How Insurance Works

GameTheory -HungryLion

check out my previous video for more games. Today we will play a very interesting game
it called hungry Lion game. imagine a special pride of lion. They are all crazy hungry. When they meet just one sheep called Alex. Alex had the misfortune
of wandering into this pack of pride of lion and is liable to get eaten. However, one thing stands between Alex the
sheep being eaten. The one thing that stands between him and
being eaten is that in lion society. The only lion who is allowed to eat the sheep
is the head lion. the big lion is you. now you are the big lion. Only you can eat the sheep. But there’s a catch if you eat Alex. The catch is, that if you the lion eat Alex
the sheep, you will fall asleep. at which point the second largest lion Chris
can attack and eat you to replace you as an alpha in the group. Now notice the second biggest lion can never
eat the sheep. He can only eat you the big lion, and only
then if you eat the sheep and falls asleep. This is very strict. … Lion society is very hierarchical like
England. If however, you eat Alex the sheep. and is
then eaten by Chris the lion. then and only then he will fall into a stupor
at which point he can be eaten by third strongest lion Isabella and so on. what would you do you were our key decision
maker. who is the biggest lion? whether you would eat Alex the sheep. this is a very good question and you will
understand soon. if you think you won’t eat the sheep. because
you would be eaten as well. may be you are right. Then you’d be eaten. Well, let’s see if you would have been eaten. you’d have been in danger of being eaten
by Chris the second biggest lion. if we ask Chris if he will eat you. he would probably answer no because if he
eats you he would be eaten by isabella. In fact, it looks like you would have got
a free lunch. what was going on here? Chris is worried about Isabelle eating him. what’s going on here? what’s wrong with this analysis. I totally in the wrong side to do my analysis. I should start with the baby lion whose name
is Agay. Agay is a little baby lion, oh, very cute
but Agay if he gets a chance to eat, he is going to eat. why is he going to eat? Because there’s no one to eat him. So if Agay gets the chance to eat. The second babiest lion named John, then Agay
will eat. So if John gets a chance to eat Ben, is John
going to eat Ben? No, John’s not going to eat Ben. because
John knows he’ll get eaten by Agay. if Mark gets a chance to eat. is he going to eat. Yes! wait a second, we know the second littlest
is not going to eat, so the third littlest lion can eat safely. So the fourth littlest lion should not eat. So the fifth littlest lion should eat. We’ve got eat, not eat, eat, not eat, eat,
not eat, eat, not eat, eat, . In fact, you should eat him. now you know how should you analyze this game. this method called backward induction. in many situations, you can use it to do your

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