You’re a mom with two naughty kids. Whenever you bake a cake for them two, you would end up with a headache. They always fight over the size (“Mom, why do I get the smaller piece?), no matter how even and accurate you think you have divided the cake with your expensive knife. What’s the solution? Economics offer you one: let them choose. Try this: toss a coin. If it is “Garuda” the first kid will move first. If it is “500”, the second kid moves first. Suppose it is “Garuda”. The first kid would have to slice the cake. Then the second one would choose which part he or she wants. The first kid would have the remaining part.
Did the story ring a bell? Maybe it did for you who happened to share an apartment with another tenant. Say, you two are to decide who would take which room. Alas, the two rooms are unequal in size. What to do? Try this: toss a coin to decide “who moves first”. Supposed it’s you. Now, you assign a "price" to each room. By "price" I mean, the share in the total monthly rent: bigger room has a bigger share; whoever happens to get it he or she should pay more than the other. Alright, have you assigned the "price"? OK, your job’s done. Now your friend would have to choose which room he or she would take.
Sounds simple. What about if there are three kids? Four? Three, four tenants? Well, we can do it, too. It’s just slightly more complicated. Therefore we have game theory1 courses.
But forget about school. Let’s apply this to something the media (and the so-called "communication experts") really likes to rant about. It’s the “race” between the two CEOs of the country, SBY and JK.2 The President and the Vice President seem to always try to outdo one another in delivering official statements (and even official actions). So far, JK scores higher: he’s very quick in taking decision (good or bad) and acting accordingly (or not accordingly, I should say), while SBY is very careful (too careful, he seems depressed).
We love our leaders. So how about suggesting a fun solution (at least to shut the media up)? Yes, the "cake solution"! Try this. Let the House, DPR, toss a coin. Suppose SBY gets to move first. Then he will list all statements and actions to do this month. Then divide it in two blocks. Next, let JK choose which block he likes to execute…
I know, who says running a country is easy?1 Game theory is an amalgam of math and econ. Math teaches you the logical steps in playing chess. Econ explains to you why you would want to play those steps.
2 Susilo Bambang Yudhoyono and Jusuf Kalla
Game Theory | Susilo Bambang Yudhoyono | Jusuf Kalla