6:39 PM | Author: Siva
A simple game. There are 2 players, you and some x.

  • Scenario 1 : You have $10. x has nothing. You can give $y to x. 0<= y <= 10. The game ends there.
  • Scenario 2 : You have $10. x has $10. You can give $y to x or you can take $y from x. 0<= y <= 10. The game ends there.

What will you do in both these cases ? The first one is a Dictator Game. The second one is the Ultimatum Game (well, not exactly) . Both used in economics. If you are a rational (in the economic sense) then you should have said 0 $ in scenario 1 and taken 10 $ from x in the second. I am irrational !

Attended a talk delivered by Freakonomics author Steven Levitt. Wall Street Journal relates him to Indiana Jones. His wife thinks Jim Jones will be a better comparison. Well, What are wives for ?
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4 comments:

On 11:06 AM , Baranidharan said...

Siva sorry I did not understand anything :-( Details please

 
On 11:22 AM , Siva said...

It is a game in game theoretic sense. Just think of it as an experiment. What will you do in these scenario ?

 
On 6:36 AM , Sarangan Rajamanickam said...

Scenario 1: Y = 4$.
Scenario 2: Y = 0$.

 
On 11:43 AM , Siva said...

Well, In the first you want an almost equal distribution, but still want to be on the top and in the second case you maintain status quo because you both have the same amount.

Is that right ? Appears most people do something similar.

But when they gave the test to economists the answer was Y = 0 in first and take away 10 $ in the second case. A perfectly rational human will do the same too. But not a lot of people are so. May be there are altruists :-))