Easter is approaching; it’s a time for family, food and of course eggs.
All children know the trade-off they constantly face: if they don’t behave well, their craved Easter eggs are at risk and the more naughty they are, the more they will have to forget about their sought chocolate eggs. Is there a “present-maximizing” strategy we can foresee? After all, no self-respecting child wants to hoover the living room or do the washing-up unnecessarily.
A survey carried out for Walmart (a giant retail corporation) by the market research firm GfK has the answer that every kid has always hoped to grasp. Indeed, the survey indicates that 78% of parents will buy their little beloved the same eggs, however bad their behavior. This finding has a precise economic meaning: children’s happiness is a positive externality for parents (after all, who wants to spend Easter with Mr. Grumpy?).
What if you are an extremely unlucky kid and your parents are in the 22% minority?
The survey shows that the biggest problem you’ll face is benchmarking. If you have a brother or sister, your parents will directly compare your sibling’s behavior to yours. Worse of all, if your sibling is a master in getting homework done before you or has the cleanest bedroom in town, you have a big problem. Your sibling’s angelic behavior will mean no Easter presents for you this year; this is by far the worst possible situation. You therefore have a strong incentive to behave well to obtain your right share of gifts.
But is this outcome efficient? To be fair, both you and your brother would be better off by being naughty. Your parents’ benchmarking wouldn’t find any difference in your behaviors and you’d still both get your right share of presents. This tricky situation is what economists call a Prisoner’s Dilemma: both you and your sibling have an incentive to behave well even though you’d both be better off if you behaved badly (any pair of siblings would prefer an outcome where they can both avoid washing-up and still get chocolate eggs).
Are your parents going to win the game then? Not necessarily. Since it’s probably neither the first nor the last Easter you spend with your family, you are in a situation of “repeated games”. Therefore, economic theory tells you that you can effectively stipulate a “contract” with your sneaky brother, in which you both agree to be equally untidy. If he cheats and tidies up, you can threaten him by saying that you will cheat as well for every other repeated game. This creates an incentive for your sibling to abide to your rules and, perhaps, a sustainable win-win situation. Beware, however: this tactic works as long as your parents do not benchmark you with other kids’ behavior. If you don’t play it well, you whole present-maximizing strategy can backfire at the first school parents’ evening gathering.