3min chapter

Think Like An Economist cover image

S E46: Game Theory - Thinking Strategically

Think Like An Economist

CHAPTER

I'm Better Off Confessioning

If you rat her out, you'll go free. If she denies and i follow through on my promise to deny it, then we'll each just get one year of jail. So if bonny denies, i'm better off confessing. The problem is, i just don't trust him. Denying is too risky. Clyde is not trustworthy enough. I'm going to confess. Are you sure? Yes. What we've just seen is something called a nash equilibrium. That means, if i'm making the best decision i can based on what i think clyde is doing, then i have no incentive to make a different decision. Oh, 'm dom being bonny

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