2min chapter

Think Like An Economist cover image

S E46: Game Theory - Thinking Strategically

Think Like An Economist

CHAPTER

What's the Best Outcome for Bonny and Clyde?

An equilibrium is a forecast of what's going to happen, and not necessarily what's best for society. Bonny and clyde could have co operated with each other and stuck to their original plan. They'dhave both been better off co operating, but in the end they didn't, and now they're both worse off. Yet, it's crazy, rigot, you know, i recall when i was an economic student, and we learnt about adam smith and the invisible hand,. Or rather, if you allow people to pursue their self interest, you'll end up with the best outcomes for everyone. But this example seems to fly in the face of all of that. You

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