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A Beautiful Mind and Game Theory

Summary

In this video clip from the movie, A Beautiful Mind, the concept of cartels and game theory is taught during a scene at a club. All of the men in the group are interested in pursuing the same blond woman. John Nash, the main character, then suggests that all the men make a deal where no one gets the blond and instead, they each pursue one of her less attractive but still desirable friends. In this deal everyone agrees, yet there is a huge incentive to cheat, much like in a situation between cartels in oligopolies.

Discussion Questions

  1. What are the advantages and disadvantages to forming cartels?
  2. What is an example of a situation whre businesses have formed cartels in the past?
  3. How can forming a cartel destroy the functionality of an industry?

REFERENCE

 Link to video


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TOPICS

Economics