Tuesday, July 26, 2011

Homer Simpson, Spock, Reaction Functions, and the Debt Ceiling

Imagine a game between Spock and Homer Simpson.  Spock's utility is maximized by saving the galaxy from destruction.  Homer Simpson's utility function is maximized by beer.  Spock gets some disutility from the amount of beer Homer Simpson drinks, because drinking makes Homer obnoxious, but it is less than the disutility he would get from the galaxy being destroyed.  Homer Simpson gets no disutility from the galaxy being destroyed, because he doesn't think it is possible.

Homer thus ties himself to the mast--he must get his beer no matter what--if he doesn't, he will allow the galaxy to be destroyed.  Homer therefore has a stronger negotiating position than Spock.  Similarly, people who think the earth is 4000 years old, that dinosaurs lived with humans, and don't believe there would be consequences to government default are in a stronger negotiating position.

1 comment:

MDK said...

This sounds like a Tragedy of the Commons problem where the players refuse to believe the inevitable conclusion of their mutually assured destruction.

How can you convincingly inform the players of the consequences of their actions?