Wicked Games – Bedroom Economics


Game theory - the hottest thing around?

Game theory – the hottest thing around?

Oh, the joys of managerial economics, as taught in an Executive MBA setting…the land of Qmax, Pmax and Δmax, of Cournot and Bertrand oligopolies and Nash equilibrium…actually, wait a minute! Nash equilibrium? “A Beautiful Mind” Nash? Russell Crowe Nash?! Yup, I know I have your attention now. (As an aside, if you don’t know who Russell Crowe is or you just thought “But he’s like…OLD!”, you would probably be more suited for a full-time MBA) . So, remember that bit in the film where he develops this amazing theory while he and his friends are trying to figure out how to pick girls up in a bar? If not, here’s the Wikipedia synopsis:

“His inspiration comes when he and his fellow graduate students discuss how to approach a group of women at a bar. Hansen quotes Adam Smith and advocates “every man for himself”, but Nash argues that a cooperative approach would lead to better chances of success. This leads to a new concept of governing dynamics which Nash develops and publishes.”

Now, I have no idea what governing dynamics is and thankfully, I don’t have to know that for the EMBA, but in our Managerial Economics (ME) class we did touch on game theory and talked extensively about the Nash equilibrium (defined as a situation in which each player in a game chooses the strategy that yields the highest payoff, given the strategies chosen by the other players). If you’ve ever come across game theory in your studies, you may be familiar with tables that look a bit like this:


This particular table reflects the rules of a game that is somewhat similar, but not identical, to the classic Prisoner’s Dilemma game (you can refresh your memory on that one here). In the Black/Red game, each participant must vote either black or red. The points each receives will depend on what the other participant votes: if they both vote black, they each get 15 points; if they both vote red, they each get 0 points. If they vote differently, the one voting red gets 30 points and the one voting black gets 0 points.

In an excellent article on “The Good Men Project” website, author Laurie Watson describes how this game is used in personal development seminars by her husband. A group of people is divided into two and participants are instructed to obtain the most points for their team by repeatedly playing this game. Initially, of course, everyone votes red, because this prevents the other side from getting any points. The problem is that, with everyone voting red, nobody gets any points. At some point, however – and this is where our friend Nash and his cooperative approach come in – one of the two sides starts voting black. After a few rounds, the other side realises that a message is being sent: think cooperatively and vote black; that way, we are all better off. The idea is not to make sure that the other side doesn’t win, but to get points for the team – and, actually, guess what? The team is the entire group.

So far, so economics-y, you might say. Can we go back to talking about Russell Crowe? Well, this is where economics gets steamy: Watson believes that the “vote black” approach is key in resolving marital problems, in particular differences in libido between the two partners. She argues that the typical reaction in such a situation is for each partner to “vote red” and try to satisfy their own desire (or lack thereof), when the best solution is to embrace “a couple mindset” and – I will quote Watson because she puts it so well: “Vote Black. Care more about the marriage than just what you want. When you want something, consider how it impacts your spouse”. Watson then goes on to offer tips on how to “vote black” for the lower-desire and higher-desire partners, which I will leave you to discover on your own in the original article while I go and get better acquainted with the considerably less steamy Messrs Cournot and Bertrand for my upcoming ME exam. Happy voting!

Image credit: auremar / 123RF Stock Photo



How's your spring going?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s