HBO’s hit show Succession returns for its fourth season on March 26th. This show does an amazing job integrating complex game theory concepts in their storylines. Game theory studies how entities will approach serious situations as if they were a game and the strategic choices they’ll make when playing the “game.” These methods are valuable and used by economists and others to study behavior.
In a previous article, I examined two game theory lessons from the show: the prisoner’s dilemma and bargaining strategy. In this article, I will share two more examples of game theory concepts illustrated in the show.
Once again—there are spoilers in this article.
Don’t Underestimate the Value of Spite
The first key lesson we examine is that players in a game should not underestimate the value of spite. Let’s take a step back before examining why spite matters and define some terms. A game’s outcome results in payoffs for players. Payoffs could be monetary or non-monetary (winning a competition could be the payoff, for example). One of the critical assumptions made in game theory is that all players know all information about all payoffs. Relatedly, it is assumed that the payoffs for each outcome are accurate. But payoffs aren’t always about money – and it is important to consider non-monetary factors when predicting behavior. Sometimes people might not take the best monetary offer if spite is involved.
The ultimatum game occurs where one person offers to split a prize and gives another person a take-it-or-leave-it offer. Many times, the person receiving the offer will reject it – and reject real money – if they don’t think the offer is fair. They turn down a cash payment – and perhaps make themselves worse off – when at first glance, it appears wise to accept the offer. Why? Spite has value to many people and sometimes, some players will think it is worth giving up some money in the ultimatum game to harm the player making the perceived unfair offer out of spite.
In Succession, we see the value of spite play out in several instances. One key spot is at the end of Season 3. Tom’s wife, Shiv, asks Tom for a favor. She wants him to run some TV content (he has that power within his role) to help Shiv and her siblings block a move by their father. It seems like this would be the wise thing for Tom to do. Shiv is his wife, and if she wins this game, he is financially better off. If money was the only factor, it’s a no-brainer for Tom to cooperate. But Shiv had previously done and said some terrible things to Tom throughout the series, including not seeming to care if Tom goes to prison, telling him he isn’t good enough for her, and cheating on him.
Shiv wanted and expected Tom’s help, but Tom foiled his wife’s plan by telling Shiv’s father, Logan, so that he could take preventative actions. It could be that the financial payoffs for such a move were worth it on its own accord, although likely not given Shiv and Tom have a shared financial interest. But when spite is thrown into the mix, the payoffs change for Tom, and he makes a choice that is not financially in his best interest.
Begin With the End in Mind
Another way game theory lessons are illustrated in Succession comes when thinking about sequential games. One of the best lessons from Franklin Covey’s The Seven Habits of Highly Effective People is to “begin with the end in mind.” In sequential games, players must begin with the end in mind and work backward to think about each optimal move/play. Game theorists call this backward induction. It is wise to use backward induction in many strategic situations, and we see the characters in Succession using it several times throughout the series.
One key example of backward induction being used effectively occurs with Stewy as he attempts a hostile takeover of Waystar, Logan’s company. He thinks backward about what would be needed for a successful takeover attempt and does several things to prepare. First, Stewy and his main partner privately accumulate a significant number of shares of Waystar well in advance. Second, Stewy and his partner recruit Logan’s son, Kendall, to help with the takeover and to run the company once acquired. Finally, the group thinks about the appropriate timing to give notice of the takeover, and they decide to do that when Logan is out of the country. They think Logan being out of the country will cause the potential response by Logan to be less organized, increasing their odds of success.
These are all good moves in advance of actually announcing the takeover bid. While an unexpected outside event ends up foiling Stewy’s takeover bid, Stewy’s use of backward induction significantly increases his odds of success.
Succession is one of the best shows on TV. With competition and situations throughout, it also gives us many good examples to see where game theory concepts are applied in (almost) real life situations.
The post What HBO’s Succession Can Teach You about the Value of Spite and ‘Beginning With the End in Mind’ was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.