The Devil and Adam Smith
This week is economic analysis class in Torts, so I will link to this Crooked Timber question regarding utility and rational choice (via Will Baude at Crescat Sententia).
You are in hell and facing an eternity of torment, but the Devil offers you a way out, which you can take once and only once at any time from now on. Today, if you ask him to, the Devil will toss a fair coin once and if it comes up heads you are free (but if tails then you face eternal torment with no possibility of reprieve). You don�t have to play today, though, because tomorrow the Devil will make the deal slightly more favourable to you (and you know this): he�ll toss the coin twice but just one head will free you. The day after, the offer will improve further: 3 tosses with just one head needed. And so on (4 tosses, 5 tosses, �.1000 tosses �) for the rest of time if needed. So, given that the Devil will give you better odds on every day after this one, but that you want to escape from hell some time, when should accept his offer?
There's two answers to this, both of which I'll list in the extended entry, so as not to spoil it. (At least, I have two answers, though they might be wrong.)
(1) Essentially, this is a way of 'slighting' utility and economics through thought problem. If you imagine suffering in hell as having a near infinite disutility (an understatement if there is one), then the benefit you gain due to the reduction of risk by waiting one more day is infinite, no matter how small the reduction in risk. Paying the suffering of one day in order to gain an even marginally greater possibility of escape will always be worth more than failing to wait until the next day. In other words, if you behave as a purely rational economic actor, you will remain in hell forever.
Fortunately for those of us who like economics, this is rarely applicable to real life. It merely highlights why Law and Economics is a more appropriate field of study than, say, Economics and Papal Doctrine.
(2) The real answer, of course, is that the Devil does not give up his own, and the coin has two (rather pointy) tails.
