In a video clip gone viral last week (hat tip to Scott Peppet), I am linking to the ending of a British game show in which the participants play a version of the prisoner’s dilemma with the winnings at the end.
High-stakes one-shot Prisoner’s Dilemma on a British game show with an astounding strategy
Before reading any further–watch the clip NOW
And below is some expert commentary on what you just saw:
From Doug Stone: Wow, this is really fascinating. It’s interesting to try and parse what this guy is thinking. On first blush, it feels extremely ingenious. But after I think about it a bit, I’m not quite sure why it’s better than both agreeing to split up front. It obviously has to do with ones sense of trust of the other and prediction about what will influence and perhaps bind them. But hard to figure out the assumptions that would lead to this tactic. Another thought has to do with the obvious overlay of reputational interests — being on the Tele and having everyone learn that you keep your word, or don’t. Hard to imagine how anyone could need a few thousand pounds more than they need a reputation for honest dealing, but I guess it depends on your circumstance. Does anyone know how this game typically plays out? Also, wouldn’t this game get boring to watch after awhile?
From Bob Mnookin: It’s so interesting and a very sophisticated strategy. The idea that his televised statement that he would “steal” and but then in fact “divide” the money was more credible (perhaps) than a straightforward commitment to split. Obviously by committing to steal, and offering to divide the $ anyway, he made it rational for the other guy to choose the “split” ball.
From Scott Peppet: This is the best short video example of “changing the game” I’ve seen, at least in the sense of changing the incentives. As you say, he simplifies the other guy’s choice so that the guy now is just deciding between $0 and a chance that he’ll get half in the side deal after the show. He thereby eliminates the temptation that the other player would have felt if he said “let’s both split.” I agree, an ingenious move. And a wonderful add-on for a class on Oil Pricing or any PD game.
From Doug in response: Hmm, I guess once the first guy commits credibly to Steal, there’s no “rational” move for the second guy but to Split. He has the upside of maybe getting a split after, and no financial downside. Of course, this assumes his interests are financial rather than about reputation or revenge (three r’s? remuneration, reputation, revenge?).
So, the second dude could have changed the game as well, to chicken: “I’m not interested in whatever you just said. He’s what I am going to do. I am going to Steal. I will then split the money with you after the show. I make this commitment on national television. I’m now going to cover my eyes and ears and not listen to anything else you say.” The guy who said that could either then Steal or Split, with Split being the better choice, but now the first guy pretty much HAS to go Split, and the risk of non-compliance has shifted from the second guy to the first. However, if the first guy assumed the second guy was up to the same trick ending, he might then assume the second guy would go Split and then he could go Steal instead….
I guess this would be a lot to think of in the two minutes you have to figure it out….
Back from Scott: Yes. There are all sorts of possible permutations. If you’re interested, there is a Volokh Conspiracy post on this with some good commentary: http://volokh.com/2012/04/22/golden-balls-split-or-steal-explain-this-episode-to-my-students/
I think a couple of things are fun to think about:
1) Cognitive overload: I think the first guy (Nick) predicts that the second guy (Ibraham) won’t have time to do anything other than what he did. He was right. Could Ibraham have fought back and tried to use a commitment tactic himself? Sure. But he didn’t have time to gather himself for that sort of move.
2) Framing and first mover advantage: Nick is a master. He is SO focused and intent while the host is laying out the rules, and he jumps immediately to speak first. Once he does, he’s got Ibraham by the, well, golden …
3) This is a one time strategy: It is brilliant, but I don’t think anyone can do this on the show in the future (assuming that future players watch prior shows in advance of playing). Fun to ponder what would happen IF someone tried playing this strategy a second time.
And from our own Michael Moffitt in his inimitable fashion: Really, the most extraordinary thing about this clip is that the host repeated the phrase “golden balls,” in a British accent, multiple times, without giggling.
After making Michael’s point in class last week, I showed this in our last class for negotiation as a “change the game” lesson to send the students off into the real world. A great discussion tool and fun to watch too. Really wonderful!