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EBayer’s dilemma: Difference between revisions
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for those spooked by the idea of being locked up in a police cell on trumped up charges, consider instead the [[eBayer’s dilemma]]. This version {{author|Douglas Hofstadter}} once described as the "briefcase came", but Millennials will recognise it as the [[eBayer’s dilemma]]. | |||
Strangers consider a settling a transaction they have drunkenly agreed on eBay to purchase a set of complete boxed set of the final season of ''Some Mothers Do ’Ave ’Em'' on VHS, for £100<ref>The eBayers don’t ''have'' to be drunk, but as we all know, most people on eBay ''are'', so this is a bit of dramatic colour.</ref>. | |||
The seller must pay for, and the buyer must post the videos, simultaneously. Assume the seller would have sold the videos at any price over £50 (so the transaction represents a £50 profit for {{sex|her}}), and the buyer would have paid up to £150 had that been the asking price (the transaction therefore representing a £50 profit for him). In other words, by honouring the transaction, each stands to gain £50. | |||
{{eBayer’s dilemma}}When settling the transaction, each has the following risks: | |||
*'''Cooperation''': If the seller posts ''and'' the buyer pays: | |||
**The seller will get £100 but will lose a video it values a £50 (+£50). | |||
**the seller will get a video it values at £150 but must pay £100 (+50) | |||
*'''buyer defects''': If the seller posts, but the buyer does not pay: | |||
**The buyer will have video it values at £150 for free (+£150) | |||
**The seller has given away a video it values a £50 for nothing (-£50). | |||
*'''Seller defects''': If the buyer pays but the seller does not post: | |||
**The buyer will have paid £100 for nothing (-£100) | |||
**The seller will receive £150 and will still have the video it values a £50 (+£200). | |||
*'''Mutual defection''' If the seller does not post ''and'' the buyer does not pay: | |||
**The seller is in its original position (£0). | |||
**The buyer is in its original position (£0). | |||
{{sa}} | |||
*[[Prisoner’s dilemma]] | |||
*[[Agency problem]] | |||
{{ref}} | |||