This week I was
trying to make plans to meet up with some friends back at home. They all agreed
that they wanted to go Black Friday shopping, but then proceeded to suggest
Friday as a good time to meet. This was possible because they were going Black Friday shopping on Thursday. I always found this ironic. When we were younger, stores would open early morning on Black
Friday, but year after year, stores have been opening earlier and earlier. Now, Black
Friday shopping begins on Thanksgiving.
Although many of
us may be used to this now, I wanted to briefly examine this from the game
theoretic point of view. There is an underlying prisoner's dilemma amongst the retailers on Black Friday in which retailers have a dominant strategy to open early in order to sell to the first rush of customers, leading to a non-allocatively efficient equilibrium in which workers must work earlier, even on Thanksgiving Day. A Pareto-efficient move would be for all retailers to go back to opening on the morning of Black Friday, but there will always be an incentive to open earlier and undercut rivals to attract as many customers as possible. The following payoff matrix depicts the situation with arbitrary numbers:
As discussed in class earlier this semester, there is potential for a third party enforcer to play a role in achieving the Pareto-optimal outcome. As mentioned in this video, perhaps a law can be instated regarding the earliest open time allowed for retailers to begin Black Friday deals in order to allow all retail employees to enjoy their Thanksgivings at home.
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