LSE Review of Books Episode 7: Behind Economics and Finance: Prisoners’ Dilemmas and Payday Lenders [Audio]
Jul 17, 2013
Carl Packman, a researcher and author of 'Loan Sharks', dives deep into the troubling rise of payday lending in the UK, revealing its impact on vulnerable communities and the cycle of debt it creates. John van Reenen, Director of LSE's Centre for Economic Performance, reflects on the influential books that shaped his economic perspective, showcasing how narratives and trust play crucial roles in decision-making. Together, they explore the blend of economic theory and real-world implications, making complex ideas relatable.
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Prisoner's Dilemma Challenges Self-Interest
- The Prisoner's Dilemma shows that mutual self-interest can lead to worse outcomes for all involved.
- Collaboration rather than individual selfishness is often better in economics and strategic decision-making.
Models Are Practical Reasoning Tools
- Economic models are imaginative tools economists use to explore possible implications about the real world.
- Like maps, models simplify reality and are not exact reflections but are used for reasoning and decision-making.
High Street Payday Loan Takeover
- Carl Packman noticed payday loan shops rapidly replacing businesses in Kilburn, signaling a takeover of high streets.
- Payday lenders target speed over price, leading to irresponsible lending and debt cycles for vulnerable consumers.
