Thoughts on economics and liberty

How good people become bad: a visual demonstration

A few weeks ago I wrote about economic design (here). The key point was that if systems are bad, if incentives are bad, then even good people WILL become bad.

The Golden Balls TV show in UK demonstrates this in front of your eyes.

This is how the last round is played:

The two players secretly choose a split or steal ball. If both of the players choose the SPLIT BALL, they share the money accumulated in the end game between them. If one player chooses a SPLIT BALL and one chooses a STEAL BALL, the player who steals takes away absolutely everything. If BOTH players opt for the STEAL BALL, they’ll both walk away from the show with absolutely nothing. [Source]

Now watch what happens. Just three minutes.

(The largest jackpot so far was featured in the second series on 14 March 2008. The accumulated jackpot was £100,150 and the entire jackpot was stolen by contestant Sarah, making her the biggest winner on the show to date. [Source])

Note that Sarah had been similarly "stabbed" in the past. People learn to become bad.

Cheating is the ONLY stable point (Nash equilibrium) in such games.

Corruption is the ONLY sustainable equilibrium in India's context today. 

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