Behavioral Game Theory

A few days ago we heard the story of how a waitress rescued an 86 year old lady who been stuck in her bath for four days. The waitress contacted the police after becoming concerned that Doreen had not come in for her usual lunch and wine. A story with a happy ending.          A story with a not so happy ending is the infamous murder of Kitty Genovese in 1964 in New York. This murder caught the public's attention because of the supposed number of witnesses who did nothing to stop the crime. The exact details of what happened are debated . One thing is, however, for certain: Several people must have seen or heard the attack and  none of them called the police.         To try and make sense of these conflicting stories let us look at simple game theoretic model. Suppose that there is someone called Doreen that needs rescuing and there are n witnesses who can call the police. If (at least) one person calls the police then Doreen is rescued and all the witnesses feel relief equa

In economics there are two diametrically opposed ways of viewing politicians. For the most part we assume the benevolent social planner who acts to maximize social welfare. But, when it comes to specifically analysing political decision making we typically assume that politicians are just like everyone else - out to maximize their own payoff. If a politician's objectives coincide with those of society then we have no problem. But, there are, of course, lots of reasons to suppose that political and societal objectives do not coincide.           A particularly important issue is that of electoral survival. Clearly, a politician needs to get elected in order to make a living. That means it is in a politicians interest to do things that go down well with the electorate. At first sight you might think that this aligns the incentives of the politician with those of society because the politician needs to do good things to get elected. There is, however, a problem of asymmetric informa