MIT Professor, Micky Rosa (played by Kevin Spacey) challenges Ben with the Monty Hall problem of selecting a door with a prize hidden behind it. The Monty Hall Problem is based on a statistics brain teaser that insists the optimal choice is to switch your decision after the host reveals what’s behind one of the doors.
Stephen Colbert interviews economist Tim Harford about his then-recent book, Logic of Life. Harford and Colbert discuss a number of items that people may consider irrational, but actually turn out to be rational like voting, unprotected sex, and smoking. The entire discussion focuses on the central idea of the definition of rationality.
Two high school students decide to play a game of chicken on a dare. In this classic game, two contestants head straight for one another and the winner is the one who doesn’t bail or turn away. If both participants turn away then they both are deemed “chickens.” However, if both stay the course then they will crash into one another and possibly die.
Thanks to Austin Boyle for the clip!
Christian Finnegan knows he isn’t in the best shape so he’s decided to join a gym. He figures that at least if he never goes to the gym then he can consider the gym membership a form of fat tax. This framing adjustment could still have the same impact as working out since he now has to internalize his decision to eat unhealthy foods.
Wanda Sykes describes how she tests her husband when he doesn’t even know he’s being tested. She’s okay with a sink of dirty dishes one or two days, but if it continues for much longer than she’ll extract her revenge (later in the clip she talks about how all the fury comes out when they’re having sex). This tit-for-tat behavior where one party waits for the other one can turn into a situation where both parties are eating off of napkins and no one is cleaning anything.
Ron White, in They Call Me Tater Salad, discusses an interaction with a fan who wanted him to know that it’s illegal to shoot someone in the back regardless of what crime they’ve committed against you. Ron quickly points out that you could just shoot them in the leg in order to get them to turn around, which means that the optimal strategy is to never turn around.
This animated clip illustrates the Hotelling Model well (even though they don’t mention it), but can also be used to introduce the idea of sequential moves.
Business Insider wanted to test just how strong the endowment effect (regret avoidance) is when it comes to Powerball tickets for the large jackpot this past week. Overall, people seemed really inclined to want to keep their numbers, even when offered the twice what they paid for the tickets.
The Battle of Wits scene may be one of the best game theory examples that students have scene before. It’s a great opportunity to introduce the concept of full information and knowing what the other one knows.
In the great British game show, Golden Balls, contestants must decide whether to cooperate with each other or be devious. The dramatic outcome of the game (replicated here) is that one will steal and the other will be honest. This variant of the game has a unique twist to ensure cooperation.