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Posts Tagged ‘prisoner’s dilemma’

Better Than Interest Rates

08 Jul

In my past two blog posts, I explained how wage-based inflation is caused by a prisoner’s dilemma contest between millions of wage earners, and how the reserve bank uses interest rates to change the contest to force people to cooperate.

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Posted in Economics

 

Combating Employment

23 May

In my last post, I explained how inflation can be caused by people getting payrises without producing anything extra. If people can do this, it leads to a “prisoner’s dilemma” situation – if both players demand a payrise, both are worse off. If neither do, both are better off. If only one does, the guy who gets a payrise is better off, and the guy who showed restraint is worse off.

If there were only two workers in the economy, they could negotiate and come to some agreement. Unfortunately, in the real economy, there are more than two workers, and the payrise-inflation game becomes a multi-player prisoner’s dilemma.

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Posted in Economics