El Farol Bar
- Inventor of Game: W. Brian Arthur
Imagine a bar that a fixed population of people chooses to go to every Thursday evening to have fun. They will only go if it is not too crowded though. Theoretically, if less than 60% of the population goes to the bar, they’ll all have more fun than if they stayed home. Meanwhile, if more than 60% of the population goes, they’ll all have less fun than they would if they stayed at home. Everyone must decide at the exact same time if they are going to go or not. However, they will have no knowledge of what others choose. However, some versions of this game allow you to discuss your decision with other players but you’re not required to be truthful.
Many might use a pure strategy concept, which is usually symmetric and is guaranteed to fail regardless. Essentially, if everyone decides it will not be too crowded then everyone will then go. This will then paradoxically cause that bar to be too crowded. Meanwhile, if the strategy employed is that the bar WILL be crowded, then no one will go. No matter the decision, there is a loss of fun for all. This is why experts believe a mixed strategy works best. Where people decide their own strategies for this game, giving a better shot to get a result that ends in the best possible outcome.