Wednesday, September 9, 2009

The Neighbors Dilemma

Yesterday we got our neighbor's mail. We think they got ours. This made me think of the "prisoners dilemma" ( So I presented the dilemma to the kids. They all said they would "play it safe" and confess to get the short sentence. I gave them a modified version with rewards instead of punishments, and still they played it safe - going for the guaranteed small reward. The issue might have been that even the number that I used for the "small" reward, $100K vs. $1MM, was pretty huge for them. I discussed the importance of each person's situation. For someone with $1MM in the bank, it might be worthwhile to risk getting nothing for the chance of another $1MM (vs. a guaranteed $100K), since that would have a material impact on their lifestyle.

I told them how many entrepreneurs face similar situations in the real world, having to decide between selling their companies for a modest gain vs. taking a chance and go for a possible huge gain.

We'll drop by our neighbors with their mail. Hopefully they'll give us ours...

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