Monday, 14 September 2009

Why do Crack Dealers Still Live With Their Moms?

Co-author of the book Freakonomics, Steven Levitt, gives a nice lecture on the topic "Why do crack dealers still live with their moms?". He explains why drug dealing is not the profitable business many would think.

Toward the end of his lecture he explains some applications of classic economics theories to actual life in drug selling. The funniest is (at around 19:50):
Economic Theory: Every two-person game has a Nash Equilibrium (Game Theory).
Real life (drug dealers): If we start shooting around there [the other gang's territory], nobody, and I mean you dig it, nobody gonna step on their turf. But we gotta be careful, 'cause they can shoot around here too, and then we all fucked (obviously it is a drug dealer speaking).

Well, if this is not a perfect application of the Prisoner's dilemma!

Here's the video: