Apr 10 2009
Golden Balls: Game Theory, the Prisoner’s Dilemma, and the cold rationality of human behavior!
Published by Jason Welker at 11:04 am under
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WikipediaTeaching the Prisoners’ Dilemma Will Never Be the Same Again « Cheap Talk
Rarely does such a perfect illustration of the Prisoner’s Dilemma come along for Econ teachers to use in their classroom:
The payoffs are clear:
Each player has a weakly dominant strategy, which is to choose to steal. By choosing to steal, the player has a chance at maximizing his own payoff, but will do no worse than he would if his opponent also chooses to steal and at least will have the satisfaction of thwarting his opponent’s attempt to steal the money.
There are three Nash equilibria in the game, which are outcomes at which a player can not do better on his or her own by changing his or her strategy. The outcome Steve was hoping for by chosing “split” (50/50) was not a Nash equilibrium because Sarah knows she can do better if she chooses steal when Steve chooses split. Steve doomed himself by choosing split because he should know that Sarah’s dominant strategy is to choose steal. However, Sarah would also have doomed herself by choosing split because she should assume that Steve would also chose steal since steal is a dominant strategy for him too.
John Nash, who pioneered the field of Game Theory, assumed that humans were coldly rational, self-interested, deceptive creatures that would not hesitate to stab one another in the back to get what was best for themselves. His theory of human behavior is only partially proven correct in this game, in which Steve is shown to be the sucker and Sarah the coldly rational self-interested player. The best chance for Steve to go home with any money would have been for him to use the one minute of discussion time to convince Sarah that he would choose SPLIT, yet be willing to go home with something LESS THAN $50,000 and accept that Sarah was going to choose STEAL. He could have threatened to chose steal if she did not agree to share her winnings with him to some extent. Then again, any promise Sarah makes she could later break, thus further empowering the players to choose steal.
Discussion questions:
- What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
- Was Steve totally wrong to choose split? What would you have done in his situation?
- How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?
About the author: Jason Welker is a teacher at Zurich International School in Switzerland, where he teaches Advanced Placement and International Baccalaureate Economics. Jason was an international school student in Malaysia before studying economics at Seattle University then earning his Masters in Education. He calls Seattle and Northern Idaho home. In addition to maintaining an economics wiki and this blog for economics student and educators, Jason also gives presentations on using Web 2.0 tools in education at workshops and conferences around the world. His economics wiki won the 2007 "Best Educational Wiki" award from the "EduBlog Awards". Related posts:
- The “delicate balance of terror”: How game theory can be used to predict firm behavior (oh, and save the human race from utter annihilation)
- Understanding Oligopoly Behavior – a Game Theory overview
- Irrational behavior leads to larger rewards
- SAS Economists Podcast #6: The oligopolistic nature of the video game console market
- “Monopoly”: the Game of Life – a guest post by John M. Ostick
Teachers!
Submit your Econ questions here. Replies will be posted to the blog
1. I would argue that Sarah chose steal because because the way she saw it, if she choose split, her best outcome would have been 50K profit with her other (and worst) being none. However if she chooses steal her best outcome is now 100K and her other (and worst) is still 0. Therefore by pure logic of averages, assuming Steve’s choice is random she should choose to steal.
2. Steve was not totally wrong to choose split. The fact is in the above paragraph in which I discussed the outcomes, the same are true of Steve. If Steve follows this through, he should also choose steal. However if both player use this logic and are aware of it, neither will get anything and thus you end up in a paradox in which Steve must convince Sarah to split, and Sarah must convince Steve to split but then both players see the ability to steal again when the other thinks that they are safe in a split. It’s something of an endless paradox. In short though splitting is not necessary a bad decision.
3. The choices faced by Steve and Sarah more or less reflect Oligopolic competition in cartel nature. They can both agree to the price set and make a good profit, or one could under cut the other and take in more money. However if both undercut, both lose profit. Ultimately the greedy nature of humanity means that it is hard to resist the temptation to undercut the price leader.
