1 00:00:01,491 --> 00:00:09,443 [SQUEEKING] [RUSTLING] [CLICKING] 2 00:00:13,315 --> 00:00:14,190 PROFESSOR: All right. 3 00:00:14,190 --> 00:00:16,379 Sorry about this. 4 00:00:16,379 --> 00:00:17,602 Hello. 5 00:00:17,602 --> 00:00:18,310 Sorry about this. 6 00:00:18,310 --> 00:00:19,860 There's some internet problems. 7 00:00:19,860 --> 00:00:23,730 I was just actually talking to MIT's president, who 8 00:00:23,730 --> 00:00:27,270 was in the economics department, talking how MIT can 9 00:00:27,270 --> 00:00:29,490 be a leader in technologies. 10 00:00:29,490 --> 00:00:33,670 Apparently, good internet is not a part of that. 11 00:00:33,670 --> 00:00:36,930 But anyway, so we're going to play 12 00:00:36,930 --> 00:00:39,990 a number of games which are standard games 13 00:00:39,990 --> 00:00:42,615 to measure social preferences. 14 00:00:42,615 --> 00:00:44,490 You might have a lot of questions about those 15 00:00:44,490 --> 00:00:46,980 eventually, you know, what exactly 16 00:00:46,980 --> 00:00:48,480 do they measure, how do we interpret 17 00:00:48,480 --> 00:00:49,730 certain results, and so on. 18 00:00:49,730 --> 00:00:55,350 We're going to discuss these in the next few classes, 19 00:00:55,350 --> 00:00:57,600 but for now, essentially, I just want 20 00:00:57,600 --> 00:01:00,950 to show you how these games work. 21 00:01:00,950 --> 00:01:03,510 You can sort of experience them pretty 22 00:01:03,510 --> 00:01:05,700 close to what an actual participant of such a game 23 00:01:05,700 --> 00:01:07,260 would experience. 24 00:01:07,260 --> 00:01:10,440 One big difference, of course, is that usually, these games 25 00:01:10,440 --> 00:01:12,010 are played in private. 26 00:01:12,010 --> 00:01:15,570 Usually, you shouldn't talk very much to your neighbor. 27 00:01:15,570 --> 00:01:17,640 One big difference as well is like, 28 00:01:17,640 --> 00:01:20,120 we can actually implement some of these, 29 00:01:20,120 --> 00:01:25,170 randomly implement some of the choices that are being made, 30 00:01:25,170 --> 00:01:26,670 so that makes it sort of more public 31 00:01:26,670 --> 00:01:31,680 than in a typical experiment. 32 00:01:31,680 --> 00:01:34,530 So you know, you should be aware of that like whatever choices 33 00:01:34,530 --> 00:01:37,020 you may make, whether they're nice or not, 34 00:01:37,020 --> 00:01:41,640 they might actually be implemented and be public, 35 00:01:41,640 --> 00:01:46,350 so that may or may not affect the way you choose. 36 00:01:46,350 --> 00:01:49,050 You should sort of choose truthfully or the way 37 00:01:49,050 --> 00:01:50,100 you would like to choose. 38 00:01:50,100 --> 00:01:53,430 Don't let that sort of influence you too much. 39 00:01:53,430 --> 00:01:54,030 OK. 40 00:01:54,030 --> 00:01:55,473 So what we're going to do is we're 41 00:01:55,473 --> 00:01:57,390 going to start with the simplest of our games, 42 00:01:57,390 --> 00:02:00,150 which is called the dictator game, which you can see here. 43 00:02:06,140 --> 00:02:07,640 Can you guys see the game? 44 00:02:07,640 --> 00:02:08,210 Can you join? 45 00:02:26,480 --> 00:02:28,550 So try to join the game as it is. 46 00:02:33,410 --> 00:02:34,990 So the way this game works is-- 47 00:02:34,990 --> 00:02:36,240 I hope these inspections work. 48 00:02:41,570 --> 00:02:44,060 OK, so the way this works is essentially, 49 00:02:44,060 --> 00:02:45,590 it's a split the pie game. 50 00:02:45,590 --> 00:02:47,330 We're going to figure out what's going on with the volume 51 00:02:47,330 --> 00:02:48,860 because it's a different laptop, but essentially, the way 52 00:02:48,860 --> 00:02:50,735 this works is like you're going to be endowed 53 00:02:50,735 --> 00:02:51,948 with an amount of money. 54 00:02:51,948 --> 00:02:53,240 There's going to be two people. 55 00:02:53,240 --> 00:02:54,860 There's going to be essentially what we call 56 00:02:54,860 --> 00:02:56,060 the divider or the dictator. 57 00:02:56,060 --> 00:02:57,650 That's the person who gets the money. 58 00:02:57,650 --> 00:03:00,050 That person can decide how much money 59 00:03:00,050 --> 00:03:03,240 he or she wants to share with another person who 60 00:03:03,240 --> 00:03:05,270 was randomly selected. 61 00:03:05,270 --> 00:03:08,510 The amounts will be-- this is so far entirely hypothetical-- 62 00:03:08,510 --> 00:03:11,990 so the amounts will be here, currently, it's $100. 63 00:03:11,990 --> 00:03:13,250 I hate to break it to you. 64 00:03:13,250 --> 00:03:16,850 You will not be able to win $100 today. 65 00:03:16,850 --> 00:03:19,340 I know, I know. 66 00:03:19,340 --> 00:03:20,120 It's $100. 67 00:03:20,120 --> 00:03:23,660 You can essentially decide between you and a randomly 68 00:03:23,660 --> 00:03:25,160 selected other person how much you 69 00:03:25,160 --> 00:03:28,960 would like to give of that money to that other person. 70 00:03:28,960 --> 00:03:30,260 It's the simplest of our games. 71 00:03:30,260 --> 00:03:32,720 There's going to be the divider and the receiver. 72 00:03:32,720 --> 00:03:34,760 The receiver actually does nothing other 73 00:03:34,760 --> 00:03:36,560 than just receiving money potentially. 74 00:03:36,560 --> 00:03:39,470 The divider is the person to do that. 75 00:03:39,470 --> 00:03:39,970 OK. 76 00:03:46,540 --> 00:03:49,640 Again, I'm going to show you some results in a bit, 77 00:03:49,640 --> 00:03:52,630 but one big issue that people often have about these dictator 78 00:03:52,630 --> 00:03:54,970 kinds of games is to say, well, do you need real stakes 79 00:03:54,970 --> 00:03:57,650 or do you need like fake stakes and so on. 80 00:03:57,650 --> 00:03:59,920 So what I have here is I have some candy 81 00:03:59,920 --> 00:04:04,570 and I have some apples, and later some money. 82 00:04:04,570 --> 00:04:07,210 I'm going to start with candy. 83 00:04:07,210 --> 00:04:12,015 So these are Swiss chocolate. 