today we started on game theory, and they started with the nash bargaining problem. deep down i want to be an asshole cause it's all cool and rational and i'd bid ?1 out of ?1 (the game is where 2 people bid for portions of a pound, and if the bids sum to ?1 or less, each person gets the money). of course, any 2 bids summing to 1 make sense. if i wanted to maximise my utility i'd bid for the whole pound, but who would bid 0? mayb 99p then.

why not bid 99p? there is a chance he is so risk averse he just ends up with 1p (better than nothing right). and if the bid goes over ?1, heck, both of you didn't get any money anyway, so none of you is relatively better off. if you're an asshole, perhaps no one matters.

except everyone plays the game everyday in pairs. when you get nothing, you're not comparing yourself with your partner (although probably the partner occupies a disproportionate weight when you're comparing). but you look at other pairs and see them getting 35-40, 67-20, not perfect, and you wonder whether your 0 is great.

so you think, well, isn't there the trust thing. play it many times. we'll learn to each bid 50, cause you can punish people for being assholes. but in life it doesn't work that way. assholes look for other suckers who do not know your game history, so in effect, you're starting the game anew. how to stop getting suckered? bid 99p. but you'll find that so many times you'll end up getting nothing and you're so desperate for some absolute payoff (not relative ones) that you'll start bidding lower. don't flinch.

the cheaters in life win, subject to the conditions above. but they need suckers to do it.

but watching house, you seem to think life is scary either way, whether you're always bidding 99p and ending up cold, lonely or settling for some 1p marriage that is all a pretend sham and you'll be divorced anyway. trust is a pipe dream, love is an illusion, only sex and babies and wedding rings are real.


i'm now looking for "what i learnt in a-level or year one" but written and published in an economics journal. figured i won't have jstor forever. it's my new hobby, to improve my economic literacy.

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