1. I think that Sarah chose SPLIT either because she did not think she could rely on Simon to SPLIT with her, or because believed Simon’s sincerity and chose to fool him to gain maximum benefit for herself. If she chose SPLIT, she would be putting herself in danger of loosing 100,000, but by choosing STEAL she eliminated the chance of Simon winning anything: either she would take it all or they would both go home with nothing, thus always reaping more or equal benefit to her opponent. The deciding factor in this game is trust: Simon placing his in Sarah to split 50/50, and Sarah, following the basic human instinct of self-preservation, betraying Simon to win the 100,000.
2. I think that Simon’s intentions were good: from his point of view them both choosing SPLIT would be advantageous to both of them, with each walking away with 50,000, as opposed to one with 100,000 and one with nothing. However he doesn’t take into account the principle’s behind game theory: ultimately humans will act to maximize their benefits, which Sarah did, taking advantage of his SPLIT to STEAL the 100,000. If he had understood this at the time, perhaps he would have appealed to his innate selfishness, and made a different decision. Basically, in order to win any money in the game, each player has to convince the other player that they are going to SPLIT, then either STEAL the money or really SPLIT it. Them actually winning any money either involves complete trust – which is quite difficult between strangers – or second-guessing one another.
3. This kind of game theory that is present in the choices of Simon and Sarah are similar to oligopolistic competition in a cartel. Cartels can either ‘SPLIT’ – i.e. choose a set price and abide by it and mutually benefit, or ‘STEAL’ whereby one firm undercuts the others and takes a profit, or both firms undercut and both loose out. I think that with respect to big countries, it is almost impossible to have complete confidence in each other’s integrity, as there is always the overwhelming temptation to act selfishly and gain maximum benefit for oneself by abusing the trust of another party. It is easy to see why OPEC countries often fail to uphold their agreements: they can both mutually benefit by choosing to ‘SPLIT’, but relations between nations are never transparent and there will always be other external factors that motivate one to betray another’s confidence.
@Elijah
I like your comparison of the decisions that Simon and Sarah can make to a paradox. I think external factors play an extremely important part in the outcome; from Simon’s PoV and what should have been Sarah’s too at the time, the best option would have been to both really and honestly choose to SPLIT and both gain something. However, Simon failed to take into account that Sarah had been cheated before (she hints at it at the end of the video), and this would affect her decision; if she did not fully trust Simon, she would have always chosen to STEAL.
1. Sarah chose steal rather than collaborate with Steve and share the $100,000 because she is a “coldly rational, self-interested, deceptive creatures that would not hesitate to stab one another in the back to get what was best for themselves.” It was only possible for her to choose steal if she absolutely knew Steve was going to choose split because should Steve chosen steal, they both have not brought back the money home.
2. Steve’s decision is not wrong at all. In fact, his decision seems more human-like in terms of his kindness and will to share the money. On the contrary, Sarah is a self-interested creature who is determined to deceive anyone when something big is up for grabs. I would have threatened to use steal at the one minute discussion before the decision so Sarah would hesitate to use the steal, and choose split to share the money evenly. It is better for both Sarah and I to bring back something home rather than nothing.
3. The choices faced by Steven Sarah relate to the choices faced by firms in oligopolistic market because one firm’s decision affects the response of its rival competitors. Collusive agreements between firms often fall apart because individual firms attempt to seek profit at their own interest, not to share happiness with others. Cartel such as OPEC often fails to achieve the high price targets agreed upon meetings of their leaders because individual attempt to attract more consumers by lowering their prices which consequently lowers the competitor’s price, bringing down the price of the entire market.
1. In my opinion it was more benifical for Sarah to steal as it would walk away with 100,000 pounds or 50,000 pounds more. Eventhough there was a 50% chance that Steve would choose steal and that none of them would benefit. As Elijah said we must assume that Steve’s choice is random, and that Sarah will choose steal. We can assume that she will win 0 or the full amount of 100,000. However it could also be done the other way round.
2.Was Steve totally wrong to choose split? What would you have done in his situation?
Steve was folllowing his human instinct and believed that it was right so share, however he was conned by Sarah. John Nash’s cold rational behaviour, didn’t play out in this case, as Steve was affraid of what the public would think of him. However Sarah did match John Nash’s cold behaviour. The safer option for the two would be to split, and that is what Steve chose to do. However Sarah decided to be cold and chose steal.