84 00:04:12,015 --> 00:04:13,390 So the way this is going to be is 85 00:04:13,390 --> 00:04:15,890 like there's going to be always 10 of them, 86 00:04:15,890 --> 00:04:18,820 so 10 is sort of like the overall amount that's 87 00:04:18,820 --> 00:04:19,720 being shared. 88 00:04:19,720 --> 00:04:21,190 Now, what I'm going to do is you're 89 00:04:21,190 --> 00:04:23,960 going to decide as if you were going to be selected. 90 00:04:23,960 --> 00:04:26,260 Of course, I'm going to only select one pair of people, 91 00:04:26,260 --> 00:04:30,370 and that pair is actually going to be actually implemented, OK. 92 00:04:30,370 --> 00:04:33,100 And that is going to be 10, and sort of like the 100, you know, 93 00:04:33,100 --> 00:04:36,070 the percentage of the candy that's being shared 94 00:04:36,070 --> 00:04:37,607 is going to get to the other person. 95 00:04:37,607 --> 00:04:39,190 You should probably use round numbers. 96 00:04:39,190 --> 00:04:43,910 Otherwise, you have to sort of like share them in parts. 97 00:04:43,910 --> 00:04:46,790 I'm going to pick a number, 50. 98 00:04:46,790 --> 00:04:49,160 So this will be hopefully working. 99 00:04:52,590 --> 00:04:54,570 It's Brian and Jackie. 100 00:04:58,880 --> 00:05:02,990 So Brian was the dictator, yes, the person giving? 101 00:05:02,990 --> 00:05:05,270 Yes? 102 00:05:05,270 --> 00:05:07,270 Where's Brian? 103 00:05:07,270 --> 00:05:09,070 What did Brian do? 104 00:05:09,070 --> 00:05:10,060 AUDIENCE: [INAUDIBLE]. 105 00:05:10,060 --> 00:05:11,018 PROFESSOR: There we go. 106 00:05:11,018 --> 00:05:12,610 So here's your candy. 107 00:05:12,610 --> 00:05:14,350 You can pick it up. 108 00:05:20,670 --> 00:05:27,010 So this is sort of the issue with the public version 109 00:05:27,010 --> 00:05:27,510 of this. 110 00:05:30,750 --> 00:05:33,180 You should feel free to do whatever 111 00:05:33,180 --> 00:05:36,397 you would like, of course. 112 00:05:36,397 --> 00:05:37,980 Now, we're going to do the same thing. 113 00:05:37,980 --> 00:05:39,510 I brought 10 apples as well. 114 00:05:43,540 --> 00:05:47,343 We have BG, whoever you are. 115 00:05:47,343 --> 00:05:48,260 AUDIENCE: [INAUDIBLE]. 116 00:05:48,260 --> 00:05:49,870 PROFESSOR: Yes, and how many apples did you-- 117 00:05:49,870 --> 00:05:51,250 AUDIENCE: I took three apples. 118 00:05:51,250 --> 00:05:52,300 PROFESSOR: That's three apples for you 119 00:05:52,300 --> 00:05:53,860 and seven apples for Lauren, I guess. 120 00:05:59,080 --> 00:05:59,783 Here you are. 121 00:05:59,783 --> 00:06:00,616 AUDIENCE: Thank you. 122 00:06:09,347 --> 00:06:10,639 PROFESSOR: They're good apples. 123 00:06:16,020 --> 00:06:20,337 You can share them with others as well if you like. 124 00:06:20,337 --> 00:06:22,420 Now we're going to do the typical version of this, 125 00:06:22,420 --> 00:06:23,400 which is money. 126 00:06:23,400 --> 00:06:26,400 Usually, people do this with $5, $10 and so on. 127 00:06:26,400 --> 00:06:29,400 We're going to do $5 now, so we have 128 00:06:29,400 --> 00:06:32,420 to figure out some way of sharing it, Venmo or whatever. 129 00:06:32,420 --> 00:06:34,820 I'm not quite sure, but I'm sure you'll figure it out. 130 00:06:37,690 --> 00:06:38,340 Number five. 131 00:06:41,970 --> 00:06:44,560 MJ? 132 00:06:44,560 --> 00:06:46,510 What'd you do? 133 00:06:46,510 --> 00:06:48,702 AUDIENCE: I gave $2 or 40%. 134 00:06:48,702 --> 00:06:49,410 PROFESSOR: I see. 135 00:06:49,410 --> 00:06:54,970 You have to figure out some way of giving $2 to Isabel, 136 00:06:54,970 --> 00:06:55,870 wherever she is. 137 00:06:55,870 --> 00:06:57,250 But here's the $5. 138 00:06:57,250 --> 00:07:02,710 So now, something that people often say 139 00:07:02,710 --> 00:07:08,535 is like, well, maybe for $5, is that a lot of money? 140 00:07:08,535 --> 00:07:09,910 Maybe not, so we're going to do-- 141 00:07:09,910 --> 00:07:12,890 maybe the stakes matter, and some sort of small stakes 142 00:07:12,890 --> 00:07:14,630 and so on, people decide in certain ways. 143 00:07:14,630 --> 00:07:17,523 Now I don't have a lot of money, actually. 144 00:07:17,523 --> 00:07:19,690 This is mostly like, I don't have more cash with me, 145 00:07:19,690 --> 00:07:21,605 so like the largest stake I can do is $20. 146 00:07:21,605 --> 00:07:23,980 So we're going to, with $20 now, do the exact same thing. 147 00:07:28,530 --> 00:07:32,712 All right, how about number 80? 148 00:07:32,712 --> 00:07:36,920 Alvin and Julia, what did you do? 149 00:07:36,920 --> 00:07:38,205 AUDIENCE: I gave $5. 150 00:07:38,205 --> 00:07:39,080 PROFESSOR: Very nice. 151 00:07:39,080 --> 00:07:40,700 Here you go. 152 00:07:40,700 --> 00:07:43,130 You have to figure out a way to actually do that. 153 00:07:46,340 --> 00:07:49,910 Now there's a couple more things that, perhaps, one 154 00:07:49,910 --> 00:07:51,150 wants to vary here. 155 00:07:51,150 --> 00:07:53,808 So one is communication. 156 00:07:53,808 --> 00:07:55,850 So far I think you're not allowed to communicate. 157 00:07:55,850 --> 00:07:56,330 Is that right? 158 00:07:56,330 --> 00:07:58,140 So you could not communicate with the other person. 159 00:07:58,140 --> 00:08:00,182 So now what we're going to do is like a version-- 160 00:08:00,182 --> 00:08:01,670 the exact same thing. 161 00:08:01,670 --> 00:08:04,760 I think that this will be $10 but the same, 162 00:08:04,760 --> 00:08:07,200 but now it actually allows for communication. 163 00:08:07,200 --> 00:08:09,890 So now the sender and the receiver can communicate. 164 00:08:09,890 --> 00:08:13,700 The receiver can, sort of, try different things to, 165 00:08:13,700 --> 00:08:17,090 like, influence, perhaps, the descender in some ways 166 00:08:17,090 --> 00:08:19,160 of eliciting more money. 167 00:08:24,020 --> 00:08:29,210 So Jenka and [INAUDIBLE],, where are you? 168 00:08:32,199 --> 00:08:33,616 AUDIENCE: We haven't [INAUDIBLE].. 169 00:08:33,616 --> 00:08:35,659 PROFESSOR: What was that? 170 00:08:35,659 --> 00:08:37,026 You haven't decided, no? 171 00:08:37,026 --> 00:08:37,980 AUDIENCE: [INAUDIBLE] 172 00:08:37,980 --> 00:08:38,610 PROFESSOR: What was that? 173 00:08:38,610 --> 00:08:39,380 AUDIENCE: Seven. 