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Oh. My . God. This really is freaking brilliant. Read the BI article, then skip ahead to 2:35 in the video. Truly brilliant move.

h/t +Mike Loukides
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A master class on the power of threats and "hard commitment", and how they will influence the options of your competitors. (after Nick's commitment Ibraham best choice, the only one that had any possibility to bring him any money, was to split).

I'm sure this video will be played in more than one MBA strategy class.
It's not prisoner's dilemma...which is why his strategy works. In real prisoner's dilemma, the payoff for both defect is more than the payoff for being cheated. Here however the other guy had no reason not to split since he was assured (or thought he was) of nothing. In real PD, if I know my partner will defect, I get more by defecting.
That was well played.
hahahaha!!! wasn't that a waste of time though?! why didn't he just split to begin with?!
Very interesting. However it teaches you that you must trick others to trust you and yourself cannot trust other people to do the right thing. A very sad social commentary
+Teina Kore Because he could not trust his opponent. If he split to begin with, then his opponent could cheat him. So he gives his opponent a different choice: take nothing, or take a chance that I'll split with you after the show. That's very different from the choice he gives his opponent if he pledges to split.
The really interesting thing is the story of how it comes about that the Financial Times doesn't know that this isn't Prisoner's Dilemma.
That was awesome! Everything about that was awesome XD
Absolutely brilliant play. I'll have to remember that next time I'm . . .
ah waste of time to do such a thing.SOME of us has lifes and would not like to waste it reading some geek aritical.though geeky thing are sweet some times
+Miguel Quintana he didn't trick the other guy. Nothing about "trust me, I will split the money with you" was a lie or dishonest. He just made it clear there was no logical third option, just the option to trust or not to trust.
There was no guarantee. People are willing to "irrationally" take a loss to punish someone who they think acts "wrongly". There was a very real chance the guy on the left would have chose steal. Quit frankly, I paused the video for a second and decided what I would have chosen. I saw the whole ruse of the secondary game as a con to get "me" to chose split. I decided that my only real option was to accept punishment to him as my only "return". I would have walked away with the pot though... so maybe it wasn't so "irrational" at all!
+Chris Bartos That's the interesting thing is that Nick knows he himself is not going to choose Steal as he says and his own guarantee is half or nothing and the other guy is actually guaranteed half or all. He makes the choice of half or nothing and only hopes his ploy results in his opponent making the same choice.
The more interesting question to ask yourself is if you were presenting a scenario like that to someone, would you have chosen Steal as you said you would or would you have chosen Split?
+Christina Kirschner If you play it as a trust game, which is how most seem to, then there is no difference at all between playing "split" and trusting your opponent to keep his word on the set, and playing "split" and trusting your opponent to divide the winnings out in the parking lot.
hahaha that guys has all my respect, because in the end he kept his word of splitting the money.
WOW is all I can say. like playing chess he had put him in a corner and told him to listen crazy
You can say Nick is smart. But he is not the smartest one. By using his tactic, he was just aiming at a "split", not "all", all the way through.
Ashok N
Loved the video.... watched it three times to understand this guy's strategy. And thanks +Thomas Bushnell for explaining the strategy.
These guys must not have anything to do better... Haha

it was only common sense really? I once learned that "a little bit of something, is worth more than a whole lot of nothing"

The simple beauty of this is that he convinced his 'opponent' that it was in his best interest to go along with whatever he said because otherwise they would both lose.

Not prisoner's dilemma, but still really interesting.
that bald headed guy was stupid. he should have gone with steal.
Very Clever!!! But after this tactic, I believe the game is ruined, as presumably everybody will try to use the same method to try to convince the other party "not" to steal. I respect the contestant in this video.
+Berke Hitay Certainly not! Humans are awfully unpredictable, so if everyone was going to try this gambit, someone's going to get greedy and try to game it. :-)
Actually, you're right +Brian Fitzpatrick, I ran the scenario in my mind a few times and thought what I would do if I was on that programme. I'd definitely try to best the guy in any situation.
To be precise this a display of Signaling Theory. In Game Theory the prisoner dilemma does not allow communication (signaling). But it is indeed a great example why such seemingly useless and expensive traits as peacock tail evolve, or why nuclear deterrent worked during Cold War.
I have to watch this, just at the moment, I can't. Sounds interesting though.
That was a cool video. It was a risky strategy though, as +Christina Kirschner said. If Abraham have even the slightest doubt that Nick would stick to his word, the deal would seem tilted towards Nick. People are known to reject small gains for themselves and deny large gains to the other side, if they feel like it was unfair compared to what the other side is getting.

It would be very interesting to find out how many people would have chosen to Split and how many to Steal under the same circumstance.
+Justin Virly Surely it cannot be, the element of ball selection does not utilize any prize money accumulation in any way.
+Thomas Bushnell From that regard I do consider it a PD; one could argue that being cheated is a worst outcome (albeit not financially speaking) than simply choosing the all or nothing option because you don't trust your opponent.

Although I agree with +Len Yabloko that introducing communication between the parties it deviates it from the pure PD where communication is not allowed among competitors.

That's why, for me, the video is represents more an example of the power of credible threats (signals and commitment) to influence your competitor options.
If you chose steal as a punishment, yes you would end up with the pot but then, most probably etic would've kicked in, realizing his plan and guilty would tempt you to split with him so you don't make a complete bastard of yourself on TV, luv this the more you think bout it the more variables you find!
there is no way you could realize his plan. If he is saying he wants to split the money with you but says he will only pick steal, it is obvious he is trying to trick you because if he wanted to split it, he would be open to both players picking split. but then the case arrises what if the other guy doesnt pick split, then he loses all the money. what the other guy should have done is say, lets switch this up, i will choose steal, and you can choose split and I will split the money with you. If he still refused that, there is no way to trust the guy so i would have gone with steal to prevent him from tricking me.
This is fantastic... i was only talking to someone two days ago that this is exactly what i would do, but i wouldn't actually want to go on the show to do it. It's great to see someone actually go and do it! Wonderful!
cheers for sharing this BP - late to bed again because of you! LOL. It was fascinating and I've since watched about 7 episodes on YouTube plus written a hub!
My point was mainly about how game theory leaves psychology out of the game completely. People are not always rational actors. As groups become larger and larger, the irrational acts of altruism and self-sacrifice for punishment become quite rational for the group to have even if it may be irrational when you focus on one round of the game with a small number of players. I am not saying game theory is missing anything, but that in real life it is a starting point rather than an all encompassing decision making tool. Unfortunately for academics, these auxiliary data points fall into the sticky realm of soft science and subjective data sets.

The guy playing the ruse had the liar's face. To me it screamed "I am performing a con". I jumped to the conclusion that the con was for his benefit at my own cost. I was completely thrown off when it turned out his con was to get a mutually beneficial result. Though it doesn't fit the textbook definition of altruism, I see his actions as being an altruistic con. I enjoyed it as much as everyone else, just from a different perspective.
That isn't game theory. Game theory is about charting, logic and math. You are confusing game theory with how people act in real life. They are often different things. Also, game theory assumes people will act selfishly.

If you scroll up to my other comments you will see the full context of my statements.
Also you had it wrong. The application of game theory applies to those various fields.
Sorry mister Fitzpatrick and Mr./Dr./Master Bartos. And you too Mrs./Ms. Kirschner.
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