Fluffy, on Sep 21 2007, 12:23 AM, said:
17. You have five pirates, ranked from 5 to 1 in descending order. The top pirate has the right to propose how 100 gold coins should be divided among them. But the others get to vote on his plan, and if fewer than half agree with him, he gets killed. How should he allocate the gold in order to maximize his share but live to enjoy it? (Hint: One pirate ends up with 98 percent of the gold.)
I am going to stick my neck out and say you are all wrong (except possibly David C and Rob F) on this.
First comment, this is NOT the same as the classic five pirate problem where the proposer gets to vote. Note that in the setup of this problem, the proposer doesn't vote, but the others do. And if fewer than half of those that vote agree with him, he is killed. (It is not stated, but assumed that if half or more do agree, then the proposal is accepted.)
Second comment, no discussion of ties is discussed. Furthermore, beliefs are not discussed. Let me propose a Nash equilibrium. Pirate A proposes 100, 0, 0, 0, 0. Pirates B, C, D, and E all vote yes and they all believe all of the other pirates are going to vote yes. Given their beliefs (which are true in equilibrium), they have no incentive to vote no (because it will not change the outcome). No need for any backward induction at all! There are, of course, other equilibria.
Third comment, so let's do this the way the problem was intended and say you must break ties with at least one gold coin. Then let's apply backward induction as it was meant to be.
If only D and E left, E will not accept any offer less than 100. Why would he when he could just vote no and D is killed. (If he votes no, then fewer than half of the others agree with the proposer, D.) So the only equilibrium is:
(dead, dead, dead, 0, 100)
If C, D, and E are left, then D will accept any proposal where he gets more than 0 (lest he get nothing at all, or even worse, killed). So for C to maximize his gold, he only need to offer D one golf coin. Since C needs only 1 out of 2 votes, he can do no better than the equilibrium:
(dead, dead, 99, 1, 0)
If B, C, D, and E are left, then B knows that he needs to get 2 out of the 3 votes to have his proposal accepted. So the best he can do is offer the equilibrium:
(dead, 97, 0, 2, 1)
If all five pirates are left, then A needs only 2 out of 4 votes to have his proposal accepted. The cheapest votes he can buy are C's and E's, so the best he can do is propose:
(97, 0, 1, 0, 2)