Strip iterated prisoner's dilemma

(Image courtesy of xkcd, click for larger image)

Consider the following two player game. Players 1 and 2 have strictly increasing and strictly convex preferences which admit a utility function representation over the number of songs they see a stripper dance to. The game they play is a finitely iterated game in which each player chooses cooperate or defect in the beginning of the period. The payoffs of the game are as follows. If both players choose cooperate, the stripper dances to two songs in the period. If both players choose defect the stripper dances to one song in the period. If one player chooses cooperate and the other chooses defect, the player choosing defect will receive a 3 song private dance.

How does the sub game perfect Nash equilibrium depend on the parameters of the number of periods and the curvature of the utility functions? With the assumptions in the statement of the problem, is it possible for cooperate cooperate to be played repeatedly in the infinitely repeated game?

Quote of the week

Another one from my macro professor. I think the material is really boring, but he says some funny things every now and then.

On why Ricardian Equivalence (the concept that the timing of taxes does not impact consumer choices i.e. it doesn't matter if you finance government spending with taxes today or taxes tomorrow) might fail in the real world:

"People could be retards...sorry I'm not supposed to say that."

My own selfish altruism

I went out for dinner with some out of town friends. There was leftover pizza, so I took it home since they couldn't keep it. Outside of CVS I saw the guy that usually begs there and gave him the pizza. A casual reader would call this altruistic. However, there are some other important facts. First of all, I did not have gloves so whatever hand I was carrying the pizza with would freeze after 5 seconds out of my jacket pocket. Secondly, I was about to go into CVS and it would have been awkward to carry the pizza in. Third, I had not paid for the pizza (as evidenced by the fact that it wasn't consumed at the restaurant) so my attachment to it was less than if I had a sunk cost in it. Lastly, the guy was pretty obese, so deep dish pizza probably wasn't what a benevolent social planner would have given him.

Quote of the week

"The obvious thing about macro models is that they're wrong."
-my Macroeconomics professor during the first class this quarter

My budget, aerial acrobatics

As I mentioned in my last budget post, December was not a very informative month in terms of whether my budget is reasonable. Below are my aggregates.

I saved a lot of money because I was home at my parents house for over half of the month, unfortunately I still had to pay rent for a full month. The one good sign I see is from the clothing budget. I don't think being at my parents house prevented me from spending money on clothing, so the fact that it was under budget was a good sign given that I have been over budget in the previous months.

The only overspent category was entertainment. That was all from one item, a groupon for an aerial acrobatic flight. I have not cashed it in yet, but I am really excited about it, particularly the prospect of piloting my own tricks. There was a groupon later for skydiving, but I couldn't find anyone that wanted to go with me. The guy I know that is doing the aerial acrobatics already went skydiving.

Shout out

I'd like to give a shout out to my friend "a player to his left" who is featured in the 7:40pm post in this blog.

Quote of the week

I heard this conversation on my bus ride from O'hare back to my house:

Amateur conspiracy theorist 1: You know who owns Phillip Morris?

Amateur conspiracy theorist 2: The cigarette company?

ACT1: Phillip Morris the cigarette company.

ACT2: Nah

ACT1: Kraft

ACT2: Kraft cheese?

ACT1: Kraft macaroni and cheese! That's why it's so addictive, they put the same stuff in it.

This was all said in complete seriousness. I don't know where to start in analyzing this so I won't.