The frequently insightful and usually accurate Megan McArdle gets this part quite completely wrong in her latest Bloomberg column about ObamaCare:
Democratic politicians and insurers are locked in a prisoner’s dilemma. In this classic game-theory case, you and a professional associate are both arrested for theft. If neither of you talks, then you’ll probably get off. But if just one of you talks, then the person who talks will get a reduced sentence, while the other person has the book thrown at them. If you both talk, then both of you go to jail for a long time. The equilibrium is for both of you to talk, just in case the other guy does .
I sincerely hope that anyone who’s ever taken my Principles of Economics course — or for that matter, any Principles of Economics course — can explain to McArdle how wrong this is, and why.
Exercise for the reader: To what extent, if at all, does this howler undermine the larger point of McArdle’s column?