Game Theory:

Let's play a game.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”…

The industry says that the proposals will force banks to issue fewer credit cards at greater cost to the current cardholders.

You’re already helping to pay off deadbeats’ homes. Why not help free them up to rack up some more credit-card debt too?

I gather the theory is that people who work hard will continue to work hard, even though they are now benefitting much less and paying the freight for people who don't. Yet we know from game theory that sometimes ultimatums get rejected:

The ultimatum game is a game often played in economic experiments in which two players interact to decide how to divide a sum of money that is given to them. The first player proposes how to divide the sum between the two players, and the second player can either accept or reject this proposal. If the second player rejects, neither player receives anything. If the second player accepts, the money is split according to the proposal. The game is played only once so that reciprocation is not an issue....

In many cultures, people offer "fair" (i.e., 50:50) splits, and offers of less than 20% are often rejected. Research on monozygotic and dizygotic twins has shown that individual variation in reactions to unfair offers is partly genetic.

To say that this arrangement is at least "partly genetic" is a way of returning to the concept of "natural law." Humans in many cultures will flatly reject an unfair split of free resources: A and B are both getting something for nothing, but B would rather get nothing at all than get only 19% while A takes 81%.

That's in a case where A is dividing spoils which are free to both parties -- neither one has any ownership of the spoils until they are divided. In the current case, A is proposing to take property that belongs to B and divide it between them. Because A controls the political branches, he is in charge of setting the terms of the division.

B, however, still has an option available, as the Randians keep reminding us. Doc Russia explores the question in depth.

It's still a good game. Many of us may have a lot more time to enjoy life, in the near future.

Cannibals!

One of the interesting sections from the paper we've been discussing is the Turkish view of the Franks as cannibals:

Other Muslim accounts note that the Franks not only killed civilians, but they tortured them to extort treasure and even ate them. According to Maalouf, Christian sources confirm that the Franks boiled and grilled adults as well as children so they could eat them. The local population quickly spread word of the atrocities that the Franks committed against the population of Ma’arrat. These stories reinforced the already prevalent image of the Franks as subhuman and further vilified them. What enemy could be worse, even in medieval times, than cannibals?

“They [Franks] aroused a mixture of fear and contempt, quite understandable on the part of an Arab nation which, while far superior in culture, had lost all combative spirit. The Turks would never forget the cannibalism of the Occidentals. Throughout their epic literature, the Franj are invariably described as anthropophagi.” Muslims equate the conduct of the Franks during this siege to their true nature and eventually used this example to igncooperation between rival princes and emirs. In the near term, the conduct of the Franks benefited their campaign. In the long term, their conduct would eventually contribute to the loss of the war.

That reminds me of Sir Walter Scott's introduction to his Crusader novel, The Talisman. It's too long to quote in full, but treats Richard the Lionheart's alleged cannibalism:

"The swarte vis [Black face] when the king seeth,
His black beard and white teeth,
How his lippes grinned wide,
'What devil is this?' the king cried,
And 'gan to laugh as he were wode.
'What! is Saracen's flesh thus good?
That never erst I nought wist!
By God's death and his uprist,
Shall we never die for default,
While we may in any assault,
Slee Saracens, the flesh may take,
And seethen and roasten and do hem bake,
[And] Gnawen her flesh to the bones!
Now I have it proved once,
For hunger ere I be wo,
I and my folk shall eat mo!"'

Sir Walter has an explanation for how he believes the rumor arose. It all reminds me of Roman Polanski's Pirates, in which the starving captain is trying to catch his last-remaining crewman to eat. The crewman scales the mast of their little boat, and as the captain is chopping down that mast, yells down:

"Cannibalism is a mortal sin! You will burn in hellfire!"

The captain pauses for a moment to consider that, and answers:

"What about Confession? What do you think Confession's for?"

Chop, chop.