174 00:08:39,380 --> 00:08:40,880 PROFESSOR: I see, and what was the-- 175 00:08:40,880 --> 00:08:42,875 did you get any message that conveyed 176 00:08:42,875 --> 00:08:45,410 or that made you nicer or no? 177 00:08:45,410 --> 00:08:49,250 AUDIENCE: Yeah, so I was going to keep everything to my self. 178 00:08:49,250 --> 00:08:51,722 But yeah, I was going to [INAUDIBLE].. 179 00:08:51,722 --> 00:08:52,430 PROFESSOR: I see. 180 00:08:52,430 --> 00:08:55,300 So some communication that seems to help this case. 181 00:08:55,300 --> 00:08:56,120 So here's $10. 182 00:08:56,120 --> 00:09:00,140 You have to figure out how to actually now give $2. 183 00:09:00,140 --> 00:09:02,390 Now another I that you might think 184 00:09:02,390 --> 00:09:05,480 might matter quite a bit, which is 185 00:09:05,480 --> 00:09:07,970 I'm, sort of, like putting you on the spot quite a bit. 186 00:09:07,970 --> 00:09:13,010 Like, I'm sort of like publicizing how much money you 187 00:09:13,010 --> 00:09:14,220 gave in front of everybody. 188 00:09:14,220 --> 00:09:16,730 So in some sense, you might want to actually keep the $10 189 00:09:16,730 --> 00:09:19,453 or you might want to give a lot or whatever and, like, 190 00:09:19,453 --> 00:09:21,620 by just the fact that like showing that to everybody 191 00:09:21,620 --> 00:09:23,333 might influence your choices. 192 00:09:23,333 --> 00:09:25,250 So we're going to do one version, which is not 193 00:09:25,250 --> 00:09:27,680 quite private but, sort of, close to getting private, 194 00:09:27,680 --> 00:09:31,340 which is like I'm just going to announce which team it was. 195 00:09:31,340 --> 00:09:33,320 And at the end of the class, you'll 196 00:09:33,320 --> 00:09:34,820 tell me what the outcome was and you 197 00:09:34,820 --> 00:09:39,470 get the-- or I guess, so you see what the other person does 198 00:09:39,470 --> 00:09:40,440 with you. 199 00:09:40,440 --> 00:09:40,940 I see. 200 00:09:40,940 --> 00:09:42,800 So then the two of you can just essentially then 201 00:09:42,800 --> 00:09:43,825 sort of split the money. 202 00:09:43,825 --> 00:09:45,200 It's, sort of, not quite private, 203 00:09:45,200 --> 00:09:46,783 because the other person obviously you 204 00:09:46,783 --> 00:09:48,567 have to interact with another person. 205 00:09:48,567 --> 00:09:50,150 You should keep that in mind, but it's 206 00:09:50,150 --> 00:09:54,440 not like everybody in class will notice it, OK. 207 00:09:54,440 --> 00:09:57,096 Is it clear what I'm asking everyone? 208 00:09:57,096 --> 00:09:59,750 Yeah, so this is private to the extent like private 209 00:09:59,750 --> 00:10:03,500 towards your other classmates except for the person 210 00:10:03,500 --> 00:10:05,840 that you're matched with, OK. 211 00:10:05,840 --> 00:10:08,712 So this is, again, $10, and this is 212 00:10:08,712 --> 00:10:09,920 the last $10 I actually have. 213 00:10:09,920 --> 00:10:12,320 So I have more candy. 214 00:10:16,560 --> 00:10:17,240 All right. 215 00:10:20,320 --> 00:10:23,122 All right, so here-- 216 00:10:23,122 --> 00:10:24,560 where is [INAUDIBLE]? 217 00:10:24,560 --> 00:10:25,060 Here. 218 00:10:25,060 --> 00:10:26,110 So you get the $10. 219 00:10:26,110 --> 00:10:31,120 You just have to find your partner. 220 00:10:31,120 --> 00:10:34,240 Who is it? 221 00:10:34,240 --> 00:10:37,823 OK, so you have to, sort of, settle that with her. 222 00:10:37,823 --> 00:10:38,740 I'll stay out of this. 223 00:10:43,245 --> 00:10:44,350 OK. 224 00:10:44,350 --> 00:10:47,178 We're going to do more. 225 00:10:47,178 --> 00:10:48,220 And this is the last one. 226 00:10:48,220 --> 00:10:50,440 We're going to do more of communication. 227 00:10:50,440 --> 00:10:54,120 Perhaps you learned about how to best communicate or the like. 228 00:10:54,120 --> 00:10:55,870 I think, in most of the remaining grounds, 229 00:10:55,870 --> 00:11:00,100 we're just going to do a 10 candies or 10 chocolates, 230 00:11:00,100 --> 00:11:01,900 whatever each. 231 00:11:01,900 --> 00:11:06,040 So this one is, again, with communication. 232 00:11:06,040 --> 00:11:09,460 So you can chat and try to figure out perhaps, 233 00:11:09,460 --> 00:11:13,005 as a receiver, how to best influence the sender. 234 00:11:16,240 --> 00:11:20,320 All right, so let's see. 235 00:11:20,320 --> 00:11:23,260 By the way, you can be repeatedly chosen. 236 00:11:23,260 --> 00:11:24,790 So we have E1. 237 00:11:28,700 --> 00:11:30,060 What did you do? 238 00:11:30,060 --> 00:11:30,910 AUDIENCE: 50/50 239 00:11:30,910 --> 00:11:32,260 PROFESSOR: Nice to hear. 240 00:11:32,260 --> 00:11:33,970 And here's Arthur. 241 00:11:33,970 --> 00:11:41,380 AUDIENCE: [INAUDIBLE] 242 00:11:41,380 --> 00:11:45,460 PROFESSOR: Here's your other part. 243 00:11:45,460 --> 00:11:47,710 These are yours, yeah. 244 00:11:47,710 --> 00:11:48,464 Go for it. 245 00:11:51,430 --> 00:11:53,320 OK, so what are some good messages? 246 00:11:53,320 --> 00:11:54,880 Or what are some compelling messages 247 00:11:54,880 --> 00:11:56,330 that you received of any-- 248 00:11:56,330 --> 00:11:58,130 or maybe funny ones? 249 00:11:58,130 --> 00:11:58,630 Yes? 250 00:11:58,630 --> 00:11:59,820 AUDIENCE: [INAUDIBLE] 251 00:11:59,820 --> 00:12:00,886 PROFESSOR: What was that? 252 00:12:00,886 --> 00:12:02,590 AUDIENCE: Lactose intolerant. 253 00:12:02,590 --> 00:12:04,855 PROFESSOR: You are lactose intolerant or the receiver? 254 00:12:04,855 --> 00:12:05,772 AUDIENCE: [INAUDIBLE]. 255 00:12:05,772 --> 00:12:07,282 The giver was actually [INAUDIBLE].. 256 00:12:07,282 --> 00:12:07,990 PROFESSOR: I see. 257 00:12:07,990 --> 00:12:09,562 AUDIENCE: They're giving everything. 258 00:12:09,562 --> 00:12:10,270 PROFESSOR: I see. 259 00:12:10,270 --> 00:12:12,550 So here's a giver that is lactose intolerant. 260 00:12:12,550 --> 00:12:15,140 You could have given it, instead of the other classmate, 261 00:12:15,140 --> 00:12:17,640 you could have also just given it to your friend as a giver. 