Game Theory, Dictator’s game and Benevolent Dictator

“The difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later; in a dictatorship you don’t have to waste your time voting.”

-Charles Bukowski, American poet, novelist and short story writer.

In game theory there is interesting game called ultimatum. Game goes like this, there are two players- first player is given some money, which he has to split between himself and second player. The second player can either accept amount given or reject offer. If second player rejects offer both get nothing. This forces first player to be reasonable while splitting amount esp. if amount is too low, second player will just reject it. This how democracy works, while government is authorised to utilize money it gets through taxes, if it neglects or spends too little on people, it gets rejected in elections.

profit sharing

There is variation in this game; it is called Dictator’s game. Here first person has option of splitting amount, but second player does not have option to reject it, he has to accept whatever he is offered. The game is useful in understanding the concept of altruism i.e. all depends on how generous first person is.

Those living in totalitarian or communist states are familiar with Dictator’s game, everything depends on “great leader” or dictator ruling that country. Since elections are farce and free press non- existing, they are totally dependent on altruism of their leader. While dictator has unlimited power, he too tries to prolong his rule by projecting himself as altruistic leader, so he will offer pensions, jobs in state run enterprises, subsidised food, medical services, water, electricity etc. But game cannot go on for too long, communist run states have inefficient and corrupt bureaucracy, which results in low productivity, losses etc. making it difficult to run state. One possibility is leader may get overthrown, but that usually results in anarchy or take over by military.

images

There some in India who believe that India should do away with democracy and replace it with “benevolent dictator”. But that just does not work, it soon becomes dictator’s game- continuing with dictatorship means loss of freedom, overthrowing it results in anarchy or military rule.

 

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