Game Theory

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Simple game theory such as the Prisoner's Dilemma shows that many situations can be improved by government interference.

Links

Academics Spy Weaknesses in Bitcoin’s Foundations [More...]
Game theory suggests the rules governing Bitcoin may need to be updated if the currency is to endure.
Bribery, Cooperation, and the Evolution of Prosocial Institutions [More...]
Large-scale anonymous cooperation (as in markets and rights) requires institutions with the power to punish. Permitting corruption such as bribery and nepotism (which many libertarians favor) undermines the institutions. Game-theoretic modeling.
How the US stopped its fisheries from collapsing [More...]
Fishing regulations do work to end the overfishing tragedy of the commons. Where governments step in, the fish stocks recover.
No One Makes You Shop At Wall Mart: The Surprising Deceptions Of Individual Choice (book) (1 link)
Tom Slee's easy to read game-theoretic description of how MarketThink, the dogma of individual choice, does not lead to optimal outcomes.
When All Else Fails: Government as the Ultimate Risk Manager (book)
"In policies as diverse as limited liability, deposit insurance, Social Security, and federal disaster relief, American lawmakers have managed a wide array of private-sector risks, transforming both the government and countless private actors into insurers of last resort... Well suited to a society suspicious of government activism, public risk management has emerged as a critical form of government intervention in the United States."

Quotations

It is really quite rare to find a buyer’s market for rented accommodation. Even if there is a slight oversupply of rental units for sale, time is almost always on the landlord’s side, because waiting is typically much more inconvenient for the party that has to wait without a house to do wait in. In general, when tenants and landlords are negotiating over the potential Pareto gain that could be made from renting the house, the landlord ends up capturing most or all of the surplus. The hot water and habitability laws are simply aimed at skewing things a bit in favour of the tenant and putting a floor on how bad a deal the tenant can end up accepting. It’s a standard game theory result that something which reduces your options can benefit you by reducing the number of bad options that you can end up agreeing to (most famously, the secret ballot has to be compulsory, because if you had the option to reveal your vote, you could be intimidated), and habitability laws are there for exactly this purpose.
Daniel Davies, "The correct way to argue with Milton Friedman"