Saturday, September 03, 2005

It can be very important to make sure your incentives are compatible

David Friedman drives the point home with the following story from his Hidden Order.

Jose robbed a bank and fled south across the Rio Grande, with the Texas Rangers in hot pursuit. They caught up with him in a small Mexican town; since Jose knew no English and none of them spoke Spanish, they found a local resident willing to act as translator, and began their questioning.

"Where did you hide the money?"

"The Gringos want to know where you hid the money."

"Tell the Gringos I will never tell them."

"Jose says he will never tell you."

The rangers all cock their pistols and point them at Jose.
"Tell him that if he does not tell us where he hid the money, we will shoot him."

"The Gringos say that if you do not tell them, they will shoot you."

Jose begins to shake with fear.
"Tell the Gringos that I hid the money by the bridge over the river."

"Jose says that he is not afraid to die."


There is more Hidden Order on line here.

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