Behavioral Game Theory

Think of how a car park typically works: you pick up a ticket when you drive in and then pay in rough proportion to  how long you park your car. Now think of how a gym typically works: you pay a fee when you go in and can then stay as long as you like.          There is no reason, in principle, why the car park could not charge a lump sum fee and the gym charge for how long you stay there. But they typically don't. And the gym may well even offer a membership package that allows year long unlimited use. How can we make sense of all this?          We need to think in terms of two part tariffs. With a two part tariff the customer is charged a lump sum fee for access to the good and then charged a user fee for each unit of the good consumed. For example, on your mobile phone you may pay a monthly subscription fee and then a fixed fee per text message or call. The car park that charges for how long you stay is using a two part tariff where the  lump sum fee is zero . Similarly t

As the dust finally settles on the 2015 UK general election it is interesting to reflect on the big (game theory) question - why did over 30 million people turn up to vote?        A simple model of voting would suggest that hardly anyone should vote. Basically there are non-negligible costs to voting in terms of time. But, the expected benefit of voting seems very, very small. Indeed, since universal suffrage in 1928 there is not a single constituency election in the UK that has been won by one vote. In other words everyone who has voted in a UK general election for the last 70 years or so could have stayed at home and the outcome would have been exactly the same.         With such dismal prospects of making a difference why would anyone vote? Yet people do vote! This is the paradox of voting . And I saw the paradox in full swing at 7am on polling day - people were already turning up in numbers, eager to vote, smiles on their faces.      Typical explanations that have been propose