How game theory can help you be a better parent
As an economist, one of the most common questions I get is inquiries on which stocks to buy. As I’ve explained before for FEE, economics doesn’t actually equip me to answer this question. However, economics has provided me with good rules to aid me in (believe it or not) parenting.
There’s a good chance that parents will hear or discover these rules on their own, but the underlying logic for why they are good rules is based on a sound understanding of economics.
So, after five years of parenting and three years of being a professor, I present to you the three rules of rational parenting.
One common struggle of being a parent of young kids is the possibility of tantrums. Kids frequently throw tantrums publicly when they don’t get what they want, and your response to tantrums needs to be strategic.
Any time you encounter a situation where your best decision depends upon the actions of another person, we can think of that interaction as a game. Something being a game doesn’t imply there is a loser or a winner, it just means your best action is dependent on the action of someone else. These sorts of interactions are analyzed by economists with the tools of game theory.
So let’s think of what we’ll call the tantrum game. In the tantrum game, a child makes a decision whether to throw a tantrum; and the parents, in turn, are given the opportunity to respond.
We’re going to analyze the decisions of...
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