The wallet game: a neat auction
Imagine you are taking a game theory class, and the professor announces an experiment. You and another student are called up to the front of the classroom to participate in an auction. Here is how the auction works: --the prize money equals the sum of money in both of your wallets --the winner is ...

Movie ticket price discrimination example
Most American theaters sell movie tickets at a fixed price. There usually are discounts for early showings or for child/senior citizens, along with a premium rate for a 3D movie, but that's pretty much it. In Pune, India I noticed a much more tiered pricing system for its movies. Here's an example ...

The supply game
(Apologies my site has been down today with technical issues. I am looking to get it resolved) Recently India caused a stir in global markets when it banned its cotton exports. The ban was a result of the unstable cotton global market, which has lead China to stockpile its cotton supply ...

Number matching game
This is a game I created after reading about a similar card game in Game Theory: a Very Short Introduction. It's a simple example of a zero sum game that's slightly more complicated than rock-paper-scissors. Here is the game: Alice and Bob play a number matching game. Each simultaneously picks an integer ...

Would you pass this 1971 economics test?
A while ago I was in Madison, Wisconsin and was browsing the small library at the hotel. Inside one of the books I found a few pieces of paper, which turned out to be an economics final examination dated June 10, 1971. Even though the test was over 40 years old, the ...

The card game le her
While game theory as we know it began about 60 years ago, there were game theory ideas dating back to hundreds and thousands of years ago (see how game theory solved a religious mystery). Another early example happened in 1713, when James Waldegrave provided a mixed strategy solution to a two-person ...

How not knowing game theory can cost you millions
A few months ago, The Economist ran a great article about some of the practical applications of game theory. My favorite part of the article was the following paragraph which highlights how ignorance of game theory can be costly:

Attacking a target optimally: an example of war game theory from RAND 1957
The Prisoner's Dilemma. The doctrine of mutually assured destruction (MAD). These are just two of the game theory ideas that came out of the RAND corporation during the 1950s, forever associating game theory with the non-profit think tank. But there were other interesting game theory applications, too. I came across a ...

Joke: how to sell a dead donkey
I came across an old joke about how it's possible to turn a profit from selling a dead animal. While the story is not true, there is a lesson to be learned.

How to divide up chores fairly using game theory
This post is based on the following email I got from Cheryl: Hi Presh~ Could you write a blog post on game theory tips for fairly dividing household chores/tasks (for roommates, partners, and perhaps coworkers)? Bonus points for providing easy division methods that people will actually use. In any case, keep up the ...

Gifts for economists, 2011
What would you get an economist as a gift? Each year on this blog I have tackled this question, and here are the three previous guides: –Gifts for economists, 2008 –Gifts for economists, 2009 –Gifts for economists, 2010 You should check out those lists, which are still full of good ideas that I do not ...

How to split a cab fare fairly using game theory
I came across a fantastic game theory article that appeared in the Wall Street Journal Number's Guy blog all the way back in 2005. The article is about three friends who agree to share a cab, and the possible ways they can split the costs. I highly recommend you read the article. The ...

Dividing up Halloween candy: the strategy to get the best candy for yourself
One of the things I used to enjoy about trick or treating was the surprise factor. Each house offered different candy, resulting in a nice mix. But the variability lead to some issues too. Many times my brother and I would go to the exact same houses, but we would end ...

All about economic consulting: what it is, how to get a job
Today I want to share a bit about the field of economic consulting. While this site already has a classified listing of jobs in economics, I wanted to highlight economic consulting because it will be of particular interest to readers of this blog. You should be interested because jobs can be ...

$10 if you guess who will be fired next – boss demonstrates how not to motivate employees
There are proper ways to use incentives to motivate employees. I have written about how incentives can help improve productivity and even reduce employee theft. Then there are the abysmal incentives that are dreamt up by sadistic bosses. This week there were news reports of a boss who made a contest ...