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https://twitter.com/R_Thaler/status/1678993443027312641Behavioural economics is often characterised as having established a long list of biases. But what do these biases really tell us about human cognition?
https://twitter.com/page_eco/status/1663182981291446272
https://twitter.com/page_eco/status/1602628387230842880Let’s start with the answer: your expected payoff with that strategy is *zero*. @momin_rayhan illustrated it nicely with some Monte Carlo simulations.
https://twitter.com/momin_rayhan/status/1602711252614225927
https://twitter.com/profpaulpoast/status/1586349543171698688
https://twitter.com/page_eco/status/1182271320077131776The madman theory is actually a perfectly sensible strategy in a situation where rational opponents suffer from not being able to make credible threats of very costly retaliation. Playing crazy is what Thomas Schelling calls a "strategic move" to change the game being played. 2/4