The Economics of the Good, the Bad, and the Ugly: Secrets, Desires, and Second-Mover Advantages

Description

The highly praised Western, The Good, the Bad, and the Ugly, has been used in many game-theory courses over the years and has also found its way into leading journals of this field. Using the rich material offered by this movie, alongside other elements from popular culture, literature and history, this book furthers this exploration into a fascinating area of economics. In his series of Schumpeter lectures, Manfred J. Holler uses his analysis of Sergio Leone’s movie as a starting point to argue that combinations of desires, secrets and second-mover advantages trigger conflicts but also allow for conflict resolution. Many people and organizations have a desire for secrecy, and this is often motivated by a desire to create a second-mover advantage, and by undercutting the second-mover advantage of others. This book demonstrates that the interaction of these three ingredients account for a large share of social problems and failures in politics and business but, somewhat paradoxically, can also help to overcome some of the problems that result by applying one or two of them in isolation. This book has been written for curious readers who want to see the world from a different perspective and who like simple mathematics alongside story telling. Its accessible approach means that it will be of use to students and academics alike, especially all those interested in decision making, game theory, and market entry. About the Author Manfred J. Holler is Emeritus Professor of Economics at the University of Hamburg, Germany; research professor at the Public Choice Research Centre at Turku, Finland, and a member of the board of the Center of Conflict Resolution. He is founding editor of the European Journal of Political Economy and the journal Homo Oeconomicus (now one of its three editors-in-chief), and also serves as assessing editor or board member for a number of other journals. The Economics of the Good, the Bad, and the Ugly- Front Cover The Economics of the Good, the Bad, and the Ugly Title Page Copyright Page Contents Preface and alternative facts Chapter 1: The trailer 1.1 The confession 1.2 The agenda 1.3 The story 1.4 Acknowledgments Chapter 2: On desires 2.1 Why desires? 2.2 Desires, preferences, and choices 2.3 Sen’s Liberal Paradox and the mixing of preferences and desires 2.4 Preferences on desires 2.5 The calculus of desires and preferences 2.6 Ranking sets of desires 2.7 Back to wants, beliefs, and desires 2.8 Desires and the neoclassical repairshop Chapter 3: Second-mover advantages 3.1 Of time and information 3.2 The Sad Hill Truel and some revisions 3.3 Second-mover advantages and market novelties 3.4 Public pioneers and the entrepreneurial State 3.5 Raisin picking and the Sherman-Willett trap: a theoretical excursus 3.6 Fair shares and second-mover advantages 3.7 Creative destruction and second-mover advantages 3.8 Strategic secrets, hiding, and the second-mover advantage 3.9 Who is a second-mover? Akira Kurosawa, Sergio Leone, or Bob Dylan Chapter 4: Secrets: how to create and how to deal with them 4.1 A variety of secrets 4.2 The Zimmermann Telegram and Alan Turing’s dilemma 4.3 Creating secrets as a work of art 4.4 The artist as a secret agent 4.5 Machiavelli’s conspiracy paradoxes 4.6 George Orwell’s notebook: the moral dimension of secrets Chapter 5: Justice in the end? References Index