BrainBlog

From the Scientific American website: May 20, 2007 The Traveler's Dilemma When playing this simple game, people consistently reject the rational choice. In fact, by acting illogically, they end up reaping a larger reward--an outcome that demands a new kind of for­mal reasoning By Kaushik Basu Lucy and Pete, returning from a remote Pacific island, find that the airline has damaged the identical antiques that each had purchased. An airline manager says that he is happy to compensate them but is handicapped by being clueless about the value of these strange objects. Simply asking the travelers for the price is hopeless, he figures, for they will inflate it. Instead he devises a more complicated scheme. He asks each of them to write down the price of the antique as any dollar integer between 2 and 100 without conferring together. If both write the same number, he will take that to be the true price, and he will pay each of them that amount. But if they write different numb...