Who pays the bill?
Where we learn what beers in a bar can teach us about the games of life
Imagine you go to a bar with a new acquaintance and both of you order a beer, for 5 Swiss francs. However, just before the time to pay is arriving, your new “friend” runs away without paying, leaving you with an unplanned 10 francs bill! Apart from making you angry, this also makes you think: you could have been dishonest before him, leaving him with a 10 francs bill in the first place. But then, what if he run away, too?
Welcome to the wonderful world of game theory. This science studies the optimal way to play such situations and many other games of life. So let’s look again at the above situation from this theoretical point of view. Obviously, each one of you can either be honest and pay, or try to run away. This gives four possibilities: when both people are honest, they pay 5 francs each. However, if one of is honest and the other not, the dishonest person spends nothing and the honest person is stuck with a 10 francs bill. Finally, if both try to run away, they are obviously caught and each will have to pay for their drink plus a 2 franc fine, that is, 7 francs each. So what is the best option?
Perhaps counter-intuitively it turns out that, if self-interest is the main goal, a person would always gain by trying to run away in this concrete situation. After all, if the other person is honest, staying will cost 5 francs, but running will cost nothing. And if the other person is dishonest, staying will cost 10 francs, but running will only cost 7 francs. So in both cases, running away is a less expensive option (as long as the fine is not too high, of course).
Of course, game theory is not only applied to bar situations, but to many more relevant phenomena ranging from marketing to politics. And things quickly get more complex when outcomes are not just based on pure profit maximisation by the individual, but also on more intangible principles such as trust, respect and the so-called “greater good”. However, as game theory precisely shows us, with the wrong assumptions of the opponent gamer, we can be a victim of our own rationality and end up stuck in an equilibrium point that is not optimal, neither for ourselves nor for society.
Game theory has also won Nobel Prizes, such as the one for the famous economist John Nash. He has also been the main protagonist of the movie “A Beautiful Mind”. In the movie there is a scene, where John explains the ideal solution for an everyday problem, namely him trying to get closer to a woman in a bar. Well, did it work out for him? I won’t tell you, but it’s definitely more advantageous to go to a bar with real friends.