3. If we start to compare their choices to oligopoly. We could state that this is an competitive olipoly however it could turn collusive, specifically formal collusive. Steve has negotiated with Sarah an agreed output for Sarah but not for himself.
OPEC, tends to fail, as leaders attempt to sell their oil at a cheaper price to attract more customers, thus there isn’t real control. They all went to make the best profits, OPEC is there to make sure it doesnt go out of control, and to set some standards. However it does have a major effect on the market.
Ralph>>
Though OPEC sets standards for its oil pricing, but individual firms attempt to increase its sale by lowering the price, which in turn, affects the other firms because they must also decrease its price to fight the competition with the former. I think this is an excellent example of how John Nash puts it “humans were coldly rational, self-interested, deceptive creatures that would not hesitate to stab one another in the back to get what was best for themselves.”
1.What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
there were many reasons as to why sarah has chosen steal here. Obviously we can see the conviction and hard felt commitment by Steve to split the prize money and so by stealing she would be able to collect all the money. Another key factor highlighted at the end of the piece is how she has been “stab in the back before” this therefore helps her come to the conclusion to steal the money rather than split through previous experience. By stealing she has the opportunity to collect all of the money but possibly find herself with no money at all and we see that she was willing to go home with no money what so ever because she chose the steal ball. Obviously here by stealing she will take the full amount or neither will which makes it a level playing field but if all had this strategy the game would never be won. She also has to consider the 50% chance that Steve will pick steal and so stealing the money means she has all or neither have anything.
2.Was Steve totally wrong to choose split? What would you have done in his situation?
Steve was relying on the morals of the girl sat opposite and he thought that by sharing they would receive equal amounts of the money. Steve is more humane and obviously uses the utilitarian view as he both tries to benefit both and overcome greed but the temptation is to much for sahara. If i was Steve i would have threatened to use the steal ball so she has to face the fact of having no money or half and would make her consider the benefits of going on halves but this would rely on the fact that he would use split.
3.How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolistic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?
The decisions faced by Steve and sarah can be mirrored in an oligopolistic market as they must preempt what the competitors will do and try match it or beat it in order to make the most money possible for them individually rather than collectively referring to the cold behaviour of humans. Collusive agreements fall apart because of self interest of the businesses as they try to get a majority in the market that is larger than there competitors. OPEC fail because they want to set the prices across all oil companies but when this standard is set there is an opportunity to under cut the prices to increase turnover of the business and so we see price wars happen.
Meiling
very good response to the questions. Also on the first question you show the rational reasoning of the women but you also need to consider the fact that before she has been “stabbed in the back” making her decision less rational more irrational as she seeks revenge. The explanation of OPEC is also very clear and is very true that different nations will have contradicting views.
1. Sarah probably chose to steal because she didn’t think she could rely on Steve to choose split so she followed her natural instinct of self-preservation and chose steal to make sure that she would walk away with some money even if Steve didn’t. Her need or desire for the $100,000 was greater than her trust in Steve, so she decided to go with her instinct and make sure that she didn’t come out of the competition with nothing.
2. Steve wasn’t wrong, he was just trying to believe the best in Sarah by choosing split and deciding that he could convince her to split the money during the 1 minute discussion time; he shows more trust than Sarah in this case. I probably would have done what Sarah did, but maybe come to an agreement during the discussion time so that we could both come out with some money.
3. This situation is similar to an oligopoly in cartel nature because the companies can either reach an agreement and keep their word and split the profit, or they can undercut the other company and leave with all of the profits. The only problem is that if both companies decide to undercut, neither of them will gain profits, so big profits depend on trust between the two companies. Arguments between oligopolists often fall apart because the companies don’t really trust each other so they always try to get the bigger half of the profits and sometimes end up ruining the profits for the other companies.
