Leo K. Simon

Family Life

Leo was born on December 6, 1948 and 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. 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. Once Margaret and Leo arrived in Berkeley in 1982, they purchased a home and began one of Leo’s many renovations at his extraordinary residence on La Vereda Road. Two additional children arrived from a second marriage, Alex now 32 and Lindsey now 28. Leo was a compassionate father completely devoted to the well-being and happiness of his three children.

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 on a paper that they had decided to present 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 co-author. However, at the actual presentation, Rachael shined so brightly that Leo was pleasantly surprised.

Friends & Network of Relationships

Leo was a trusted, engaging, and rewarding friend to those within his network of relationships. 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

Leo’s academic 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-authored papers in the top five journals for economists and, if you’re an economics theorist like Leo was, in the top six 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.

In his initial appointment in the ARE department, Ken Arrow, a Nobel Prize winner and arguably one of the top three 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 his 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 European Union and United States, which has achieved approximately 400 citations. This paper now has more citations than his most-cited theoretical paper in Econometrica. In 1997, in a later merit evaluation of Leo in advancing his appointment within ARE, Ken Arrow noted:

“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 in the early 1990s. Given the special relationship with the Department of State and the Agency for International Development, Leo, along with his co-author, Gordon Rausser, 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. 

Leo’s sudden and untimely death on January 10, 2022 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
2022