Economics Question for you all... lets see how we go

[gumpy]

Reading the QF Program changes and associated threads has made me want to ask the following question:

Scenario:
You are sitting across from someone at the table who you are not allowed to talk or communicate with.
You don't know this person.
You have been given 10,000 dollars.
You have to offer to the person across from you a dollar amount from the 10,000.
If they accept the amount you offer them you both walk away with money. (ie you offer 5000 and they accept you walk away with 5000)
If they don't accept you walk away with nothing.

Question:
How much do you offer?
How much is the minimum you'd accept if you were the other person?

 

[samiam]

Sorry to question rather than answer... are you suggesting that there is some game theory in play, and the information provided via these forums are informing the probabilities?

 

[gumpy]

Sorry to question rather than answer... are you suggesting that there is some game theory in play, and the information provided via these forums are informing the probabilities?

Nah this isn't game theory, just decisions made on utils which is what FF programs are creating.

Absolutely no probability at play in the question above.

 

[dfcatch]

Let's keep the scenario simple, and there are no known externalities (and ignoring other thread discussions or even the context of the QFF program).

1/ I would offer $5000.
Why? Because without knowing any additional intel other than what you have stated it's the best win-win proposal that carries a high certainty of success.

2/ I would accept probably any amount in this scenario as if I reject it - I walk away with nothing.
I came with nothing, a single negotiation round with only a singular offer and no chance of counter-offer, any money is free money.

2b/ You haven't asked for any consideration from me in return for your offer so it's "take it or leave it".

3/ The implied incentive (bargaining tool) for you to give me a reasonable offer (that if I reject it, we both lose) - expires as soon as you make the offer - so again it's a "take it or leave it scenario".

4/ As intriguing as the scenario is..... Where are you going with it?

 

[samh004]

I’d offer a dollar. It strikes me that the more you offer, the more likely they’ll turn it down as it seems suspicious. Whereas, "here’s a dollar", seems like they probably wouldn’t care either way about the figure.

On the plus side, I’d then walk away with $9999.

 

[Awesom Andy]

I would offer $1. The other person knows full well that, either he/she gets that $1, or nothing at all. How much I get is irrelevant to his/her well-being.

However, if I know that this person can reject my offer, and walk to someone else and go through the same process, I'll have to have a think about that. In the extreme case, I could offer $9999 to the other person, as that would be an extra $1 I would get, rather than nothing at all.

 

[samh004]

I suppose you could just offer them the whole $10k, but I was assuming the other person didn’t know how much I had to give, if they do know, that changes things.

 

[Deleted User]

Reading the QF Program changes and associated threads has made me want to ask the following question:

Scenario:
You are sitting across from someone at the table who you are not allowed to talk or communicate with.
You don't know this person.
You have been given 10,000 dollars.
You have to offer to the person across from you a dollar amount from the 10,000.
If they accept the amount you offer them you both walk away with money. (ie you offer 5000 and they accept you walk away with 5000)
If they don't accept you walk away with nothing.

Question:
How much do you offer?
How much is the minimum you'd accept if you were the other person?

I would simply place $100 on the table and walk away from the table then out of the room, I am guessing that once the other person "steals" or in my terms, accepts the money on the table, the remaining $9900 is all mine


You see I am not actually allowed to offer them anything... an offer would be breaking the rules...

You are sitting across from someone at the table who you are not allowed to talk or communicate with.

 

[russ]

I'd offer them the $10,000 and mug them as soon as we were outside.

 

[Deleted User]

You are sitting across from someone at the table who you are not allowed to talk or communicate with

Yet...

You have been given 10,000 dollars.
You have to offer to the person across from you a dollar amount from the 10,000.

How does one offer someone something without being able to communicate...? Or is this how Frequent Flyer programs operate...? :shock:

This is also the case... how do you know what the other party would happily accept if again, you are not allowed to communicate with them...

 

[MEL_Traveller]

Reading the QF Program changes and associated threads has made me want to ask the following question:

Scenario:
You are sitting across from someone at the table who you are not allowed to talk or communicate with.
You don't know this person.
You have been given 10,000 dollars.
You have to offer to the person across from you a dollar amount from the 10,000.
If they accept the amount you offer them you both walk away with money. (ie you offer 5000 and they accept you walk away with 5000)
If they don't accept you walk away with nothing.

Question:
How much do you offer?
How much is the minimum you'd accept if you were the other person?

It all depends on how much the other person knows!

If they know you have $10000, then placing a $1 on the table will likely result in them not accepting, and you would both leave with nothing.

If we translate that into the current frequent flyer offerings (enhancements) - we, the passengers, know what other airlins are offering and hence we are unlikely to accept the $1 that is placed in front of us!

If we decide to move to another alliance then QF may end up with nothing...

 

[Timba-Jet]

Based on both knowing there is $10,000 up for grabs.

I would offer $4000. This is close enough to an even split, but I still walk away with more.

I would not accept anything less than $2000. Even though I would walk away empty handed, clearly the other party is seriously screwing me over, so I'm not going to entertain it.

As for the QFF program. Some feel the latest round of enhancements were not enough, so do you accept say $1000 or decline and walk away to another airline/program. Or in QF's position how much of the $10000 do you need to give away to maximize returns.

 

[oz_mark]

It all depends on how much the other person knows!

If they know you have $10000, then placing a $1 on the table will likely result in them not accepting, and you would both leave with nothing.

If the other person was an AFFer, they would reject the $1, and come onto AFF and start a thread about how they were being ripped off.

 

[dfcatch]

If the other person was an AFFer, they would reject the $1, and come onto AFF and start a thread about how they were being ripped off.

No - they would start a thread about how they went to someone else and got them to "match" the offer, and then get someone else to match with a "double offer".

 

[medhead]

Nah this isn't game theory, just decisions made on utils which is what FF programs are creating.

Absolutely no probability at play in the question above.

However, isn't this a standard, well known game theory/probably scenario?

 

[gumpy]

However, isn't this a standard, well known game theory/probably scenario?

Nah it's a well known game about economic rationality.

All the folk who said they'd offer 1 dollar or accept 1 dollar are economically rational. They are 1 dollar better off so the decision is a good one. It doesn't matter what the other person gets, it should play no factor in your decision. I guess this is what i'm getting at. When you make a economic decision you only consider, am i better off with the dollar or any i not?

Personally I'd have to be offered 500 before I accept the offer as knowing the other person missed out on money gives me some value =) yes i know it's irrational but I'm human.

 

[Moopere]

Personally I'd have to be offered 500 before I accept the offer as knowing the other person missed out on money gives me some value =) yes i know it's irrational but I'm human.

I don't know if you gave us enough information. Or perhaps my mind is playing tricks on me

I assumed that the person I can't speak to doesn't know anything about me or the money in my wallet. We're both just sitting there and suddenly I pull out an amount of money. God only knows what I'd think the unspoken proposal was if I was the other guy ... I think you can be arrested for that in most places

Greed aside, I'd probably put only a small amount on the table. A couple of hundred or more is likely to cause 'what the' questions and drown the deal.

I accept the economic rationale answer, however if I were the other guy I'd probably (accidentally) blow the deal by giving him his dollar back if he left the table without it ... unless of course it was clear that there was indeed some kind of deal going on and I had a faintest hint of what that might be.