Thursday, November 7, 2013

Game theory is to blame for unjust system!

Good morning economists! Long time no see. I was rather busy (as usual), you know the normal married, gone to my honeymoon, taught three economics classes and so on :). Now that things are starting to settle down, I hope to tend to my blog again. A lot of interesting stories to tell as always.

A few days ago, I was drinking coffee on the beachfront in my hometown when I noticed something strange. A police car parked on the side of the road and the officers were stopping all people riding motorcycles. From what I could make out, they were asking for license, registration and checking to see whether riders were wearing their gear. They were even stopping old men riding small scooters.

At one point I noticed a teenager riding a GSXR. For those who are not familiar with motorcycles, this is a rather fast one, capable of reaching speeds well in excess of 200 km/h. The teen was not wearing a helmet and was showing off by doing burnouts (spinning the back wheel hard so that smoke was coming out as a result of the friction). I thought to myself that the police will most likely arrest this guy.
To my surprise, the police did absolutely nothing. They did not even flag him down. Upon further reflection, I understood that game theory is to blame (game theory is a situation where two or more players act based on their beliefs on how others will act).

The teen knows that his bike is fast enough to lose the police car in the small city streets. So if the police gave chase he would most likely run. So if his decision set was comprised of the decisions to run or not to run, he would always choose to run because the punishment from getting caught would be very severe.

The police on the other hand know that the teen would most likely run. The decision set of the police officers is comprised of the actions to give chase or not to give chase. If they decide to give chase and they catch the teen, they will most likely get a pat on the back from their superior officer. If however they give chase and cause an accident (or the teen gets injured from trying to get away) the officers will most likely end up in court and will lose their jobs in the process (yes it has happened before). So weighing their options, police officers decided not to give chase and they went back to giving tickets to 60 year olds riding scooters....oh the injustice.

Can you think of any other situations that game theory messes things up?