Masaya,
I like your point about companies lowering their prices to try and attract consumers and that this lowers the price of the market. Do you think this also lowers profits for the other ocmpanies in the same market?
sara
Well, isn’t it obvious? John Nash was genius, and was definitely correct in his interpretation of human behavior: humans are selfish bastards who only seek personal gain. However, it is not just that they are selfish, but that this selfishness has led them to mistrusting everybody: for example, I believe Sarah would have been extremely happy to go home with 50 000: but she thought Steve would steal (mistrust) so she decided to steal as well to make sure Steve would not win. Steve, in the other hand, is only a victim of human stereotypes and prejudices, and even if he might have been a trustworthy person once, he will never be again, taking Sarah’s place next time. Indeed, as Sarah said “I couldnt be stabbed in the back again:” she was stabbed in the back once (like Steve), and thus became mistrusting (this reminds me of the domino theory). Nevertheless, it might have happened that Sarah was indeed aware of the fact that Steve was not lying, but just wanted to get everything for herself, still proving John Nash’s theory of deceptive, self-interested human behavior.
Actually Steve represents the core human being who is new to life and does not realise the fierce nature of people: of course he was totally wrong by choosing to split; by choosing split, he had 1 chance out of 2 to get 50 000, while by choosing steal, he had 1 chance out of 2 to get 100 000. Trust and faith are things which do not apply to humans and money: it is only probability which needs to be accounted for when dealing which such matters. Me? For sure I would have chosen steal: however, I would have told the other person I would in fact steal. I would tell her that she must choose to split, and that after the game I would give her half of what I gained; I would tell her to trust me, but even if she did not, I would tell her that anyways, by splitting, she had at least one chance out of two to get 50 000; if she stole, she would not get anything at all for sure. All a matter of probability and trust. And of course, if she chose split, I would then give her half of what I won. If she chose steal, I would tell her we had both lost 50 000 because of a pointless, vindictive and rather dumb human mistrust.
Well, oligopolistic markets indeed try at times to reach similar agreements, in which they share profits equally, by dividing them. However, they are still risking to lose everything if the other does not do what was agreed. So, indeed, that is why agreements between oligopolists often fall apart: they do not trust each other, and constantly stab each other in the back. The same happens with OPEC: the lack of trust and abundance of self-interest leads to constant failure.
Ralph,
John Nash’s theory played out perfectly in this case: Sarah was coldblooded, selfish and deceptive. And of course, to be able to create such terms you need someone who represents the opposite; in this case the sincere and trusting human being, otherwise such adjectives and theory could not possibly exist.
Furthermore, you speak about ‘what the public would think;’ Imma tell you one thing: when it comes to money, and in this case thousands of it, you dont care at all about what the public might think. Steve chose to split because he trusted Sarah would do the same (it is this wrong belief men have that women are weak and vulnerable.)
Daniel and Masaya,
Threatening the other player with stealing for no other reason than intimidation would only provoke the typical self-preservation human response which is stealing as well from you, and would make you walk out with your empty hands.
1. What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
Sarah chose to STEAL rather than collaborate with Steve and share the $100,000 because she decided to depend logic rather than another human being. If Sarah chooses SPLIT she has a 50% of not going home with anything. If she chooses STEAL she has the same probability of loss, but the amount of money she’d gain by STEALING is twice as much as she’d gain if she SPLIT the money. Also if Sarah is convinced of Steve’s honesty then by stealing she is reaping the greatest benefit for herself. If she isn’t convinced then she is preventing him from taking advantage of her. Her choice to STEAL is the most logical.
2. Was Steve totally wrong to choose split? What would you have done in his situation?
Steve is not totally wrong to chose split because he based his decision on common decency rather than logic. This may not be the smartest choice, but in the context of human society such a moral act could hardly be doomed wrong. Also, if Sarah and Steve decided before hand that one of them would choose split, then they are insuring that someone gets the money instead of leaving it to chance where a possibility is that both could walk out with no money. The money could then still be split after the show. Either way, the only way for anyone to benefit is for at least one person to split.
3. How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?
Collusive agreements between oligopolists fall apart, because one oligopolist always serves to benefit more if it undercuts the prices of the other oligopolists with which it is colluding. This is why cartels like OPEC often fail to achieve the high targets agreed upon in the meetings of their leaders. There is always the possibility that another oligopolist will undercut the agreed upon price and take profits away from the rest. This leads the other oligopolists to use logic and realize that the best way for them to ensure their own security is undercut as well, or undercut first.
