Friday, September 17, 2010

The Bachelor's Dilemma

This week's finale of Bachelor Pad set up a game with some interesting ramifications (I will try to avoid giving too much away if you want to see it; here). I tell my economist friends that I watch the show for the strategy. Here's my chance to explain why the show's strategy is interesting.

All season, attractive bachelors and bachelorettes have been competing with one another for an opportunity to win $250,000. About halfway through the season, the competition broke from an individual-by-individual competition into couples competing against couples. The idea was to generate a TV romance along the way, and for the final couples, it looks like it might have worked.

At the finale, the two individuals who were a part of the winning couple were given a choice: keep or share. If both chose share, they would split the $250,000. If both chose keep, they would get nothing (and the contestants who didn't "win" would get to split the money). If one chooses share and the other keep, the one who chose share would get nothing while the one who chose keep gets the whole $250,000.

They were sent to their own private deliberation rooms to make their choice and they weren't allowed to communicate their intended choice before making one. If you would like to see a payoff matrix, here's what it looks like:

So, that's the game. Notice that regardless of what the other person picks, you can get as much (0 versus 0 if she picks keep) or more money (250K versus 125K if she picks share) by picking keep.

But, that's a naive solution to this game. There are three ways that this can be made more realistic:

1. The contestants are in a budding relationship with one another. Picking keep might destroy their chance at love. People don't just put value on money. They also value relationships. For this to be a game changer, the contestants would have to value the cost of picking keep at greater than $125,000. Depending on the person, that's possible.

2. The game takes place on television. Picking keep might make the person look selfish. To the extent that these individuals value their public image (and plenty of them make a living from their image), picking keep could be toxic professionally. Even if the two contestants are not in love, looking like they are in love can be profitable.

3. Finally, the two individuals could be in a loving and lasting relationship. To see why this matters, suppose that they're going to live together forever. Then, it doesn't really matter how the couple earns $250,000. In this case, they value the money in their partner's hands as much as the money in their own because either way, they'll get a say in spending it in the long run. If this is the case, it is never in the interest of the individual to say keep because it has the chance of destroying the couple's chance of earning the money.

So, while the game tempts you to say keep, there are very good reasons to stick to sharing. Instead of making this a poll like I usually do, I'll leave it open ended. If you haven't seen the show, what do you think happened? If you have watched the show, what would you do? What do you think would be your strongest motivator in this situation?

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