In my previous post I argued that a person can be kept truthful (in a repeated setting) by the threat of never believing this person again once this person has been caught lying even once. This is a strategy that, as I have pointed out in my previous post and in one comment, many proverbs suggest.
In this post I want to ask the question whether this threat is a credible one. I will have two answers to this question. Yes and no. Continue reading
You probably know the story of the boy who cried wolf. A boy is charged by his elders to watch their flock of sheep and to call them as soon as he sees a wolf approaching. The wolf supposedly would want to kill one of the sheep, and the boy’s cry of “wolf” would bring the elders running to fend of the wolf to protect their sheep. In the story the boy on two occasions cries wolf when there is no wolf, with the effect that the elders come running both times and being very upset at his “lying” (and the boy pleased). But when he does cry wolf for a third time, this time when there actually is a wolf, the elders do not believe him and stay away. This, of course, has the disastrous (?) effect that the wolf kills one of the sheep.
The nappy-changing game as I have written it down in my post on lying (which you may need to read before you can read this post) can also be seen as the game between the boy and his elders. There are two states of nature. Either there is a wolf or there is not. The boy, who is watching the sheep, knows which state it is and the elders, who are somewhere else, do not. The boy has four (pure) strategies: never say anything, be honest (cry wolf when there is one, be quiet when there is none), use “opposite speak”, and always cry wolf. The elders who listen to the boy’s cry also have four (pure) strategies: always come running, trust the boy, understand the boy as if he was using opposite speak, and never come running. Supposedly, the elder’s preferences are just as mine are in the nappy-changing game. They would like to come running if there is a wolf, and they would like to keep doing whatever it is they are doing when there is no wolf. The boy’s preferences seem to be the same as Oscar’s in the nappy-changing game. If there is a wolf the boy would like to see his elders to come running to help, but the boy would like the elders to come running even when there is no wolf (he gets bored I suppose). The one slight difference between the two games seems to be that the assumed commonly known probability of a wolf appearing, is now less than a half (if we assume that the payoffs are still just ones and zeros). Well, what matters is that the ex-ante expected payoff of coming running is lower than the ex-ante expected payoff of staying put. We infer this from the elders’ supposed actions of staying where they are when they do not believe that there is a wolf. If the elders had found a wolf attack really disastrous and at the same time sufficiently likely, then after finding the boy not trustworthy, they would have decided to come always, that is to watch out for wolves themselves. The fact that they let the boy do the watching (and to then ignore his warnings – because they do not believe him) tells us that without further information about the likelihood of the presence of a wolf, they prefer to stay where they are (probably doing something important) and risk losing one sheep to a wolf over keeping constant watch for wolves.
In any case the same model as the nappy-changing game, but now with , now takes account of the supposed (long-run) behavior in this story. The game still has only two pure equilibria and they involve the boy either crying wolf in both states (or not doing so in both states), but now with the effect that the elders never come.
There is a German saying about lying: “Wer einmal lügt, dem glaubt man nicht, und wenn er auch die Wahrheit spricht.” The closest corresponding idiom in English is probably this: “A liar is not believed even when he speaks the truth.” This is good enough for the moment but there is a little bit more information in the German saying than in the English one and this little bit more will become interesting in my discussion further below.
There are many forms of lying, from so called white lies that are really just a form of politeness to deliberate attempts to misrepresent the truth to fashion policy (of some institution) in your own interest. I am here interested in something somewhere in the middle of the lying spectrum, children lying about something to avoid a slightly unpleasant duty. We all know that a child’s answer to “Have you brushed your teeth?” is not always necessarily completely truthful.
In this and the next two blog posts, using the language of game theory, I want to discuss the incentives to lie and how one could perhaps teach children not to lie.
Ein Beispiel einer Vorlesungsstunde für potentielle angehende Studierende. Es geht um rationales Herdenverhalten. Wenn ein Produkt von vielen Menschen gekauft wird, heißt das dann, dass es ein gutes Produkt ist? Warum gehen wir lieber in das volle Lokal? Und was bedeutet das für andere?
This post builds on the previous two, economics on the beach II and economics on the beach III. I have started this, so I need to finish this now. In this post I will finally try to build a small model in which it is true that “charging a perhaps even substantial price for beach access would be welfare improving for all potential beach goers”.
I will try and build a small model in which it is true that “charging a perhaps even substantial price for beach access would be welfare improving for all potential beach goers”, a claim I made in my last post. In this post I will take a first few steps in this direction, first only demonstrating my claim that beaches potentially suffer from the “tragedy of the commons” before I will tackle the main question in the next post.