262 00:12:17,640 --> 00:12:19,600 But yes. 263 00:12:19,600 --> 00:12:20,955 What else? 264 00:12:20,955 --> 00:12:22,330 Was there any compelling messages 265 00:12:22,330 --> 00:12:25,609 that you received that actually worked or did something? 266 00:12:30,500 --> 00:12:31,273 Yes? 267 00:12:31,273 --> 00:12:33,440 AUDIENCE: I wasn't deciding, but the person told me, 268 00:12:33,440 --> 00:12:35,482 that if I tell them a joke that makes them laugh, 269 00:12:35,482 --> 00:12:36,656 they'll give me chocolate. 270 00:12:36,656 --> 00:12:37,895 [LAUGHTER] 271 00:12:37,895 --> 00:12:39,080 PROFESSOR: And did you? 272 00:12:39,080 --> 00:12:39,920 AUDIENCE: Yeah. 273 00:12:39,920 --> 00:12:41,020 They gave me 40, so-- 274 00:12:41,020 --> 00:12:42,020 PROFESSOR: Not bad, so-- 275 00:12:42,020 --> 00:12:43,160 [LAUGHTER] 276 00:12:43,160 --> 00:12:45,815 Maybe you need to work on the jokes, but yes. 277 00:12:45,815 --> 00:12:47,090 [LAUGHTER] 278 00:12:47,090 --> 00:12:51,110 All right, so now we're going to choose-- 279 00:12:51,110 --> 00:12:53,360 play a second game, which is called the-- sorry, 280 00:12:53,360 --> 00:12:57,370 let me close this-- which is called the Ultimatum game. 281 00:12:57,370 --> 00:13:00,410 So the Dictator game is a nice game in a sense. 282 00:13:00,410 --> 00:13:01,770 It's a very simple game. 283 00:13:01,770 --> 00:13:04,100 It's a very stark game and very, in some sense, 284 00:13:04,100 --> 00:13:07,610 good at capturing a form of pure altruism. 285 00:13:07,610 --> 00:13:08,630 Here's your money. 286 00:13:08,630 --> 00:13:09,900 Here's the other person. 287 00:13:09,900 --> 00:13:11,900 How much money you want to give for that person? 288 00:13:11,900 --> 00:13:13,860 There's often, no communication. 289 00:13:13,860 --> 00:13:15,780 Often, it's even anonymous, and so on. 290 00:13:15,780 --> 00:13:17,660 So it's essentially, just like, how much 291 00:13:17,660 --> 00:13:20,330 do you care about yourself, versus some other person? 292 00:13:20,330 --> 00:13:21,590 So that's very simple. 293 00:13:21,590 --> 00:13:23,570 But when you think about real-world situation, 294 00:13:23,570 --> 00:13:26,510 often, there's interactions across people. 295 00:13:26,510 --> 00:13:33,150 And the Dictator game cannot really capture that that well. 296 00:13:33,150 --> 00:13:36,860 So one of the second perhaps most famous 297 00:13:36,860 --> 00:13:40,940 or a game [INAUDIBLE] is what's called the Ultimatum game. 298 00:13:40,940 --> 00:13:42,500 We have, again, instructions. 299 00:13:42,500 --> 00:13:48,680 I think you can't really necessarily hear the narration, 300 00:13:48,680 --> 00:13:49,843 but-- 301 00:13:49,843 --> 00:13:50,510 [VIDEO PLAYBACK] 302 00:13:50,510 --> 00:13:52,670 - You're going to be randomly placed into groups. 303 00:13:52,670 --> 00:13:53,660 PROFESSOR: Sort of. 304 00:13:53,660 --> 00:13:56,090 - One player in each pair is the proposer. 305 00:13:56,090 --> 00:13:58,460 The other is the responder. 306 00:13:58,460 --> 00:14:00,490 The first thing that will happen is the proposer 307 00:14:00,490 --> 00:14:02,719 proposes how to divide a sum. 308 00:14:02,719 --> 00:14:03,302 [END PLAYBACK] 309 00:14:03,302 --> 00:14:05,090 PROFESSOR: Does it work? 310 00:14:05,090 --> 00:14:05,910 No. 311 00:14:05,910 --> 00:14:06,560 sorry. 312 00:14:06,560 --> 00:14:08,510 So there's a proposer, and there's there's a-- 313 00:14:08,510 --> 00:14:10,190 [INAUDIBLE], turn this off. 314 00:14:10,190 --> 00:14:12,060 There's a proposer, and there's a receiver. 315 00:14:12,060 --> 00:14:15,980 The proposer, as in the Dictator game, 316 00:14:15,980 --> 00:14:18,610 proposes a sum amount of money, as you see. 317 00:14:21,610 --> 00:14:23,890 And then the other person, who is the receiver, 318 00:14:23,890 --> 00:14:27,140 the responder can accept or reject. 319 00:14:27,140 --> 00:14:27,640 OK? 320 00:14:27,640 --> 00:14:33,190 So if somebody says, if I have 10 candy, if I offer you 1, 321 00:14:33,190 --> 00:14:34,810 you might say, that's not very nice. 322 00:14:34,810 --> 00:14:36,280 And you might reject it. 323 00:14:36,280 --> 00:14:37,870 Or you might say, actually, I'd rather 324 00:14:37,870 --> 00:14:40,330 have one candy than zero candy, and I accept it. 325 00:14:40,330 --> 00:14:42,790 And for each of these amounts, you can make a choice. 326 00:14:42,790 --> 00:14:48,070 But when you are the first person choosing, 327 00:14:48,070 --> 00:14:49,870 you need to take into account what 328 00:14:49,870 --> 00:14:53,230 the other person might do for different offers that you have. 329 00:14:53,230 --> 00:14:56,110 If the offer is rejected, you essentially-- neither of you 330 00:14:56,110 --> 00:14:57,130 receives anything. 331 00:14:57,130 --> 00:14:59,470 If it's accepted, it's just implemented 332 00:14:59,470 --> 00:15:02,380 as what the proposal was. 333 00:15:02,380 --> 00:15:03,370 Any questions on that? 334 00:15:07,860 --> 00:15:08,360 OK. 335 00:15:15,850 --> 00:15:23,710 And we're still playing for Lindt chocolates. 336 00:15:23,710 --> 00:15:27,210 [CLASSROOM CHATTER] 337 00:15:29,210 --> 00:15:32,860 AUDIENCE: I did 50/50 [INAUDIBLE].. 338 00:15:32,860 --> 00:15:35,200 PROFESSOR: Wise choice, Here you are. 339 00:15:35,200 --> 00:15:39,310 So Vijay, and yeah, Here you are. 340 00:15:39,310 --> 00:15:41,290 OK. 341 00:15:41,290 --> 00:15:42,430 So we're going to do the-- 342 00:15:45,023 --> 00:15:45,690 let me see here. 343 00:15:53,000 --> 00:15:55,950 [INAUDIBLE] 344 00:15:55,950 --> 00:15:56,450 I see. 345 00:15:56,450 --> 00:15:59,040 We're going to play the same thing again, 346 00:15:59,040 --> 00:16:00,578 but in rotated roles. 347 00:16:00,578 --> 00:16:02,870 So that's usually not what people would necessarily do. 348 00:16:02,870 --> 00:16:05,203 Because usually, it would be essentially one-shot games. 349 00:16:05,203 --> 00:16:07,670 It was very clean in the sense of expectations are clear. 