@Daniel
I’m not sure what benefit Steve would have achieved by threatening to use the steal ball. This would only serve to make Sarah insecure an probably give her an even greater incentive to use her own steal ball. Plus, Sarah gave no indication that she was going to use the steal ball. There was no reason for Steve to threaten her with this. A threat from Steve would probably end up with to steals and no money for anyone.
-Issa
• Sarah chose to Steal because she knew that it was the best way to get what she wanted. Sarah wanted to win 100,000 pounds and did not want to Split, so she chose to Steal in order to maximize her profits. Also, I believe that she said something about “being stabbed in the back last time,” which is an example of competitors learning from previous mistakes.
• Morally, Steve was totally right to Split. Splitting is the kindest and most fair thing to do. However, Economics and Ethics are not exactly the same! If Steve had chosen to Steal, he still would have won no money. I think that he should have worked harder during the discussion to make Sarah choose to Split, and then either Split or Steal. This would have given him a greater chance of winning either half or all of the money. If I was Steve, I would have told Sarah that she had to share or I would Steal. If I convinced her that if she chose Steal I would also, and therefore take all of her money, she might have agreed to Split, and I could have won half the money, which is better than none.
• The choices faced by Steve and Sarah are like those in Oligopolistic markets because they demand trust, although only betrayal can bring maximized profits. When oligopolistic markets collude, they assume that their competitors will keep their promises. When collusive agreements fall apart, one firm wins while the other loses. The winner loses the trust of the loser and others. Cartels sometimes fail to reach high price tags because they are worried that the other parties will not maintain their promises.
Chamonix
Issa,
I liked how you said that the only way for anyone to benefit is for one person to Split. I think that this has a pretty clear message. If people are not willing to exercise trust and take personal risks, then no one can make any progress. In economics, people must take risks to invest, buy, and sell so that a market can even exist. You noted that it is morally the best thing to Split. I agree. This can also be seen in the metaphor for Economics as a whole. By investing or selling, people and firms are doing the right thing by helping those around them to progress Economically. It shows that you have to be selfless to succeed.
Thanks, this was a really interesting post.
Chamonix
@Marcello
I agree with your comment of “It is this wrong belief men have that women are weak and vulnerable.” You are right about the public view, however It could be discussed.
@Issa & Chamonix, Just like Chamonix I really enjoy Issa view view on question two, as it does indeed show the public deceny that Steve showed, however Just wondering what you guys would do if you were in Steve’s position, knowing the odds.
1.What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
there were many reasons as to why sarah has chosen steal here. Obviously we can see the conviction and hard felt commitment by Steve to split the prize money and so by stealing she would be able to collect all the money. Another key factor highlighted at the end of the piece is how she has been “stab in the back before” this therefore helps her come to the conclusion to steal the money rather than split through previous experience. By stealing she has the opportunity to collect all of the money but possibly find herself with no money at all and we see that she was willing to go home with no money what so ever because she chose the steal ball. Obviously here by stealing she will take the full amount or neither will which makes it a level playing field but if all had this strategy the game would never be won. She also has to consider the 50% chance that Steve will pick steal and so stealing the money means she has all or neither have anything.
2. I think that Simon’s intentions were good: from his point of view them both choosing SPLIT would be advantageous to both of them, with each walking away with 50,000, as opposed to one with 100,000 and one with nothing. However he doesn’t take into account the principle’s behind game theory: ultimately humans will act to maximize their benefits, which Sarah did, taking advantage of his SPLIT to STEAL the 100,000. If he had understood this at the time, perhaps he would have appealed to his innate selfishness, and made a different decision. Basically, in order to win any money in the game, each player has to convince the other player that they are going to SPLIT, then either STEAL the money or really SPLIT it. Them actually winning any money either involves complete trust – which is quite difficult between strangers – or second-guessing one another.
3.The choices faced by Steve and Sarah are like those in Oligopolistic markets because they demand trust, although only betrayal can bring maximized profits. When oligopolistic markets collude, they assume that their competitors will keep their promises. When collusive agreements fall apart, one firm wins while the other loses. The winner loses the trust of the loser and others. Cartels sometimes fail to reach high price tags because they are worried that the other parties will not maintain their promises.
