Jason Grindstaff: Jonathan, man, how you doing?
Jonathan Davis: How you doing?
How you doing?
Jason: Great, great.
Jonathan: All right.
Jason: Today we're going to be talking about the prisoner's dilemma.
If you've ever seen the movie Jerry Maguire, you've heard of it?
Jonathan: Show me the money?
Jason: There you go.
There you go.
Show me the money.
Jerry Maguire is a sport's agent who is helping Rod Tidwell strike up a new contract.
That's where the- Jonathan: Show me the money.
Jason: Show me the money, exactly.
Jonathan: Okay, cool.
Cool.
Jason: If you were the owners of the football team and I am Rod Tidwell, I'm trying to position
myself and negotiate for as much of that money as possible.
What are you, as the owners, doing?
Jonathan: The owners, we're trying to get you in.
Sales pitch.
Just trying to really just key you into.
Jason: Absolutely.
You're trying to pay me as little as possible, as you can to still keep me.
Jonathan: This is true.
It's true.
Jason: All right.
In this model, what we're going to look at is how oftentimes in sports markets, how some
of that negotiation process works.
Jonathan: Got you, got you.
Jason: Now this prisoner's dilemma is not a sports' model, but it's a pretty interesting
model.
I think you're going to like it.
Here in this model, what we're going to assume is that we've got, not Jerry Maguire, but
we've got Jerry and we've got Larry.
Jonathan: Got you, got you.
Jason: Now, here's how the story goes.
Jerry and Larry are pulled over by the police one evening.
Now their vehicle matches the description of a getaway vehicle from a robbery that just
occurred at the bank.
Okay.
The police haul them in.
The police actually haul them into the police station and put Larry and Jerry in two different
rooms.
Larry and Jerry can't talk with one another.
Jonathan: Oh, wow.
That's wow, okay.
Jason: But they know they're in trouble.
All right.
Larry and Jerry are in two separate rooms, can't talk with one another.
The interrogators come in and they tell Larry and Jerry at separate times, "Hey, we've got
enough on this robbery to convict you guys."
Jonathan: Oh man.
Yeah, yeah.
Jason: What can Larry and Jerry do?
They can either fess up or what do you think their other option is?
Jonathan: Either fessing up, man, or probably the other option would be to either fabricate
something that may not be actually to what it is.
Jason: Very possible.
Or stay quiet.
Jonathan: Or stay quiet.
That's true.
Jason: All right.
Okay.
We're going to say they can stay quiet, all right.
We'll put Q over here, as well.
They can either stay quiet or admit.
Jonathan: Or admit, got you.
Jason: All right.
Follow this along.
If Jerry and Larry both stay quiet and don't admit to this, here's the thing, though.
The police have just enough information to- Jonathan: Convict them, yeah right.
Jason: Mostly circumstantial.
Jonathan: Right, right, right.
Jason: They're each going to get one year in jail.
Jonathan: Okay, okay.
I see where you're going.
Okay, okay.
Jason: All right.
If they both admit, all right.
Here, they both admit to doing it.
Either admit or pin it on the other person, all right.
Jonathan: Right, okay.
Jason: If that's the case, they both admit to doing it, then they get six years each.
Jonathan: Wow, wow.
Major difference.
Jason: Big difference.
Jonathan: Major difference.
Jason: Big difference.
We'd probably say that they're both in a position right now, try to stay quiet, right/
Jonathan: As much as possible.
Jason: Absolutely.
Absolutely.
Jonathan: As much as possible.
Jason: Now what happens, okay.
If Larry stays quiet, all right, and instead of admit, what if we just say, so they either
admit ... Jerry pins it on Larry.
Jonathan: On Larry, right, right.
Jason: If Jerry pins it on Larry and Larry stays quiet, Larry goes to jail for 10 years.
Jonathan: Wow.
Jason: Guess what happens to Jerry?
Jonathan: Wow.
Jason: He gets off scot-free.
Jonathan: Wow, wow.