350 00:16:07,670 --> 00:16:10,430 This is a little bit just for you to see the other side. 351 00:16:10,430 --> 00:16:12,740 I think this is now-- 352 00:16:12,740 --> 00:16:14,600 I think it is with the same person. 353 00:16:22,110 --> 00:16:24,708 It might just be that the roles are rotated. 354 00:16:24,708 --> 00:16:27,250 I don't know if you can see what the other-- can you actually 355 00:16:27,250 --> 00:16:28,900 see the name of the other person when you player, or no? 356 00:16:28,900 --> 00:16:29,680 AUDIENCE: [INAUDIBLE] 357 00:16:29,680 --> 00:16:30,388 PROFESSOR: I see. 358 00:16:30,388 --> 00:16:34,718 So I think it might not be the same person. 359 00:16:34,718 --> 00:16:36,010 Sorry, I should know this, but. 360 00:16:38,962 --> 00:16:42,406 [CLASSROOM CHATTER] 361 00:16:44,374 --> 00:16:45,721 AUDIENCE: [INAUDIBLE] 362 00:16:45,721 --> 00:16:46,888 PROFESSOR: Guess that's you. 363 00:16:46,888 --> 00:16:49,422 AUDIENCE: [INAUDIBLE] 364 00:16:49,422 --> 00:16:50,380 PROFESSOR: Here you go. 365 00:16:50,380 --> 00:16:53,470 I think she's up there. 366 00:16:53,470 --> 00:16:55,840 Now we're going to do the same thing, 367 00:16:55,840 --> 00:16:57,470 but entails communication. 368 00:16:57,470 --> 00:17:00,400 So that is to say now, as a receiver, 369 00:17:00,400 --> 00:17:02,890 you can talk to the other person. 370 00:17:02,890 --> 00:17:03,730 You can discuss. 371 00:17:03,730 --> 00:17:07,960 Or as a giver, you can discuss about, 372 00:17:07,960 --> 00:17:10,609 if I make you this offer, will you accept it or not? 373 00:17:10,609 --> 00:17:14,650 And of course, the receiver will have some thoughts 374 00:17:14,650 --> 00:17:17,057 and try to sort make the case of yes or no. 375 00:17:17,057 --> 00:17:18,849 And you'll see that has a somewhat slightly 376 00:17:18,849 --> 00:17:20,484 different dynamic. 377 00:17:20,484 --> 00:17:23,109 So again, same game now, except for now, there's communication. 378 00:17:23,109 --> 00:17:24,484 You can talk to the other person. 379 00:17:28,267 --> 00:17:29,725 One person is playing with a robot, 380 00:17:29,725 --> 00:17:31,260 so I guess you can't really-- 381 00:17:31,260 --> 00:17:32,407 [LAUGHTER] 382 00:17:32,407 --> 00:17:34,030 --communicate. 383 00:17:34,030 --> 00:17:34,530 Sorry. 384 00:17:39,150 --> 00:17:41,370 Because it's just because there's uneven numbers, 385 00:17:41,370 --> 00:17:43,692 and I'm trying to finish up. 386 00:17:43,692 --> 00:17:44,756 All right, so-- 387 00:17:48,780 --> 00:17:51,720 AUDIENCE: Oh, [INAUDIBLE]. 388 00:17:51,720 --> 00:17:54,717 The person gave me 100. 389 00:17:54,717 --> 00:17:55,800 PROFESSOR: Did you accept? 390 00:17:55,800 --> 00:17:56,760 AUDIENCE: Yeah, I accepted. 391 00:17:56,760 --> 00:17:57,760 PROFESSOR: There you go. 392 00:17:57,760 --> 00:17:59,070 [LAUGHTER] 393 00:17:59,070 --> 00:17:59,880 Lucky you. 394 00:17:59,880 --> 00:18:01,580 AUDIENCE: But who is it? 395 00:18:01,580 --> 00:18:03,023 [LAUGHTER] 396 00:18:03,023 --> 00:18:04,190 PROFESSOR: Very nice of you. 397 00:18:04,190 --> 00:18:05,773 AUDIENCE: Oh, well, I'll pay you back. 398 00:18:05,773 --> 00:18:07,410 PROFESSOR: Are you the lacto? 399 00:18:07,410 --> 00:18:09,240 Are you the lactose intolerant? 400 00:18:09,240 --> 00:18:09,740 No. 401 00:18:13,233 --> 00:18:15,229 [LAUGHTER] 402 00:18:15,229 --> 00:18:23,100 All right, now we're going to do the same thing again 403 00:18:23,100 --> 00:18:25,920 in private, just to see whether your choices in private 404 00:18:25,920 --> 00:18:28,950 perhaps are different from the-- 405 00:18:35,200 --> 00:18:37,550 so it is in private with communication, 406 00:18:37,550 --> 00:18:39,670 so as in you can communicate. 407 00:18:39,670 --> 00:18:42,210 But again, it's not public, at least 408 00:18:42,210 --> 00:18:43,960 to your other classmates, what is actually 409 00:18:43,960 --> 00:18:46,867 the outcome of the game. 410 00:18:46,867 --> 00:18:48,700 I think I'm running out of Swiss chocolates. 411 00:18:48,700 --> 00:18:50,990 So now you have to get some Snickers instead-- 412 00:18:50,990 --> 00:18:52,280 AUDIENCE: Woo, woo. 413 00:18:52,280 --> 00:18:54,322 PROFESSOR: --which is worse, I think, but anyway. 414 00:18:56,740 --> 00:18:58,400 What did you offer? 415 00:18:58,400 --> 00:18:58,900 What's that? 416 00:18:58,900 --> 00:19:01,028 AUDIENCE: I probably received three-- 417 00:19:01,028 --> 00:19:01,570 AUDIENCE: Oh. 418 00:19:01,570 --> 00:19:02,875 AUDIENCE: [INAUDIBLE]. 419 00:19:02,875 --> 00:19:04,876 PROFESSOR: Three-- did you say 330? 420 00:19:04,876 --> 00:19:06,190 AUDIENCE: [INAUDIBLE] 421 00:19:06,190 --> 00:19:08,556 AUDIENCE: I gave him 3.1 chocolates. 422 00:19:08,556 --> 00:19:09,556 PROFESSOR: You have to-- 423 00:19:09,556 --> 00:19:10,432 [LAUGHTER] 424 00:19:10,432 --> 00:19:12,133 You guys can deal with that. 425 00:19:12,133 --> 00:19:15,310 [LAUGHTER] 426 00:19:15,310 --> 00:19:17,920 Here you go. 427 00:19:17,920 --> 00:19:18,880 I stay out of this. 428 00:19:22,345 --> 00:19:24,260 AUDIENCE: He's [INAUDIBLE]. 429 00:19:24,260 --> 00:19:25,212 AUDIENCE: [INAUDIBLE]. 430 00:19:25,212 --> 00:19:26,640 Thank you very much. 431 00:19:26,640 --> 00:19:28,068 [LAUGHTER] 432 00:19:28,068 --> 00:19:33,270 PROFESSOR: All right, we can do one more of these. 433 00:19:33,270 --> 00:19:35,080 I also have-- 434 00:19:35,080 --> 00:19:36,455 I brought some chocolate bunnies. 435 00:19:39,930 --> 00:19:43,070 These are very nice bunnies, so here you go. 436 00:19:48,280 --> 00:19:52,287 This is again with communication. 437 00:19:52,287 --> 00:19:53,620 So I was saying this is private. 438 00:19:53,620 --> 00:19:54,370 I guess it wasn't private. 439 00:19:54,370 --> 00:19:54,870 Sorry. 440 00:19:54,870 --> 00:19:55,980 Forget about this. 441 00:19:55,980 --> 00:19:58,300 This is in public with communication. 442 00:19:58,300 --> 00:20:01,960 So I should have been clear. 443 00:20:01,960 --> 00:20:03,250 Isabel and Hannah. 