Marcelo,
I think your answers are very thoughtful and complete.
1. She chose to steal most likely because she understands that Steve is a spineless compromiser who would prefer to take the safe and easy route. Sarah is the real entrepreneur and is willing to make risks with the hope of a better payoff.
2. No, Steve was not completely wrong. He wanted assurance and a guarantee of money. The only problem is is that he was risking it at the same time. He may have also known that since Sarah was going to receive money he may as well let her thrive. He does not operate by the “live and let die” philosophy.
3. In oligopolistic markets, it is vital for firms to anticipate the moves of their competitors. This can have big payoffs or big losses. The entrepreneurial instinct must take over and the firm may have to take risks in order to survive in the highly competitive market. It is very clear why these collusive agreements fall apart. No firm is willing to trust another because each one, like Sarah, is clever, tricky and self-preserving. With the high price targets set by leaders of organizations such as OPEC, various countries will believe that the other members of the organization will undercut prices for their own profits. This leads to many other avenues for which non-OPEC countries can acquire oil for lower prices.
1. What in the world is going on here? Why did Sarah choose steal rather than collaborate with Steve and share the $100,000?
By choosing to steal, Sarah is not really risking anything. If Steve decides to steal as well, then she will end up with nothing–the same as if she had chosen to split while he stole. However, if she steals while he splits, she stands to win much more than if they both split.
2. Was Steve totally wrong to choose split? What would you have done in his situation?
By choosing to split, Steve assumed that Sarah would do the same. This was a faulty assumption, as she stood to win more by stealing rather than splitting. In that situation, I would have chosen to steal because I would have the opportunity to win a lot more money.
3. How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?
In an oligopoly, firms must make decisions based on what they think others will do. The same is true in this situation, where Sarah and Steve must consider what the other will choose. Cartels might fail to reach price targets because the firms may not trust each other entirely, and try to take advantage of each other and go back on their agreement.
1. Because she is inconsiderate of others and realizes that business is business and she is just trying to get as much output as she can and even if Steve also steals, she knows she took him down.
2. Steve was not totally wrong because he was being tactful for his opponent and did not want to ruin her.
3. In oligolopolistic markets a decision made by one firm directly affects the others and their decisions have to be based on what they think the other firms will do. Collusion usually fails because a firm decides one thing will help their own firm and the others less, calling the collusion to fall apart. Also when OPEC sets high price targets, all the other firms in the world will try to find ways to get it cheaper because they worry other firms will be undercutting.
Trevor,
Your point about Steve not operating on a “live and let die” philosophy is interesting. Most economists assume that humans are purely self-centered, and would act as such in this situation. According to the typical economic philosophy, Steve’s choice would have been motivated by self-centerdness rather than altruism. They would argue that he was simply trying to minimize risk and made a false assumption that Sarah would do the same.
Issa, I really like what you said about how Sarah is more willing to trust logic rather than another person. That is a big reason why collusion fails and I’m impressed that you were able to tie that in here.
Good catch, Chamonix! I didn’t quite pick up on the fact that Sarah might have been “stabbed in the back last time.” I’m sure that has a great impact on the decisions both of Sarah and Steve make in this game.
I have to say, though, that your analysis of the actions that both individuals should have taken may ignore the basic fact that you never truly know the intentions of your competitors and can only somewhat understand their inner thinking. Steve can work as hard as he can to convince Sarah to split but, in the end, he places a certain amount of risk in whatever decision he makes. And I believe in this game, the players make their decisions unaware of the decisions being made by the other player.
1. Sarah chose to steal rather than to collaborate with Steve for a possible multitude of reasons. One is that, as Elijah mentions, the pure logic of averages dictates that stealing is a logically better option. Also, she might have chosen steal simply because she was afraid to be stabbed in the back again (as mentioned at the end of the clip). The final reason that she might have chosen steal is simple greed, human nature makes us wish to benefit ourselves more than anyone else, especially some stranger we will never see again.
