Enterprises for Privatization.” Their multilateral bargaining framework admitted two distinct hypotheses. First, that the privatization of state-owned enterprises or parastatals might serve to support Fukuyama’s contention in his book, “The End of History,” that the “universalization of Western liberal democracy is the final form of human government.” The alternative hypothesis is that political power would be concentrated among the oligarchs and autocratic political regimes with the result that crony capitalism would prevail. Unfortunately, the empirical evidence over the last 33 years supports the alternative hypothesis for many of these countries.

At the beginning of the current year, 2022, Leo, with many of his co-authors, had completed drafts of various papers that have yet to be published. These include: “A Game-Theoretic Model of LIBOR Manipulation,” “Intra-household Bargaining over Household Technology Adoption,” “Existence and Uniqueness in the Rausser Simon Multilateral Bargaining Model,” “The Determinants of Bargaining Power in Three-player Negotiation Games,” “Polarization, Hyperbole and the Battle for Control over the Narrative” and “The Evolution of Political Hyperbole and Polarization: Echo Chambers and Voter-Elite Feedback Loops.” All of his co-authors have assured me that these papers will ultimately be published.

Leo’s sudden and untimely death was a surprise to all of us. In the final analysis, while we are all going to die, the fundamental question remains: how did we live? Leo lived a full and engaging life, bringing warmth and often joy to both his professional, family, and personal relationships. I and all my ARE colleagues will treasure our memories of Leo.

Gordon Rausser