In 1982, Milgrom and Stokey proved a remarkable “Groucho Marx theorem”: If rationality is common knowledge, risk-averse players should not make speculative bets with one another (unless they have hedging motives). Of course, speculation goe…Table IX shows predicted betting rates (for τ = 1.5) and Sovik
[2000]’s first-round data.[^18] The model does not track differences in betting rates across the three ambiguous information states particularly well, but it is an obvious impr…
Groucho Marx
comedian · 4 mentions across 2 readings
In this course
The "Groucho Marx theorem" in microeconomics formalizes his famous aphorism about not wanting to join clubs that would accept him—a paradox that reveals how rational agents with asymmetric information should avoid speculative trades that seem mutually beneficial. The course readings invoke this theorem to frame problems of social capital fragility and network effects, particularly how status-driven communities collapse when their exclusionary logic breaks down, using Marx's quip as both a historical observation about preference revelation and a conceptual lens for understanding algorithmic sorting and computational models of social behavior.
Mentioned in 2 readings
Social network effects are different. If you've lived in New York City, you've likely seen, over and over, night clubs which are so hot for months suddenly go out of business
just a short while later. Many types of social capital have qual…Groucho Marx was ahead of his time as a social capital philosopher, but we can build upon his work. To his famous aphorism we should add some variants. When it comes to evaporative cooling, two come to mind: “I don’t want to belong to any c…
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