Think like a Freak by Steven D. Levitt & Stephen J. Dubner

Author:Steven D. Levitt & Stephen J. Dubner
Language: eng
Format: epub
ISBN: 9780062218360
Published: 2014-04-22T04:00:00+00:00

And so it was that David Lee Roth and King Solomon both engaged in a fruitful bit of game theory—which, narrowly defined, is the art of beating your opponent by anticipating his next move.

There was a time when economists thought that game theory would take over the world, helping to shape or predict all sorts of important outcomes. Alas, it proved to be not nearly as useful or interesting as promised. In most cases, the world is too complicated for game theory to work its supposed magic. But again, thinking like a Freak means thinking simply—and as King Solomon and David Lee Roth showed, a simple version of game theory can work wonders.

As disparate as their settings were, the two men faced a similar problem: a need to sift the guilty from the innocent when no one was stepping forward to profess their guilt. In economist-speak, there was a “pooling equilibrium”—the two mothers in Solomon’s case, and all the tour promoters in Van Halen’s case—that needed to be broken down into a “separating equilibrium.”

A person who is lying or cheating will often respond to an incentive differently than an honest person. How can this fact be exploited to ferret out the bad guys? Doing so requires an understanding of how incentives work in general (which you gained in the last chapter) and how different actors may respond differently to a given incentive (as we’ll discuss in this one). Certain tools in the Freak arsenal may come in handy only once or twice in your lifetime. This is one such tool. But it has power and a certain elegance, for it can entice a guilty party to unwittingly reveal his guilt through his own behavior.

What is this trick called? We have scoured history books and other texts to find a proper name for it, but came up empty. So let’s make up something. In honor of King Solomon, we’ll treat this phenomenon as if it were a lost proverb: Teach Your Garden to Weed Itself.

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