444 00:20:08,240 --> 00:20:10,850 What did you do? 445 00:20:10,850 --> 00:20:12,198 AUDIENCE: We did [INAUDIBLE]. 446 00:20:12,198 --> 00:20:13,490 PROFESSOR: And it was accepted? 447 00:20:13,490 --> 00:20:14,280 AUDIENCE: Yes. 448 00:20:14,280 --> 00:20:16,866 PROFESSOR: All right, lucky you. 449 00:20:16,866 --> 00:20:20,594 [LAUGHTER] 450 00:20:22,460 --> 00:20:26,510 OK, so now, one main thing about these games 451 00:20:26,510 --> 00:20:29,990 is, when you notice this, it's like, in particular, 452 00:20:29,990 --> 00:20:31,850 from the receiver's part, there's 453 00:20:31,850 --> 00:20:34,650 only one action that you see for one realization, right? 454 00:20:34,650 --> 00:20:36,650 So it's not very efficient in terms of eliciting 455 00:20:36,650 --> 00:20:38,120 a lot of information. 456 00:20:38,120 --> 00:20:41,660 In the sense of if I ask you, how much money did you give? 457 00:20:41,660 --> 00:20:44,450 And I'm going to see what you do as the first mover. 458 00:20:44,450 --> 00:20:46,520 And then, for a specific realization, 459 00:20:46,520 --> 00:20:50,735 you see, what does this person do as a second mover? 460 00:20:50,735 --> 00:20:52,610 Instead, what you can do is we can use what's 461 00:20:52,610 --> 00:20:56,210 called the strategy method, which we are, in some sense, 462 00:20:56,210 --> 00:20:58,940 already doing, in the sense of the strategy method 463 00:20:58,940 --> 00:21:01,200 is to say, in case a certain thing, 464 00:21:01,200 --> 00:21:03,050 in case a certain situation occurs, 465 00:21:03,050 --> 00:21:04,860 and that situation will be implemented, 466 00:21:04,860 --> 00:21:06,613 what would you do in that situation? 467 00:21:06,613 --> 00:21:08,030 And there's a positive probability 468 00:21:08,030 --> 00:21:09,570 that this actually happens. 469 00:21:09,570 --> 00:21:11,390 And so therefore, people are incentivized 470 00:21:11,390 --> 00:21:12,987 to behave optimally. 471 00:21:12,987 --> 00:21:15,320 In the sense, that's exactly what we're doing right now. 472 00:21:15,320 --> 00:21:17,240 In some sense there's 80 different pairs 473 00:21:17,240 --> 00:21:19,520 that are playing, and I'm randomly just quasi randomly 474 00:21:19,520 --> 00:21:20,900 selecting just one. 475 00:21:20,900 --> 00:21:23,030 So this is already a strategy method. 476 00:21:23,030 --> 00:21:24,500 In a sense, I'm asking you, in case 477 00:21:24,500 --> 00:21:27,020 you are selected, what would you like to do? 478 00:21:27,020 --> 00:21:29,660 So I'm eliciting information from 80 people 479 00:21:29,660 --> 00:21:32,570 at the same time, while only having 480 00:21:32,570 --> 00:21:36,740 to pay out 10 chocolates or chocolate bunnies, or whatever, 481 00:21:36,740 --> 00:21:38,643 at one time for the result. 482 00:21:38,643 --> 00:21:40,310 So that's essentially a way of creating. 483 00:21:40,310 --> 00:21:42,290 If you wanted to run large experiments, 484 00:21:42,290 --> 00:21:45,170 that's a way of running experiments 485 00:21:45,170 --> 00:21:46,160 where there are stakes. 486 00:21:46,160 --> 00:21:48,440 And sometimes, it doesn't matter what you choose, 487 00:21:48,440 --> 00:21:51,980 but it's much cheaper to do and much more feasible to do so. 488 00:21:51,980 --> 00:21:55,310 Now, the strategy method is going a little bit further. 489 00:21:55,310 --> 00:21:57,440 What the strategy method essentially is doing, 490 00:21:57,440 --> 00:22:01,640 it is essentially just asking you explicitly, 491 00:22:01,640 --> 00:22:03,818 it's asking you explicitly as a proposer, 492 00:22:03,818 --> 00:22:04,860 how much would you offer? 493 00:22:04,860 --> 00:22:06,590 So it's asking essentially both people. 494 00:22:06,590 --> 00:22:10,220 As a proposer, each person is asked, if you were proposing, 495 00:22:10,220 --> 00:22:11,720 what would you do? 496 00:22:11,720 --> 00:22:16,160 And then it's asking each person, 497 00:22:16,160 --> 00:22:17,870 as a responder, what's the smallest 498 00:22:17,870 --> 00:22:19,970 offer that you would accept? 499 00:22:19,970 --> 00:22:22,430 Notice, if I have those two pieces, if I match two people, 500 00:22:22,430 --> 00:22:25,025 I can play the entire game for any realization, because I 501 00:22:25,025 --> 00:22:27,710 know, essentially, the fully contingent plan. 502 00:22:27,710 --> 00:22:29,870 In that way, I'm eliciting way more information 503 00:22:29,870 --> 00:22:32,360 than just realizing-- and essentially, for each person, 504 00:22:32,360 --> 00:22:36,470 I'm going to elicit both what they're doing in both roles. 505 00:22:36,470 --> 00:22:40,520 And for the responder, I'm eliciting also, 506 00:22:40,520 --> 00:22:42,650 for all potential realization, as opposed 507 00:22:42,650 --> 00:22:44,930 to just if you received $3 or $5, 508 00:22:44,930 --> 00:22:47,050 or whatever, what would you do? 509 00:22:47,050 --> 00:22:52,190 OK, so we're going to do that right now I 510 00:22:52,190 --> 00:22:53,165 guess with Snickers. 511 00:22:56,420 --> 00:22:58,520 So now it's not clear who actually your partner 512 00:22:58,520 --> 00:23:00,590 is, because now it's essentially you're choosing 513 00:23:00,590 --> 00:23:02,780 for all contingent plans. 514 00:23:02,780 --> 00:23:07,940 So it's not obvious what your other partner will actually do. 515 00:23:07,940 --> 00:23:10,880 You are essentially deciding, independent of what 516 00:23:10,880 --> 00:23:14,450 my partner does, for all scenarios what I'm going to do. 517 00:23:14,450 --> 00:23:16,220 And then, essentially randomly, you 518 00:23:16,220 --> 00:23:19,650 will be matched with somebody. 519 00:23:19,650 --> 00:23:24,075 So why don't you tell me two numbers between 1 and 60. 520 00:23:24,075 --> 00:23:25,025 AUDIENCE: 23. 521 00:23:25,025 --> 00:23:26,290 PROFESSOR: 23 and? 522 00:23:26,290 --> 00:23:27,150 AUDIENCE: 52. 523 00:23:27,150 --> 00:23:28,290 PROFESSOR: 23 and 52. 524 00:23:28,290 --> 00:23:30,270 So I'm going to just pick number 23 and 52. 