By Niki Cervantes
Staff Writer

March 15, 2016 -- Lloyd S. Shapley, a longtime RAND Corporation researcher and academic who shared a Nobel Prize in economics for his study of strategic decision-making called “game theory,” died Saturday. He was 92.

Shapley’s health declined rapidly after he broke a hip a few weeks ago, officials from Santa Monica-based RAND Corp. said. They said he died in his sleep in Tucson, Arizona, where a son lives.

“Lloyd Shapley, who is credited with naming the book and film 'A Beautiful Mind,' indeed possessed one of his own,” said Michael D. Rich, president and CEO of RAND. “His contributions to game theory have and will continue to impact the field of economics for years to come.”

He was a research mathematician at RAND from 1948 to 1950 and from 1954 to 1981. Between the 1970s and early 1980s, Shapley also taught “Game Theory and Applications” at what is now the Pardee RAND Graduate School. He was awarded an honorary degree there in 2014.

In 2012, Shapley shared a Nobel Prize with Alvin E. Roth for their research on “the theory of stable allocations and the practice of market design,” RAND said in a statement Monday.

Roth's work adapted and applied the theoretical study and foundations laid by Shapley years earlier.

Shapley and Roth addressed “a central economic problem: how to match different agents as well as possible,” the Royal Swedish Academy of Sciences said in a press release at the time to announce their Nobel. The Academy gave the example of matching donors of human organs with patients needing transplants.

“How can such matching be accomplished as efficiently as possible?” the academy continued. “The prize rewards two scholars who have answered these questions on a journey from abstract theory on stable allocations to practical design of market institutions.”

Rich said that Shapley “recognized that money is not essential to a market, because economics is about maximizing welfare, not about gross domestic product. But without a price to determine supply and demand, it becomes harder to know whether welfare is being maximized or not.”

In the early 1960s, Shapley developed an algorithm to help match, for instance, people seeking a marriage partner, or students seeking the right college to attend.

He said Shapley’s “deferred acceptance” algorithm has been applied to such causes as resident-matching programs. In the 1970s, his theoretical market work on trading indivisible items such as houses led to a kidney donor matching system by Roth two decades later.

Shapley’s work remains much-discussed among academics, Rich said. He noted a 2013 conference in Istanbul was convened to analyze the “Shapley Value,” a concept Shapely developed in 1953 to provide a way of “uniquely valuing the contribution of each individual to a group where the value of the whole is greater than the sum of its parts.”

Lloyd Stowell Shapley was born June 2, 1923, in Cambridge, Massachusetts, a son of the distinguished astronomer Harlow Shapley. He was a student at Harvard University when he was drafted into the military in 1943. While serving in the Army Air Forces in China, Shapley received the Bronze Star for breaking the Soviet weather code.

Shapley returned to Harvard after the war, graduating with a bachelor's degree in mathematics in 1948 and then working at RAND until 1950. He left to attend Princeton University, completing his doctorate in 1953.

His 27-year career as a research mathematician at RAND began the following year. He left RAND in 1981 to join the faculty of UCLA as a professor of economics and mathematics.

In 1981, Shapley received the John von Neumann Theory Prize, awarded to those who make “seminal contributions to theory in operations research and the management sciences,” RAND said in its statement.

He is survived by his sons Peter and Christopher, and their families.