That's no joke, man.
Wow, wow.
Jason: Now what do you think we're going to do here?
Jerry's going to stay quiet.
All right.
He's going to pin it on Larry.
Jonathan: Got you, got you.
Jason: Just the opposite.
Jonathan: Would you think it would be the same?
Jason: Sorry, in this one, so we've got Jerry going to jail for 10 years.
Jonathan: Then you've got Larry- Jason: Where Larry gets off.
Jonathan: Got you, got you.
Jason: Their position on this.
What's their best, most favorable outcome?
Both stay quiet.
Jonathan: Both staying quiet, yep.
Jason: Absolutely.
Jonathan: You give them a lawyer.
Jason: There you go.
Jonathan: That kind of idea.
Jason: Absolutely, absolutely.
Now we would say as well, they probably don't want to go for this one.
If they both try to pin it on each other- Jonathan: It's your best bet not to.
Jason: Exactly, right.
If they pin it on the other, they're both going to jail for six years.
They've got them.
But the police also know, if they can get one to pin it on the other-
Jonathan: Yeah, yeah.
That's a good lead to a conviction.
Jason: It is, but then one's only going to jail for 10 years, while the other gets out
scot-free.
Jonathan: Justice is not served.
Jason: What do we do in this situation?
If you were in Larry or Jerry's position, what do you think you would do?
You can't talk.
You certainly can't talk with the other.
Jonathan: It brings up an interesting dilemma because you want to show integrity.
With that being said, you want to be like, "I did it.
It's my fault.
I need to go ahead and serve my time."
Jason: Fess up.
Jonathan: But at the same time, I'd rather be quiet.
Jason: Absolutely.
Jonathan: If you know what the sentence is going to be and you know the circumstances
and the consequences behind it, then if you guys are really friends, like if Larry, if
he's my guy, we've been knowing each other for a while.
You really don't want to pin it on him.
At the same time, you don't want it to fall back either.
It's definitely, definitely interesting.
Jason: It does.
It presents a really interesting dilemma here on what do you do in these situations.
There's a lot of applicability here in sports' negotiations.
If we were to, instead of Larry here, here we have our football team.
We have our football team.
Here we have Jerry Maguire from our movie and Rod.
Jonathan: Got you.
Jason: We have Mr. Tidwell and we have Jerry Maguire trying to press for that show me the
money.
Right.
Jonathan: Yeah, yeah.
Got you, got you.
Jason: Is their best position to just stay quiet and let the football team run the whole
negotiation process?
Jonathan: It probably wouldn't be a good idea.
Jason: No.
Absolutely not.
They're probably going to get taken to the cleaners.
Jonathan: Very true, very true.
Jason: Absolutely.
Jonathan: Very true, very true.
Jason: If Jerry and Rod keep pushing for that show me the money, and the football team comes
to show me the money, we probably don't get the most favorable outcome.
Jonathan: Exactly, exactly.
Jason: When it comes to these negotiation processes, certainly one gets taken to the
cleaner when one presses too hard and the other stays quiet or just get railroaded.
Jonathan: Yeah, yeah.
True, true.
Jason: In that position, when it comes to sports' negotiation, or really any negotiation
process in general, how key that communication process is to the whole thing.
Jonathan: Definitely, definitely.
Jason: If we don't have that communication, one is certainly going to get railroaded over
the other.
Jonathan: That's true.
That's true.
Jason: When we take a look at the prisoner's dilemma, which is oftentimes studied in economics.
There's a lot of applicability here to even sports markets.
Jonathan: Yeah, very true.
Very true.
I guess you can see how Lebron has got his big contract on.
Jason: There you go.
There you go.
Jonathan: Yes, sir.
Jason: Absolutely.
Jonathan: Cool.
Jason: Well hopefully that gives you a little bit of an introduction to the prisoner's dilemma.
Jonathan: Oh yeah man.
Thank you.
Jason: Very good job.
Jonathan: Straightforward.
Jason: All right.