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David Friedman | Gaming the Future, Chapter 4: SKIM THE MANUAL | Intelligent Voluntary Cooperation.

Foresight Institute Radio

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The Bilateral Monopoly Problem Game

Economists think of it as the bilateral monopoly problem game, which is I've got an apple. My apple is worth a dollar to you and I want to sell it to you. If I really believe that you won't pay me more than a penny, I should accept that offer because a penny is better than nothing. Each of us has an incentive to pretend to insist on the price he wants in order to get his outcome in the bargaining.

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