525 00:23:30,270 --> 00:23:32,910 We're going to take the offer from, what, 23 526 00:23:32,910 --> 00:23:35,910 and then the response from 52. 527 00:23:35,910 --> 00:23:39,240 And I asked you to remember what you chose, hopefully. 528 00:23:39,240 --> 00:23:40,380 So 23 is-- 529 00:23:42,762 --> 00:23:44,470 I don't know how to pronounce your name-- 530 00:23:44,470 --> 00:23:45,968 [INAUDIBLE]? 531 00:23:45,968 --> 00:23:47,260 How do you pronounce your name? 532 00:23:47,260 --> 00:23:48,260 AUDIENCE: [INAUDIBLE] 533 00:23:48,260 --> 00:23:50,505 PROFESSOR: [INAUDIBLE],, what did you propose? 534 00:23:50,505 --> 00:23:52,150 AUDIENCE: I proposed to do half. 535 00:23:52,150 --> 00:23:52,960 PROFESSOR: Half? 536 00:23:52,960 --> 00:23:53,680 OK. 537 00:23:53,680 --> 00:23:55,897 And then what did you do, the 50-- 538 00:23:55,897 --> 00:23:56,480 AUDIENCE: Two. 539 00:23:56,480 --> 00:24:01,000 PROFESSOR: 52, which is Brandon. 540 00:24:01,000 --> 00:24:02,590 So now the question is, for half, 541 00:24:02,590 --> 00:24:04,060 if you were offered half, Brandon, 542 00:24:04,060 --> 00:24:05,480 what would you actually do? 543 00:24:05,480 --> 00:24:05,980 Yeah? 544 00:24:05,980 --> 00:24:07,018 AUDIENCE: [INAUDIBLE] 545 00:24:07,018 --> 00:24:08,560 PROFESSOR: And you'd also accepted it 546 00:24:08,560 --> 00:24:09,830 earlier in your round? 547 00:24:09,830 --> 00:24:10,510 [LAUGHTER] 548 00:24:10,510 --> 00:24:11,350 OK. 549 00:24:11,350 --> 00:24:12,080 Yes, here you go. 550 00:24:12,080 --> 00:24:15,643 And so essentially, that's the way 551 00:24:15,643 --> 00:24:16,810 this is usually implemented. 552 00:24:16,810 --> 00:24:20,380 So now essentially, for that specific contingency, 553 00:24:20,380 --> 00:24:21,860 that's now being implemented. 554 00:24:21,860 --> 00:24:23,950 But now I know essentially what Brandon 555 00:24:23,950 --> 00:24:25,450 would have done for all scenarios, 556 00:24:25,450 --> 00:24:29,532 because he gave me his fully contingent plan. 557 00:24:29,532 --> 00:24:31,740 We're going to do the exact same thing again, in case 558 00:24:31,740 --> 00:24:32,740 this wasn't fully clear. 559 00:24:40,565 --> 00:24:41,940 So I don't know actually why they 560 00:24:41,940 --> 00:24:43,740 are making groups out of this. 561 00:24:43,740 --> 00:24:47,250 But whatever, it's fine. 562 00:24:47,250 --> 00:24:49,345 Abby? 563 00:24:49,345 --> 00:24:50,220 AUDIENCE: [INAUDIBLE] 564 00:24:50,220 --> 00:24:50,845 PROFESSOR: Yes. 565 00:24:50,845 --> 00:24:51,810 What did you propose? 566 00:24:51,810 --> 00:24:54,000 AUDIENCE: [INAUDIBLE]. 567 00:24:54,000 --> 00:24:54,802 PROFESSOR: Eight? 568 00:24:54,802 --> 00:24:55,962 AUDIENCE: 50. 569 00:24:55,962 --> 00:24:56,920 PROFESSOR: Was that 30? 570 00:24:56,920 --> 00:24:57,462 AUDIENCE: 50. 571 00:24:57,462 --> 00:24:58,410 PROFESSOR: 50-- sorry. 572 00:24:58,410 --> 00:24:59,155 And-- 573 00:24:59,155 --> 00:25:00,030 AUDIENCE: [INAUDIBLE] 574 00:25:00,030 --> 00:25:00,690 PROFESSOR: But you-- 575 00:25:00,690 --> 00:25:01,565 AUDIENCE: [INAUDIBLE] 576 00:25:01,565 --> 00:25:02,190 PROFESSOR: No. 577 00:25:02,190 --> 00:25:02,690 Sorry. 578 00:25:02,690 --> 00:25:03,240 It was 8 and? 579 00:25:03,240 --> 00:25:03,900 AUDIENCE: 13. 580 00:25:03,900 --> 00:25:08,545 PROFESSOR: 13 is Brian. 581 00:25:08,545 --> 00:25:10,970 AUDIENCE: [INAUDIBLE] 582 00:25:10,970 --> 00:25:12,290 PROFESSOR: So we've got-- 583 00:25:12,290 --> 00:25:12,921 here you go. 584 00:25:15,750 --> 00:25:17,345 You guys are pretty nice. 585 00:25:17,345 --> 00:25:19,165 [LAUGHTER] 586 00:25:19,165 --> 00:25:22,239 In previous years, we're not that nice. 587 00:25:22,239 --> 00:25:26,030 AUDIENCE: [INAUDIBLE] 588 00:25:26,030 --> 00:25:29,090 AUDIENCE: [INAUDIBLE] 589 00:25:29,090 --> 00:25:30,350 PROFESSOR: All right. 590 00:25:30,350 --> 00:25:31,940 So now we're going to play the third game, which 591 00:25:31,940 --> 00:25:33,830 has been used a lot in this literature, which 592 00:25:33,830 --> 00:25:36,290 is called the Trust game. 593 00:25:39,470 --> 00:25:43,310 The Trust game works as follows. 594 00:25:48,120 --> 00:25:57,890 So there is a person who is the investor, who 595 00:25:57,890 --> 00:25:59,760 gives some amount of money. 596 00:25:59,760 --> 00:26:02,300 And so let me just-- 597 00:26:02,300 --> 00:26:04,650 OK, where's the video? 598 00:26:04,650 --> 00:26:07,390 There's supposed to be a video. 599 00:26:07,390 --> 00:26:08,080 Oh, here. 600 00:26:08,080 --> 00:26:09,768 Sorry. 601 00:26:09,768 --> 00:26:10,938 All right. 602 00:26:10,938 --> 00:26:12,980 So they call it an investment game, a trust game. 603 00:26:12,980 --> 00:26:17,000 There's the investor, and there's the responder. 604 00:26:17,000 --> 00:26:19,550 The investor-- why is this so slow? 605 00:26:27,190 --> 00:26:27,730 OK. 606 00:26:27,730 --> 00:26:30,340 So the investor and the responder 607 00:26:30,340 --> 00:26:33,400 have some amount of money, which is a little bit contrived here. 608 00:26:33,400 --> 00:26:35,620 But anyway, let's assume that's true. 609 00:26:35,620 --> 00:26:37,480 The investor chooses how much to send. 610 00:26:37,480 --> 00:26:38,890 This is the investment. 611 00:26:38,890 --> 00:26:42,730 The responder gets the investment plus a multiplier. 612 00:26:42,730 --> 00:26:47,530 The multiplier here is usually two or three. 613 00:26:47,530 --> 00:26:50,500 And then the responder gets essentially the investment 614 00:26:50,500 --> 00:26:52,810 plus the multiplier and then can decide 615 00:26:52,810 --> 00:26:56,030 to respond and send money back. 616 00:26:56,030 --> 00:26:56,530 OK? 617 00:26:59,362 --> 00:27:01,320 So in our case, I guess this is a little tricky 618 00:27:01,320 --> 00:27:02,490 to do with candy. 619 00:27:02,490 --> 00:27:07,200 But suppose the investor has 10 to start with. 620 00:27:07,200 --> 00:27:09,570 You can now decide out of the 10 how much you're going 621 00:27:09,570 --> 00:27:11,570 to give to the other person. 622 00:27:11,570 --> 00:27:12,932 That is multiplied by 3. 