Saturday, January 23, 2010

Economics in the Movies

The Princess Bride is one of my favorite fun films. And it's loaded with opportunities to illustrate economic concepts. Probably the most often used is the famous “battle of wits” clip that can be used to illustrate how people choose. But there are more.

At the beginning of this clip, we learn that two of the characters need the help of the "man in black" - Wesley. He seems to have absolute advantage in several areas. At about the 8:00 minute mark, there is a fun example of negotiating prices, with all kinds of incentives thrown into the process.

This next clip begins with a continuation of the price negotiation. But about 1:35 into the clip, we watch Wesley demonstrate some entrepreneurial thinking, bringing his productive resources together in innovative ways to satisfy a need. And at about the 4:00 minute mark, Wesley explains how he can use asymmetric information to his advantage. We also see that wants (problems) are unlimited and can even arise from satisfying other wants. And about 5:00 in, we see the payoff to Wesley's "entrepreneurial" skills.

You can view the clips to see what I mean, but you really should consider purchasing a copy of the DVD. I’ve added it to my carousel at left, and I hope you’ll consider using that venue if you do choose to purchase.

I welcome your ideas and comments.


Jason Welker said...

Tim, great post! I use the "battle of wits" to help teach game theory and strategic behavior! Here's the post I did recently including that clip:

Tim Schilling said...


Your post was great, as well. I loved all the video clips. Thanks for commenting.