Game theory says you should charge your friends to borrow things


Timothy Revell in New Scientist [h/t: Jennifer Ouellette]:

Want to borrow my tent? No problem, that will be £25 please. That might sound annoying, but it will be better for society in the long run. Surprisingly, this is the conclusion reached by a new game theory analysis of sharing goods.

With larger and more expensive items that are used infrequently, like power tools and hiking gear, people often face a choice between buying one themselves or borrowing from a friend. Assuming that this choice solely comes down to cost, Ariel Procaccia and colleagues at Carnegie Melon University in Pennsylvania wanted to see what outcome these individual decisions have on society as a whole.

In their first simulation, people were able to borrow items for free from their friends. Considering overall wealth, “in this situation the cost for society was really bad,” says Procaccia. “Everyone tried to optimise their own situation, but this was far from the optimum for society,” he says.

To picture what goes wrong, imagine a town where people very occasionally want access to a circular saw. Most of the time the item remains unused, so anyone who owns one is happy to lend it to friends for free.

More here.