Comment on Nash Equilibria and Schelling Points

Fri, 29 Jun 2012 21:29:59 GMT

will not in and of itself benefit me

Did you ever see Shawshank Redemption? One of the Warden's tricks is not just to take construction projects with convict labor, but to bid on any construction project (with the ability to undercut any competitor because his labor is already paid for) unless the other contractors paid him to stay away from that job.

My thought, as hinted at by my last question, is that refusing or accepting any particular blackmail request depends on the immediate and reputational costs of refusing or accepting. A flat "we will not accept any blackmail requests" is emotionally satisfying to deliver, but can't be the right strategy for all situations. (When the hugger mugger demands "hug me or I'll shoot!", well, I'll give him a hug.) A "we will not accept any blackmail requests that cost more than X" seems like the next best step, but as pointed out here that runs the risk of people just demanding X every time. Another refinement might be to publish a "acceptance function"- you'll accept a (sufficiently credible and damaging) blackmail request for x with probability f(x), which is a decreasing (probably sigmoidal) function.

But the reputational costs of accepting or rejecting vary heavily based on the variety of threat, what you believe about potential threateners, whose opinions you care about, and so on. Things get very complex very fast.

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