2. Steve was not totally wrong to choose split, although he was wrong logically. As explained above, the logical choice is steal, however, he let his simple emotions or rather his character get the best of him. In this situation I would choose split. This is because I personally feel no need to ruin someone’s opportunities especially if I will be getting money for free, but if the other person chooses steal, I know that I have the ability to go on with my life, unlike many people out there.
3. The decisions made by Steve and Sarah relate to decisions made by oligopolistic firms in that they also have to sort of guess what intentions the competing firms have in mind. And with these guesses or predictions they choose how to set their prices. Collusive agreements in between oligopolies often fall apart because a firm cannot trust another firm to stick to the agreement when each firm is actually looking out for its own best interest, thus the collusive agreements often collapse. Cartels like OPEC cannot agree on a single high price because each individual firm is afraid that the others will not come through on their promises.
-Dennis-
Mattea,
I find it interesting that you and so many people say that if you were in that position, you would choose steal. I’m just wondering why, because I do not understand how stealing 50,000 pounds that does not really rightfully belong to either candidate can bring anyone satisfaction. Perhaps, it is exactly this mentality of cold self-promoting action that is why we humans have so many problems in the nature of our lives. Therein, I see the only appropriate choice to be split, even if other candidate chooses steal, at least you walk away with a sense of self, whereas the opponent will probably feel enormous guilt whenever spending that money. Anyhow, I don’t mean to offend you, I’m just offering a point of view.
-Dennis-
1. Sarah choose to steal rather than to collaborate with Steve this I think it is normal as if Sarah chose to collaborate with Steve he could have chosen to pick ‘steal and she would have been left with nothing and if he would have picked ‘split’ they would both get 50,000. But as Sarah chose to steal the two options would have been 1. Steve would have picked ‘steal’ as well and both would get nothing or 2. He would have picked ‘split’ and Sarah would have won all the money and Steve nothing. So this means that either way what Sarah picks she could loose everything or share the money or get all the money. So if anyway there is a risk of loosing everything why not risk everything on winning all the money.
2. Steve was just very Naïve as he trusted Sarah and let him self be persuaded by her that he should pick ‘split’ and so he did. I wouldn’t have done that. I would have taken ‘steal’ as this is the option you loose the least. As if my opponent would have been honest with me and picked ‘split’ I would win everything, if she had lied to me we would both loose everything. But if I would have picked split and she would be honest to me we would both win 50% but if she had lied I would loose everything. And so by picking ‘steal’ and win I win more than if I pick ‘split’ and in both ways I can also loose everything.
(I have just repeated my self 1000 times I think but this game is just so clever and so exiting I cant really express in writing what I could be saying about what happened between Sarah and Steve in the game)
3. The example of Sarah and Steve are like in a oligopolistic market as one depended on the other and Sarah wanted to have the most profit of it so she ad to betray Steve. Firms also have to do such things if they want to have a maximum profit. On the other side Steve should have not been so naïve he should have done some tactical thinking and should have tried to predict what Sarah might do in such a situation and place himself in Sarah’s situation. This is the same for firms they will have to be ‘cruel’ by choosing ways where they can win all and not be ‘nice’ and trust the others and risk to loose all, and be prepared for every move the competitors do.
Dennis,
Wow very intresting point about people being greedy and yes it is so true people are so greedy in all kind of ways. I think it is very ‘human’ and ‘nice’ of you to say that you would pick ’split’ and trust the other person but i think this is jsut too risky and the what you can win is just too much of worth. I would and already do think that it is cruel to do what Sarah did and when I looked at the youtube clip I was shocked and thinking how could she do such a thing but I would probably do the samething as what she did. this is because you should trust nobody and it might be fine to be stabbed in the back a few times but after a while you will realize how much you have lost and (hopefully) wont trust anybody like this any more. this is the same with firms in the begining they might be naive and trust everyone because all the other firms persuade them that they can trust eachother and then from the back everything is ruined for the ‘nice’ and naive firm. the money will be all lost and the only thing they gained is the lesson to never trust anyone, always be prepared for everything and start to ruin other firms so your firm can get bigger.
(I hope this is understandable because sometimes i just write in no order and when i read my text it makes sence to me but not to anyone else.)
