Suggest the following game to the host:
Have a friend donate a $1 bill and place it on the table. There are two general rules.
- The dollar bill is awarded to the highest bidder. Whatever the highest bid is, that bidder pays for the dollar with that bid. Each bid must be higher than the last and the game ends when there are no new bids.
- The second-highest bidder has to pay his last bid, but gets nothing.
It’s easy to imagine how the game plays out. The first bids are pennies, but it slowly rises to bids of $1.00 and $0.99. Now, the second-highest bidder is now paying $0.99 for nothing, when he can just bid $1.01 and only lose a penny! Etcetera, Etcetera, Etcetera… Soon, friends are no longer friends.
Is there a rational way to play this game? This question is the premise of game theory and is the theme of William Poundstone’s Prisoner’s Dilemma. I won’t describe the prisoner’s dilemma here, but I did appreciate the description and critiques of game
theory from this book. Poundstone develops the “why” behind people’s motivation to cooperate or defect. He also presents a brief history of John von Neumann and his contribution to game theory.
A good follow-on to this book seems to be Liars and Outliers by Bruce Schneier, which explores how society relies on trust to function, even when there are defectors, to use game theory parlance. For example, when we board the plane, we trust that pilot knows how to fly.
However, I’m going back to fiction for the moment and I’m going to read the Girl who kicked the Hornet’s Nest. I’ve read the previous two books some time ago, but I have this thing against finishing a series…