Economics, games, and choices

In two unrelated instances today, I ended up speaking with friends about the kind of games economists make people play in experiments. The objective in doing so is to learn how people reason, when presented with economic choices. This has a lot to do with heuristics and often generates results that do not make sense, if people have the sole objective of maximizing how much money they will earn from the game itself. That is what happened when I played one of these games during my first month in Oxford.

The form I was discussing with Mark is called The Traveler’s Dilemma (not to be confused with The Salesman Problem). Being good at games like the Traveler’s Dilemma will help you in negotiations with tricky insurance companies. Solving the Salesman Problem would earn you the esteem of mathematicians everywhere.

In a act unrelated to either conversation, Nick Howarth – an Oxonian and former Olympian who I met a couple of days ago – sent me a link to a Nobel Prize lecture on the emerging discipline of behavioural economics.

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. In the fall of 2005, I began reading for an M.Phil in IR at Wadham College, Oxford. Outside school, I am very interested in photography, writing, and the outdoors. I am writing this blog to keep in touch with friends and family around the world, provide a more personal view of graduate student life in Oxford, and pass on some lessons I've learned here.

2 thoughts on “Economics, games, and choices”

  1. Tim Darling’s “Surefire Strategy” for winning at Monopoly sounds plausible — a great way to suck all the fun out of the game, leaving behind nothing but the relentless pursuit of victory.

    * Always buy Railroads; never buy Utilities *
    * At the beginning of the game, focus on acquiring a complete C-G (Color Group) in Sides 1+2, even if it means trading away properties on Sides 2+3. After acquiring one of these C-Gs, build 3 houses as quickly as possible: no more houses, no less!
    * Once your first C-G starts to generate some cash, focus on completing a C-G and building 3 houses in Sides 3+4.
    * Note: 3 houses is the “sweet spot” in the game as shown in Table 1 below. That’s where you’re making the best use of your money.
    * Single properties are the least good investment if you don’t build on them.
    * The only exception to the above rules are when you need to acquire stray properties to prevent your opponents from completing their C-Gs to accomplish the above strategy.

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