Why rival ice-cream carts end up side by side: Hotelling's beach
30seconds
Put two ice-cream carts on a long beach and each one is tempted to creep toward the other, because standing next to a rival steals customers without losing any. Economist Harold Hotelling spotted this in 1929.
Drag the carts and watch them huddle in the middle. Each keeps half the customers, but everyone at the far ends of the beach now walks twice as far as they would if the carts stood at the quarter points.
Deep dive · 4 min
More in Economics
View all →
Why adding a road can slow every driver down: Braess's paradox
You would think a free shortcut can only help. In 1968 the mathematician Dietrich Braess showed it can make every driver slower. In our four-road example…
Why people bid more than a dollar for a dollar: Shubik's escalation trap
Auction a dollar bill with one twist: the second-highest bidder pays their bid too. It sounds harmless, yet in 1971 economist Martin Shubik reported that…
The winner's curse: why whoever wins an auction has usually overpaid
In 1983, MBA students bid on jars of coins worth exactly $8. On average they underestimated the jars, guessing $5.13. Yet the winning bids averaged $10.01, so…
Why shared fish, fields and water get used up, and how some places don't
When something is shared and nobody controls it, taking a bit more is always worth it for you. You keep the whole gain; the damage is split among everyone…