Programming Pauls of Wisdom

Hunting Wabbits

http://www.gametheory.net/dictionary/Games/StagHunt.html

The basics behind the stag hunt are simple - but they underlie the institutions of trust that make our economy feasible. THe northern rock queues are shown as an example of people preferring to hunt rabbits on their own (invest seperately from other investors) thus leading to the collapse of the stag hunt (bank).

Now presumably the way to build institutions is to ensure the profit from hunting rabbits alone is less than the profit from hunting rabbits together

Hunting stags is a high risk venture, and has two hurdles - trust of the other hunter, and success.
Building the first can be done through hunting rabbits together.

I am struggling for an example...but mutal savings and loans seem a good idea. As does the grameen bank

SO the first step in building rich countries seems to be building institutions that everyone trusts.
I guess that means the government too.

So it seems we can mathematically prove the bleeding obvious

posted by paul @ 3:25 AM