Consulting by RPM || Free Advice Blog

Finding an Actual Use for My Game Theory Training

Although my dissertation was in capital and interest theory, my “field exam” at NYU was in “theory,” which basically meant micro/game theory. This was definitely an example of studying something for its sheer elegance, because I think whenever game theorists pontificate on the actual real world, they usually give horrible advice. (E.g., “Yes, sir, it would be a good idea to build hundreds of nuclear warheads for the U.S. government, but only if we deploy them according to this formula.”)

But yesterday I actually benefited from my years of training. On the radio there was some goofy commercial with kids on a road trip. The kids are bored and the brother says, “Let’s play 20 Questions” and the sister immediately agrees and throws out the first question. So there was no way the brother could have had time to think of his pick, before hearing the question about it.

So that got me to thinking: Would there be an advantage to either player, doing it this way? In other words, if someone says, “Let’s play 20 Questions!” should you immediately blurt out a question, before the person can think up his pick? Or does it give an advantage to the other player, because then he can choose the thing based on your question (and then answer appropriately of course)?

At first, I thought there was no way to really answer this definitively. But then I realized that actually, the answer is straightforward, and all you have to do is make a very weak assumption that wouldn’t even upset Murray Rothbard on a good day.

I leave it to the reader as an exercise.