1) Sarah had been “stabbed in the back last time” and therefore does not fully trust anyone to choose “split” anymore. As a result her choice to “steal” is a way of protecting herself against a repeat of that situation. Aware of the possibility that Steve will choose “steal” and walk away with everything, Sarah opts for “steal” to at least prevent him from doing that. She also realizes that if he chooses “split” she will earn more money by stealing than she would with splitting.
2) I do believe he should have made more of an effort to convince Sarah to choose “split,” but I don’t think his decision to split should be called wrong but should be encouraged. What Steve was really choosing from was from stealing and getting all the money or splitting and hopefully getting 50 and the respect of the public. By stealing he would not have been able to be proud of himself. I would probably try to convince the other player to split – unless the other player’s behavior is clearly showing they are going to steal, just like you could see it with Sarah.
3) If Steve and Sarah would have come to an agreement and split the money that would have been similar to how oligopolistic firms agree to set a certain price for their products, hence assuring normal but stable profits. What happened, though, was that Sarah decided to “Steal,” thus portraying how the moves an oligopolistic firm can make are unpredictable and not always according to the agreement, since firms prefer earning supernormal profits. Also OPEC leaders are usually not satisfied with earning normal profits as a result of a high set price. They will often lower prices to have increased demand so they can obtain higher profits.
-Eline
Dennis,
I have to agree with Vica here: while it is very courteous of you not to steal and to choose the option that will leave you with no guilt afterwards, you must also keep in mind that these two candidates are both in this show with as goal to win money, and not to be shown as “kind” people. Having participated in what must have been a nerve-cracking competition to win the money, and having been “stabbed in the back” previously, I think many people would react similar to Sarah.
-Eline
1.) Sarah had two options: to walk away with 50K or try at get to 100K. She developed a bond with Steve that allowed him to trust her, and then took advantage of the situation. Steve wanted money and was willing to settle for 50K, but Sarah wanted to maximize her profits. In the end, she walked away with the money.
2.) Steve was not wrong to choose the split. He was trying to take the safe route and walk away with some kind o profit. He knew that there was a 50/50 chance that Sarah would choose to split, which is a very high probability. In that situation, I would probably choose to steal. I mean, when presented with the opportunity to get 100K, why not go for it?
3.) Oligopolies are a little like Steve And Sarah. They can agree to set a specific price and stick to it (the split), or one firm can secretly maneuver its prices and make a greater profit than the other firm (the steal). OPEC, for example, often fails to achieve the high price targets agreed upon in meetings of leaders because if it sets the price and individual actors end up lowering prices, OPEC does not make a gain. Essentially, there is a game of trust, and a firm can either uphold that trust or destroy it (and walk away with the money).
- Catherine
Hey Daniel,
I like your response to the second question, about what you would do in Steve’s situation. I think he gave in too easily, which made Sarah believe that he fully trusted her. If he had been more threatening, she would have probably chosen to split, in which case they would have both gotten money. He could still use the split, but I think that if he had threatened Sarah he would have had a greater chance to win the 100K himself.
- Catherine
1- Well, Sarah ended up of gaining more money and levae with nothing or go with money in two ways, by either get 50,000 or by been more ambitious and try to get 50,000 more, meaning to try to leave with 100,000. Therefore, Sarah was smart and decided to create a close bond with Steve, who also wanted money, they were both planning to settle this money for their both benefits,but Sarah wanted it all, so finally Sarah ended up goin with all the money.
2- I think Steve was right about choosing the split, since he made an easy way to get money. He knew there was a high probablility that Sarah would choose the 50/50. I think if I was so close to getting the 100,000 I would have gone for it. However, Sarah was faster and more ambitious and took it all.
3- Oligopoly relates to Steve and Sarah as they can both agree to settle a split of the money for both of them or simply just go for all and take everything. On the other hand, OPEC usually fails to achieve the high price targets agreed by the heads of the group because if it sets the price and individual actors end up lowering prices. therefore , they never gain money. This is a strategy game of pair up and be fair are be ambitious and take it all and destroy the rest.
Catherine and Marcelo…
Catherine Good choice… I would have done the same gone for everything… I probably wouldnt have mind if I knew Sarah’s intentions. Marcelo I think in real life you would go for the money, I dont think you are ambitious.