Old Ipswichian James Legrand returned to school on 14 September to work with Year 13 economists on Game Theory. James is about to return to his third year studying Economics at Cambridge after a 10-week internship with the Financial Conduct Authority (FCA).
Game theory is the mathematical analysis of strategies for dealing with competitive situations (hence ‘game’) where the outcome of a participant’s choice of action depends on the actions of other participants. James loves this topic, and researched it widely during his A Level. Through games such as the Pirates Game and Ultimatum game, students learned that rational decisions to win the game often conflict with behavioural bias.
Thank you to James for spending time with our students.
BACKGROUND: THE PIRATE GAME
Five rational pirates have discovered 100 gold coins, and want to keep as many each as possible. The most senior pirate of the five gets to propose how to split the coins and they all (including the proposer) vote. If the proposer wins, they split the treasure. If their offer is not accepted, the proposer is out (killed by the other pirates), and the second most senior pirate gets to propose a split.
What is the largest quantity of coins the first proposer should rationally be able to keep? Answer = 98. Can you use game theory maths to prove it!
Mr Faiers, Economics Teacher and Head of Study Skills
