Wednesday, December 12, 2012

My Parents are Economists #1: Honesty is the Best Policy

I think I might start a new blog series called My Parents are Economists.  It's true that neither of them are professional economists and that they might not think like economists sometimes, but they taught me a lot about the economic way of thinking when I was growing up even if they didn't call it that.

So, economists (especially game theorists) will tell you that honesty is not always the best policy depending on the payoff structure of the game you are playing.  My parents careful to make sure to structure payoffs such that truth telling led to higher payoffs than lying.  I would always get in more trouble if they found out I was lying than if I told the truth initially.  Since I'm a bad liar that raised the probability that they would sooner or later catch me in a lie to nearly 1.

As parents, you want to have an honest line of communication with your children.  If you want them to be straightforward with you, then you can't chastise them for telling you things like when they had a few beers the other night.

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