623 00:27:12,932 --> 00:27:14,640 I need to make sure we have enough candy. 624 00:27:14,640 --> 00:27:15,750 I think I do. 625 00:27:15,750 --> 00:27:17,100 That is multiplied by 3. 626 00:27:17,100 --> 00:27:20,460 And then the other person can decide to send some back. 627 00:27:20,460 --> 00:27:23,120 OK? 628 00:27:23,120 --> 00:27:26,330 And so you get the issue that essentially, on the one hand, 629 00:27:26,330 --> 00:27:31,520 you want to send a lot, to get the other person to have a lot 630 00:27:31,520 --> 00:27:32,893 to be able to send you back. 631 00:27:32,893 --> 00:27:35,060 But of course, it could also be that you send a lot, 632 00:27:35,060 --> 00:27:37,018 and the other person says, thank you very much, 633 00:27:37,018 --> 00:27:39,000 and doesn't send you anything. 634 00:27:39,000 --> 00:27:39,500 OK? 635 00:27:48,530 --> 00:27:50,240 OK, so this is without communication. 636 00:27:50,240 --> 00:27:53,350 And we'll do one with communication after that. 637 00:27:53,350 --> 00:27:57,087 And why don't you take these two and divide in those fractions 638 00:27:57,087 --> 00:27:57,670 that you have. 639 00:27:57,670 --> 00:27:59,170 How about this? 640 00:27:59,170 --> 00:28:02,680 So usually, this would be obviously with real numbers, 641 00:28:02,680 --> 00:28:03,816 done properly. 642 00:28:03,816 --> 00:28:04,730 AUDIENCE: Oh, three? 643 00:28:04,730 --> 00:28:05,830 PROFESSOR: No, no, just divide it. 644 00:28:05,830 --> 00:28:06,970 I think roughly half is fine. 645 00:28:06,970 --> 00:28:08,387 AUDIENCE: Thank you, [INAUDIBLE].. 646 00:28:10,963 --> 00:28:12,380 PROFESSOR: Sorry, this is a little 647 00:28:12,380 --> 00:28:15,180 tricky with these numbers. 648 00:28:15,180 --> 00:28:16,270 AUDIENCE: OK. 649 00:28:16,270 --> 00:28:17,320 [INAUDIBLE]? 650 00:28:17,320 --> 00:28:17,660 PROFESSOR: No, no, no. 651 00:28:17,660 --> 00:28:18,695 Then we will use this for the next. 652 00:28:18,695 --> 00:28:18,920 I'll get these. 653 00:28:18,920 --> 00:28:19,760 AUDIENCE: You can do the next one. 654 00:28:19,760 --> 00:28:20,385 PROFESSOR: Yes. 655 00:28:20,385 --> 00:28:22,400 [LAUGHTER] 656 00:28:22,400 --> 00:28:24,930 All right, so we can do the same thing with communication. 657 00:28:24,930 --> 00:28:29,480 So now you can essentially, before the first person makes 658 00:28:29,480 --> 00:28:33,140 their first choice or where before, when the person is 659 00:28:33,140 --> 00:28:35,990 making the response choice, you can communicate and talk 660 00:28:35,990 --> 00:28:41,390 about what you might do in the future, which may or may not 661 00:28:41,390 --> 00:28:42,980 be the truth, of course. 662 00:28:46,130 --> 00:28:48,590 We have Jodi and Sarah. 663 00:28:59,929 --> 00:29:00,915 AUDIENCE: [INAUDIBLE] 664 00:29:00,915 --> 00:29:02,400 PROFESSOR: Hi. 665 00:29:02,400 --> 00:29:05,876 What did you give and receive? 666 00:29:05,876 --> 00:29:09,207 AUDIENCE: She gave me all of it, and I gave half of it. 667 00:29:09,207 --> 00:29:11,540 PROFESSOR: So that's, in some sense, the ideal scenario, 668 00:29:11,540 --> 00:29:14,750 because the other person had a lot of faith 669 00:29:14,750 --> 00:29:17,210 in their classmate, perhaps because it's 670 00:29:17,210 --> 00:29:19,040 in public, because perhaps because they 671 00:29:19,040 --> 00:29:21,270 think their classmates are really nice. 672 00:29:21,270 --> 00:29:23,690 And so you gave a lot to start with. 673 00:29:23,690 --> 00:29:26,360 And then so that was multiplied, and then 674 00:29:26,360 --> 00:29:29,270 you actually got a lot back, which doesn't always 675 00:29:29,270 --> 00:29:30,930 happen either. 676 00:29:30,930 --> 00:29:33,740 So I think you could just, whatever this number 677 00:29:33,740 --> 00:29:37,850 is, and divide it according to the actual division of what 678 00:29:37,850 --> 00:29:39,750 it is. 679 00:29:39,750 --> 00:29:41,340 So now we're done with those games. 680 00:29:41,340 --> 00:29:43,090 What I'd like you to do is-- so next time, 681 00:29:43,090 --> 00:29:45,440 we're going to discuss in detail each of these games. 682 00:29:45,440 --> 00:29:48,200 And if you want more rigorous research 683 00:29:48,200 --> 00:29:50,330 in a sense of rigorous versions of this research, 684 00:29:50,330 --> 00:29:53,180 and trying to understand, when you do this a bit 685 00:29:53,180 --> 00:29:55,610 more carefully, in terms of, experimental economists 686 00:29:55,610 --> 00:29:57,620 are extremely careful in their procedures 687 00:29:57,620 --> 00:30:00,680 and in their ways in which they present information, 688 00:30:00,680 --> 00:30:01,890 and so on and so forth. 689 00:30:01,890 --> 00:30:04,130 So what we just were doing was pretty sloppy 690 00:30:04,130 --> 00:30:06,435 by those standards. 691 00:30:06,435 --> 00:30:08,060 So what can we learn from this research 692 00:30:08,060 --> 00:30:09,480 that does it very carefully? 693 00:30:09,480 --> 00:30:12,200 And what does it predict, when you think about, OK, these lab 694 00:30:12,200 --> 00:30:14,465 games, in some sense, they are fairly contrived, 695 00:30:14,465 --> 00:30:15,590 what can we learn actually? 696 00:30:15,590 --> 00:30:17,900 Are they predictive of real world behaviors? 697 00:30:17,900 --> 00:30:19,880 If you have any observations about things 698 00:30:19,880 --> 00:30:22,172 that you have learned or thought that were interesting, 699 00:30:22,172 --> 00:30:25,100 and so on, feel free to share them on the forum, 700 00:30:25,100 --> 00:30:26,378 anonymously, if you like. 701 00:30:26,378 --> 00:30:27,920 And I can discuss some of the things. 702 00:30:27,920 --> 00:30:30,620 This could be either anecdotes about messages you received 703 00:30:30,620 --> 00:30:32,270 or things that happened. 704 00:30:32,270 --> 00:30:35,670 I can then look at these and share them with the class. 705 00:30:35,670 --> 00:30:37,280 Otherwise, I'll see you on Monday. 706 00:30:37,280 --> 00:30:40,630 [CLASSROOM CHATTER]