i’ve been doing some reading in economics. just a couple of quotes

“… forecast errors from a good forecasting model must be unforecastable!” (Elements of Forecasting, Diebold)

“The statistical literature describes false positives as Type I errors and false negatives as Type II errors. Most common of all is the Type III error: not being able to remember which one is which.” (Thinking strategically, Dixit)

Bonnie Parker (October 1, 1910 – May 23, 1934) and Clyde Barrow (March 24, 1909 – May 23, 1934) were well known outlaws, robbers, and criminals who, with their gang, travelled the Central United States during the Great Depression. (Wikipedia)

Bonnie & Clyde: this twosome is very well known; and so is the concept of the prisoner’s dilemma. A couple of weeks ago I was on a bus from Toronto to Guelph and I’ve been reading a book on game theory and thinking about relationships. So here is a game I came up with.

Bonnie and Clyde are two young people in a romantic relationship. At a certain point of their relationship, the police is after them. Clyde says to Bonnie: “Honey, you and I, we both know that we have much better chances to be caught while we are together. For now, I want you to take half of all the money that we have. Let us part right now and think about our future. Should we want to stay together, we will meet each other tomorrow, at noon, at this very spot.”
Each of them now has two options: to show up and stay in the relationship or leave. The two individuals have very similar characters, thereby their utility functions are the same. The key assumption is that

U(staying together) = – U(being left behind)

The other important feature is that both individuals are indifferent between separating mutually and leaving the partner.  The utility values in both cases are zero. The payoff matrix is self-explanatory.

Think about this, I will write more about this game in a week from now, when I’m finished with my finals.

This is my first academic paper in economics and my first real and independent academic paper overall. I will just go ahead and post it.

“A Simple Way to Prove The Fundamental Theorem of Game Theory”.
(Michael Kuzmin. Glendon College. 2009.)

the flash viewer is clickable. if fact, i recommend that you do click on it) if you’d rather download a PDF version please click here.