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Ever played the investment game? (or variations) [0] I used it in a game theory class to teach distribution, thresholds and coordination. Take a pile of penni

Ever played the investment game? (or variations) [0] I used it in a game theory class to teach distribution, thresholds and coordination. Take a pile of pennies and give one to every member of the class. A group of about 100 in a large lecture theatre is best. Now tell them that if they agree to invest in your scheme by pitching their penny, you will guarantee to give them two pennies (2x sure ROI) just for participating... BUT IFF more than say 75% of the group invest. If less than three quarters of the group invest, the investors lose everything. Watch in amazement! Slowly lower the participation threshold. You can get it down to 40% sometimes, with more than half the class literally screaming at each other "Don't you fucking understand you idiots!". The minority still hold out and claiming it's a con and dig in even more as the threshold lowers. Controversially. I sometimes then use that to teach leadership/demagoguery by acting as (or selecting someone else to act as a stooge) coordinating authority and order them all to invest. It's actually terrifying to see how democracy succeeds or fails based on the flimsiest of information paths and communication factors. [0] https://en.wikipedia.org/wiki/Coordination_game https://en.wikipedia.org/wiki/Coordination_game

leereeves 3y ago
The stakes there (a penny) are far too low for the game itself to matter. I'd say what you're witnessing is instead a debate about whether people are trustworthy or not, plus some attention/status seeking, preexisting social dynamics in the group, and people just having fun stirring up trouble.
- nonrandomstring 3y ago
  Could be. If only they paid professors enough I could afford to hand out some £5 notes. Oh well, for that reason I probably won't ever again get to try that fun game with higher stakes.
  - pdonis 3y ago
    The game can't be played with higher stakes; the whole point is that the 2X payoff can only be guaranteed in the first place if the stakes are too low to make any real difference. In the real world, people who refuse to invest in such schemes when the stakes are enough to make a real difference are being rational, because in the real world, nobody can guarantee a 2X payoff with stake amounts that actually matter unless they are running some kind of scam. That is the basic reason why these games played in academic settings are useless for understanding the actual world outside academia.
    - nonrandomstring 3y ago
      > The game can't be played with higher stakes; the whole point is that the 2X payoff can only be guaranteed in the first place if the stakes are too low Also a good point about how contrived the experiment is. Double your money is always too good to be true. > That is the basic reason why these games played in academic settings are useless for understanding the actual world outside academia. I am always wary of assumed dichotomies between "the real world" and "academia". Please let me try to explain why I tire of that jaded trope... Actually there's three domains of interest here. There is "academia", which is indeed a cloistered madhouse of egotistical and socially stunted Luftmensch. And there is the world outside it.. which is often deflated into something like "Industry" - to which people attach pompous tags like "the real world". Rot. I've worked in both and neither encompass the "real world". Neither capture the reality of the Favela, the terminal cancer ward, the battlefield.... Both are microcosms with big ideas about their own scope. Thirdly, separate and distinct there is the abstract mathematical world of Game Theory, being neither the academy nor the factory boardroom, but a non-existent and inscrutable world of equations and theories. It makes few if any claims. One may derive utility from it, apply it, or not.
      - pdonis 3y ago
        > Actually there's three domains of interest here. None of which, as far as I can tell, are "the real world". So there is obviously a fourth domain that you didn't cover (although you briefly described some aspects of it). And that kind of disconnect is what I was talking about. Abstractions are all very well, but unless they ultimately bottom out in something getting improved in the actual real world (not "academia" or "industry" or "game theory", but the world of Favelas and terminal cancers and battlefields and so on), they are useless.

leereeves 3y ago

The stakes there (a penny) are far too low for the game itself to matter. I'd say what you're witnessing is instead a debate about whether people are trustworthy or not, plus some attention/status seeking, preexisting social dynamics in the group, and people just having fun stirring up trouble.

nonrandomstring 3y ago
Could be. If only they paid professors enough I could afford to hand out some £5 notes. Oh well, for that reason I probably won't ever again get to try that fun game with higher stakes.
- pdonis 3y ago
  The game can't be played with higher stakes; the whole point is that the 2X payoff can only be guaranteed in the first place if the stakes are too low to make any real difference. In the real world, people who refuse to invest in such schemes when the stakes are enough to make a real difference are being rational, because in the real world, nobody can guarantee a 2X payoff with stake amounts that actually matter unless they are running some kind of scam. That is the basic reason why these games played in academic settings are useless for understanding the actual world outside academia.
  - nonrandomstring 3y ago
    > The game can't be played with higher stakes; the whole point is that the 2X payoff can only be guaranteed in the first place if the stakes are too low Also a good point about how contrived the experiment is. Double your money is always too good to be true. > That is the basic reason why these games played in academic settings are useless for understanding the actual world outside academia. I am always wary of assumed dichotomies between "the real world" and "academia". Please let me try to explain why I tire of that jaded trope... Actually there's three domains of interest here. There is "academia", which is indeed a cloistered madhouse of egotistical and socially stunted Luftmensch. And there is the world outside it.. which is often deflated into something like "Industry" - to which people attach pompous tags like "the real world". Rot. I've worked in both and neither encompass the "real world". Neither capture the reality of the Favela, the terminal cancer ward, the battlefield.... Both are microcosms with big ideas about their own scope. Thirdly, separate and distinct there is the abstract mathematical world of Game Theory, being neither the academy nor the factory boardroom, but a non-existent and inscrutable world of equations and theories. It makes few if any claims. One may derive utility from it, apply it, or not.
    - pdonis 3y ago
      > Actually there's three domains of interest here. None of which, as far as I can tell, are "the real world". So there is obviously a fourth domain that you didn't cover (although you briefly described some aspects of it). And that kind of disconnect is what I was talking about. Abstractions are all very well, but unless they ultimately bottom out in something getting improved in the actual real world (not "academia" or "industry" or "game theory", but the world of Favelas and terminal cancers and battlefields and so on), they are useless.