Thursday, April 9, 2009

Game Theory

I suspect many of you don't teach game theory. But for those who might like to introduce the idea, this is a great video to introduce the "prisoners' dilemma". (HT to Greg Mankiw.)

This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
5. Incentives produce “predictable” responses.

1 comment:

Jason Welker said...

Wow, this would make John Nash so proud! It partially confirms his assumption that humans were self-interested, coldly rational decision makers always interested in maximizing their own well-being even at the expense of others. You gotta feel sorry for the loser though, Nash would call him the "sucker". But you have to ask, would he have been better off if he had chosen to steal? NO! But he would have at least left with the satisfaction that he kept the girl from going home rich while he went home poor.