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...

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 nu...