
The obscure game-theory problem that explains why rich countries are rich - nickb
http://www.slate.com/id/2174706/
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danteembermage
The Normal form of the game is linked in the article

    
    
             stag    rabbit
    
     stag    10,10   0,8
    
     rabbit  8,0     7,7
    

Both players choose stag or rabbit and score according to the cell on the grid
that matches both moves. So 10, 10 is better than 7,7 for everyone so it is
Pareto optimal however a player choosing rabbit gets 8 or 7 versus 10 or 0 for
stag, so the uncertainty is higher for stag.

I think a way to translate the article into this framework is to add players,
reducing the likelihood of getting saddled with a zero if you trust. Then,
when someone rabbits, redistribute from some 10s to the zero guy. Instead of
10 a lot and 0 some, you get 10 some and 9 a lot, better than 8 or 7 always.
Hence credit card interest rates, and credit cards existing at all (you pay
14% because lots of folks default, but without a big pool it would be too
risky for the lender)

However, lots of rabbits can swamp this arrangement; a bank run would be a
good example. Then you rationally go rabbit because your 10 9 is turning into
a 5 3.

So perhaps institutionalizing trust is approximately equal to diversification.

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mynameishere
In real hunts, you have this one player called the "alpha male". If you think
cooperation is the hallmark of such arrangements, try a bit of defiance...

~~~
eru
Sure, following a leader is a perfectly acceptable form of cooperation for
game theorists.

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kul
trust comes from a legal framework. he overlooks that.

