3 February 2009
One of the most depressing aspect of conventional economics is the way it reduces everything to a self-interested trade. Gary Becker, for example, suggests that women choose their husbands on the basis of the amount they earn; whereas men choose their wives on the basis of their ability to perform at dinner parties and assist the ascent up the slippery pole.
The most blatant expression of this underlying culture amongst economists is what we teach as 'game theory'. This is another jargonistic misnomer, since the situations we deal with are far from convivial evening entertainment. Whoever played games in a police station - the setting for the archetypical example of the genre: the prisoners' dilemma?
This is a game that questions whether you should trust your 'friend' when you've both been caught in some shared criminal activity. You are questioned in separate cells. If you both deny the crime you will both be let off. But if you deny it and your friend confesses, s/he will take all the penalty. If you confess and your friend denies it you will take all the punishment on yourself.
In reality, of course, all of these 'games' and their study become a self-fulfilling prophecy. If you take love and spontaneity out of human relationships you can guarantee that you will be unpopular and that most of your friends will be exactly the same calculating sort of person you are yourself. You will become less sociable and be more miserable. Such games are best avoided in life and in economics.
However, I recently heard of a game strategy I liked. It is called Always Generous and is fairly self-explanatory. It fits in well with my moral inclination and is also excellent for dealing with that awkward situation at the end of shared meals in a restaurant when nobody is sure whether they should pay for what they actually consumed or their share of the total.
The Always Generous strategy suggests that you break the deadlock by putting on the table at least a third more than you could owe under either of the other strategies. I've seen this done twice recently and it works a treat. Everybody puts in too much money - the excess can either go to the less well-off around the table or the waiters. When meanness is an option, generosity is always a better bet - in economics, in the restaurant and, most importantly, in life. Tweet