[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Chapter 14
STRATEGIC
BEHAVIOR
∂
During the 2000 television season, viewers were enthralled by the first
season of the show Survivor. Sixteen contestants were marooned on Pulau
Tiga, an uninhabited island off the coast of Borneo, and at the end of each
episode, the survivors voted to kick out one of their members. The last surviving
contestant collected $1 million. By episode 13, the original group had been reduced
to just three final contestants: Kelly, Rudy, and Rich. In the course of a trial that
involved answering questions about the thirteen previously evicted castaways, Kelly
won immunity in the first round of voting that would reduce the group to the final
pair. She still had to decide, though, how to cast her own vote. If, as seemed certain,
Rudy votes against Rich and Rich votes against Rudy, Kelly’s vote would decide who
stays and who leaves. How should Kelly vote?
To know whom she should vote out in the first round, Kelly must think about
how she was likely to fare in the final round. Kelly must think backward from the
end of the contest. Rudy seemed popular with the audience and with the other thirteen
contestants who would get to vote for the final winner. So Kelly would reason
that if the final contest came down to her and Rudy, Rudy would probably win. On
the other hand, Rich seemed to be very unpopular. So Kelly would reason that if it
came down to a choice between her and Rich, she would probably win. Her best
chance would be to face off against Rich, not Rudy, in the final voting. Even if Kelly
really dislikes Rich, her best strategy is to oust Rudy. As it turned out, that is exactly
what happened. Rich and Kelly voted against Rudy. Unfortunately for Kelly, the
voters ended up picking Rich over her, but her strategy was still the right one.
The participants in Survivor had to think strategically. They needed to anticipate
how their rivals would respond to the decisions they themselves made. They had
to consider how their own position would depend on who else survived and who
didn’t, and they had to use that information in deciding how to vote.
Thinking strategically doesn’t help just in a made-up environment such as a television
show. We all face situations that call for strategic thinking. Economists try
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