Ice Bucket Challenge – Game Theory
Source: http://www.valuewalk.com/2014/08/ice-bucket-dilemma/
From social networking sites, such as Facebook, to various online news distributors, whether it be the average man or a famous celebrity, the ALS Ice Bucket Challenge has been publicized and promoted for several months. What’s interesting is how the Ice Bucket Challenge was interpreted in terms of the infamous Game Theory model of Prisoner’s Dilemma.
The author of the article suggests the following model: two players, each given the option of choosing a green card or a red card. If both individuals choose a green card, $100 is donated to ALS in each of their names (for a total of $200 donation). If one person chooses red while the other chooses green, the one who chose red gets $250 donated to ALS in their name while the one who chooses green gets a bucket of ice on their head. If both players choose a red card, they both get ice dumped on their head in addition to $50 donated to ALS under both of their names (for a total of $100).
As this is a Prisoner’s Dilemma situation, the equilibrium is for both players to opt for a red card, for a total of $100 donated to ALS as opposed to the $200 total if both opted for green or $250 if one opted for red and one opted for green. This article brings up the question of whether this strategy was the best way to go about fundraising. While it may promote awareness, half as much money is actually donated to ALS.