The Traveller's Dilemma
I was reading on Scientific American about the Traveler's Dilemma. The article explains this quandary thusly:
Lucy and Pete, returning from a remote Pacific island, find that the airline has damaged the identical antiques that each had purchased. An airline manager says that he is happy to compensate them but is handicapped by being clueless about the value of these strange objects. Simply asking the travelers for the price is hopeless, he figures, for they will inflate it.
Instead he devises a more complicated scheme. He asks each of them to write down the price of the antique as any dollar integer between 2 and 100 without conferring together. If both write the same number, he will take that to be the true price, and he will pay each of them that amount. But if they write different numbers, he will assume that the lower one is the actual price and that the person writing the higher number is cheating. In that case, he will pay both of them the lower number along with a bonus and a penalty--the person who wrote the lower number will get $2 more as a reward for honesty and the one who wrote the higher number will get $2 less as a punishment.
It got me to thinking, though. What if Lucy and Pete have different income levels? Let's say that Lucy takes this trip every few years, but it is a once-in-a-lifetime trip for Pete?
Because then the cost of the item is much, much higher to Pete, who won't have another chance to get this or another, similar item on this trip. Should he be compensated with more money? Plane tickets back to this destination? Does the damage to this item represent a greater loss to someone who will not be able to acquire another one?
How much different is loss of an item to someone who is poor vs. someone who is relatively well-off? Is it more significant? How do we judge the impact? How do we compensate it?
The rational part of me says that it makes sense for both people to be compensated in the same dollar amount. The emotional part of me says that whatever this antique is, the damage done to it represents a greater comparative loss to Pete.
Lucy and Pete, returning from a remote Pacific island, find that the airline has damaged the identical antiques that each had purchased. An airline manager says that he is happy to compensate them but is handicapped by being clueless about the value of these strange objects. Simply asking the travelers for the price is hopeless, he figures, for they will inflate it.
Instead he devises a more complicated scheme. He asks each of them to write down the price of the antique as any dollar integer between 2 and 100 without conferring together. If both write the same number, he will take that to be the true price, and he will pay each of them that amount. But if they write different numbers, he will assume that the lower one is the actual price and that the person writing the higher number is cheating. In that case, he will pay both of them the lower number along with a bonus and a penalty--the person who wrote the lower number will get $2 more as a reward for honesty and the one who wrote the higher number will get $2 less as a punishment.
It got me to thinking, though. What if Lucy and Pete have different income levels? Let's say that Lucy takes this trip every few years, but it is a once-in-a-lifetime trip for Pete?
Because then the cost of the item is much, much higher to Pete, who won't have another chance to get this or another, similar item on this trip. Should he be compensated with more money? Plane tickets back to this destination? Does the damage to this item represent a greater loss to someone who will not be able to acquire another one?
How much different is loss of an item to someone who is poor vs. someone who is relatively well-off? Is it more significant? How do we judge the impact? How do we compensate it?
The rational part of me says that it makes sense for both people to be compensated in the same dollar amount. The emotional part of me says that whatever this antique is, the damage done to it represents a greater comparative loss to Pete.