A Beautiful Mind: Using Media to Teach Economics
Context for Use
Description and Teaching Materials
In the movie, Nash's eureka moment occurs while he is with his friends in a bar. Five girls enter the establishment and Nash and his friends start contemplating who will get the blonde.
Eventually the conversation turns to Adam Smith and one of his famous quotes, "In competition, individual ambition serves the common good."
"Everyman for himself, gentlemen" says one of Nash's friends.
And another adds, "and those who strike out are stuck with their friends."
Eventually the blonde looks over at Nash, and he joins the conversation, "Adam Smith needs revision." Nash goes on to state that no one should pursue the blonde since they will all "block each other and not a single one of us will get her. Then when we strike out, none of her friends will have us because no one likes to be second choice. But what if no one goes for the blonde? We don't get in each others way and we don't insult the other girls. That's the only way we win."
But his friend quickly adds, "If this is someway for you to get the blonde you can go to #%^*!"
"Adam Smith said that the best result comes from everyone in the group doing what is best for himself, right? That's what he said. Incomplete. OK, because the best result would come from everyone in the group doing what is best for himself and the group."
At this point Nash rushes out the bar and spends the next few months writing his treatise on general equilibrium theory.
There is just one problem – the economic explanation in the bar scene is wrong! The scene that was just described is NOT a Nash equilibrium. A Nash equilibrium occurs when economic decision-makers choose the best possible strategy, taking into account the decisions of others. The scene in the film cannot be a Nash equilibrium since if no one goes for the blonde, each of the friends best strategy – given what their friends is doing – is to go for the blonde! Therefore, as soon as one guy decides to go after the blonde, the agreement not to pursue her falls apart and chaos reigns! Oops. Director Ron Howard took a few liberties to try to simplify Nash's discovery.