It occurs to me that in Evil Plutocrat, you can get what you want in a simpler way, by just going to the majority party and saying “unless you make the bill pass, I will donate a large amount of money to the other party” which shows that what makes the evil plutocrat powerful is not his clever use of game theory, but again his unique ability to make credible precommitments.
In Hostile Takeover, although you’re right, doesn’t that just pass the problem on to whoever you sell it to? At some point the shareholders either have to decide not to sell the company (thus passing up the deal to get $101 for their stock) or sell the company to one of the two bidders.
You can keep the shares and its associated stream of future dividends, which presumably is worth $100 in present value. (If the 50% owner intentionally does something to reduce the value of future dividends, he would be violating minority shareholder rights, which is why I asked whether we’re assuming that such rights don’t exist.)
You’re right; these seem to be more parables on what happens if one side has strong ability to coordinate among itself and keep precommitments and the other side does not.
My problem is that these examples seem designed (but perhaps not consciously) to oversell the power of game theoretic thinking, by obfuscating the fact that the side that appears to be winning through clever use of game theory is also given other strong and unrealistic advantages. Unless maybe the author intended them to be puzzles, where we’re supposed to figure out what element hidden in the setup is responsible for the counterintuitive/unrealistic outcomes?
Also hidden in hostile takeover is that on those assumptions (other buyer only buys if he gets all shares, your shares are worth less than 90$ if neither buys them) you could just buy 1 share for 102$, and get rest for 90$, no need for that complexity there either.
It occurs to me that in Evil Plutocrat, you can get what you want in a simpler way, by just going to the majority party and saying “unless you make the bill pass, I will donate a large amount of money to the other party” which shows that what makes the evil plutocrat powerful is not his clever use of game theory, but again his unique ability to make credible precommitments.
You can keep the shares and its associated stream of future dividends, which presumably is worth $100 in present value. (If the 50% owner intentionally does something to reduce the value of future dividends, he would be violating minority shareholder rights, which is why I asked whether we’re assuming that such rights don’t exist.)
My problem is that these examples seem designed (but perhaps not consciously) to oversell the power of game theoretic thinking, by obfuscating the fact that the side that appears to be winning through clever use of game theory is also given other strong and unrealistic advantages. Unless maybe the author intended them to be puzzles, where we’re supposed to figure out what element hidden in the setup is responsible for the counterintuitive/unrealistic outcomes?
Also hidden in hostile takeover is that on those assumptions (other buyer only buys if he gets all shares, your shares are worth less than 90$ if neither buys them) you could just buy 1 share for 102$, and get rest for 90$, no need for that complexity there either.