Golden Balls Split or Steal – Explain This Episode to My Students

My introduction to law and economics for first year students – a non-technical introduction to basic law and economics – has a basic discussion of Prisoner’s Dilemma, including watching one of the Golden Balls Split or Steal episodes, in which a man and a woman talk it out and she successfully steals on him. We compare the canonical payoff table for Prisoner’s Dilemma with the slightly different one in the Golden Balls game (it’s on Wikipedia). Someone sent me the link for this different episode of Golden Balls, linked above, which is indeed the most intriguing round of Golden Balls I’ve ever seen.

I am considering a final exam question in which I ask my students to explain the above video (specifically this video, and not only Golden Balls in general), and explain how the general Golden Balls payoff table works, and then to discuss whether they think that the player who leads off the negotiation has altered the other player’s rational strategies or not. Or instead whether this is just a version of trying to build trust in a single round game, without finally changing what makes sense for the players to do, assuming a single round game. The exam is open book, open note, open discussion beforehand – I’m interested in seeing how they explain the answer, to see whether they can demonstrate in their explanation that they understand the logic of the situation. I’m inviting them to prepare this answer in advance.

If I decide to use this as a final exam question, I will invite them to look at this post, as well as at the comments to the video and anything else they might like. So I would like to invite you to explain as clearly as you can, in a non-technical way, accessible to students who do not have a background in game theory and strategic behavior, how they should see this particular episode of Golden Balls. I am particularly interested in whether everyone agrees with how to answer the question: does player 1 in this episode manage to come up with a move in the game that alters the rational strategy of the other player (or both players), or is this instead just another attempt to come up with a way to create extra-rational trust? Thanks!