Reading, Writing, Arithmetic + Game Theory In School

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

I’ve always maintained that life and certainly business is a game. Some know how to play it well but unfortunately most do not. Game theory should be taught starting in Jr. High through H.S. and into college. I believe it is as fundamental as reading, writing and arithmetic.

I have an interesting situation with a property developer. Each time we talk he reminds me of how smart he is because he is a Harvard Law graduate.

Here is our situation. I have 5 waterfront lots that have been tied up for almost two years in the permitting process. The permits and short plat have been approved the value of the property has doubled and we are getting ready to close. I think the pricing is artificially inflated and wanted to assign my contract. He refuses to let me assign the contract (despite the fact it’s written as Lcap or assigns/nominees) because he’s betting I won’t close and he can make an extra $525. Understanding and playing into his greed I offered a deal that would net him $220. He said no. Thereby turning it into a zero sum game. He understands there is a 99% chance he will end up with $0.00. In my opinion this is stupid, stupid, stupid.

That’s my scenario and here is a classic game theory scenario:

Two criminals are captured by the police. The police suspect that they are responsible for a murder, but do not have enough evidence to prove it in court, though they are able to convict them of a lesser charge (carrying a concealed weapon, for example). The prisoners are put in separate cells with no way to communicate with one another and each is offered to confess.

If neither prisoner confesses, both will be convicted of the lesser offense and sentenced to a year in prison. If both confess to murder, both will be sentenced to 5 years. If, however, one prisoner confesses while the other does not, then the prisoner who confessed will be granted immunity while the prisoner who did not confess will go to jail for 20 years.

What should each prisoner do?

Alter Ego · Posted: Jun 14, 2005 9:29 am Post subject:

after taking micro-economics for the past 4 years....i draw the 4 quadrant box and come up with you should confess... Laughing

mathematically its right thing to do.

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

lcap, how do you figure 5 years for confessing to murder?

That doesn't seem right. If both confess they would probably both get 20 years.

Leggester · Posted: Jun 14, 2005 10:51 am Post subject:

Talk to an RE atty. I do not believe he can do that.

wkebrd3 · Posted: Jun 14, 2005 10:53 am Post subject:

Wakebrad, Game "Theory," theory being the key word here.

Alter Ego, you're wrong. Neither are to confess.

jason_ssr · Posted: Jun 14, 2005 11:10 am Post subject:

also, I think "4 quadrant" is redundant. Laughing

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

wkebrd3,

But you can't control what your buddy will do. If he gives you up, your in jail for 20 years.

-=LoneStar=- · Addict Joined: 20 Nov 2004 Posts: 751

wkebrd3,

How is he wrong? The key here is that the criminals are separated. They cannot form a strategy together. So, looking at it from one's perspective, just consider what the other guy could do:

1. He could confess. If you confess too, you'll get 5 years. If you don't, you'll get 20. You should confess.

2. He could not confess. If you confess, you get zero years. If you don't, you get 1. You're still better off confessing.

Obviously, the best solution, in terms of the total number of years served, would be for both not to confess. Of course, even if you could discuss it with the other guy, would you gamble 20 years by trusting him not to confess? I wouldn't. I'd take 0 or 5, not 1 or 20.

jason_ssr · Posted: Jun 14, 2005 11:16 am Post subject:

Jack Mccoy says that even if you flip one on the other, there has to be corroborating evidence that the confessor can produce to prove they did what they did and the other party was definitely involved.

wkebrd3 · Posted: Jun 14, 2005 11:24 am Post subject:

As you can see, the best outcome would be 2 years to total prison time.

8824 · Posted: Jun 14, 2005 11:34 am Post subject:

It's called the prisoner's dilemma. It is a very common discussion in the the criminal justice/legal curriculum.

HERE IS THE ANSWER FOR ALL YOU SALLY"S.

YOU GOT TO PULL B'S TO GET A'S.

hey wke3, is that some sort of six sigma equation?

ISO 420

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

muckmeister,

You are correct and I think Game Theory should be taught from Junior High through High School.

People get to hung up on absoulte victory. This of course also means absolute failure for the other player. I see it and deal with it every day. People rarely look at or strive for the best outcome---Total Victory is rarely the best outcome.

8824 · Posted: Jun 14, 2005 11:52 am Post subject:

lcap,

So, you agree that you need to pull B's to get A's. I don't think they should teach that in Jr. High

But definetly in HS.

RampageWake · Posted: Jun 14, 2005 11:54 am Post subject:

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

Sorry. Maybe I just think too much about this but you would also have to consider what happens when the other criminal gets out. Are they a vindictive type person who would want revenge for putting them in the slammer for 20 years while you're roaming freely. So even if you get off scott free you only really get 20 years of your life before he'll come back to get you.

I think I wouldn't confess.

wkebrd3 · Posted: Jun 14, 2005 12:22 pm Post subject:

Wakebrad, are you paying attention here?

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

wkebrd3, maybe I miss the point. But I treat this as if I was actually in that situation. In which case there are many more factors to be considered.

If the options were really that simple 0 or 5 if you confess and 1 or 20 if you don't then it's a simple choice to me: confess.

And yes that guy is a dumby wumby for not taking the $220.

-=LoneStar=- · Addict Joined: 20 Nov 2004 Posts: 751

wkebrd3,

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

-=LoneStar=-

My developer situation is interesting to me because so few people realize that most of the time it's stupid to turn a situation into a zero sum game. Throughout life this mind set costs people much heartache, time and money.

This is a study on the prisoner scenario in game play:

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

Now if you got through the study, here is a link to a website that lets you play the game to see if you should compete or cooperate:

http://serendip.brynmawr.edu/playground/pd.html

Tyler T · Posted: Jun 14, 2005 2:34 pm Post subject:

All this greed over $305? Buy the guy a ticket to disneyland and tell him to loosen up.

lcap · Ladies Man Joined: 13 Nov 2003 Posts: 10973 City: Homeless

Tyler T,

I would but to see this Micky I'd need to add a comma and some zero's to the tab.

pooser · Wakeboarder.com Freak Joined: 13 Jan 2003 Posts: 4738

i wouldnt confess. i wouldnt want to buy an accomplice 20 years in jail even if i did go free. There use to be a game show on this topic a while ago. it was called friend or foe. teams of two would compete to win money then at the end they would choose to be a friend or a foe. if both went friend they split there earnings, if both went foe theyd take all the money, if one went foe and the other went friend, the foe would take all the money. to me it seemed like the best option would have been to go friend because if youre partner chooses foe you get no money no matter what and if they choose friend you can either take half the money are all. I'd rather not be a greedy door knob and hope that my partner was not a greedy door knob as well.