Consider The Equilibrium

@ Greg re: (2)

The latter is not more credible than the former. It is the threat to play steal that is credible, as it is a dominant strategy. If you are faced with a promise to split during the game, your best option is to steal. If you are faced with a promise to split after the game, and a credible threat to steal in the game, then you are indifferent between in-game choices and the non-zero possibility of splitting after the game trumps the big fat nothing both players get with a {steal, steal}. This assumes that the bald player wouldn’t get any utility from schadenfreude; I might have tried to stick it to the other guy and chosen steal just to be spiteful.

@Emil: I think you’re getting to the root of what’s happening. My hypothesis:
1) In-game, Player A’s threat to steal is more credible than any promise of splitting. If I’m Player B, my level of time-proximal trust in my counterpart is greater.
2) By providing me with a point of trust/credibility, my overall trust in Player A goes up. Thus, I have more faith in a more-distal promise, since I have proximal information suggesting the person can be trusted.

It also makes me think that the player who promised Steal and played Split did exactly what he needed to (though it hurts its efficacy in future rounds; then again, he’s not playing future rounds). Assume I’m the player promising, “Steal:”
+ If I play, “Steal,” and the other person trusts me and plays, “Split,” then we get to split the money.
+ If I play, “Split,” and the other person trusts me and plays, “Split,” then we get to split the money.
+ If I play, “Steal,” and the other person feels offended and plays, “Steal,” to spite me, then we get nothing (although I will have lived up to my word, albeit in a somewhat socially unacceptable way; note how people bristled when the guy threatened, “Steal”).
+ If I play, “Split,” and the other guy tries to spite me and plays, “Steal,” then the money still exists – and now there is a *huge* pressure on the other guy to actually split the money with me, since I’ve just visibly and very publicly demonstrated that, *if he had trusted me as a fellow human,* he would have had the guaranteed 1/2 the money. I have shown that he was wrong to *not* trust me, and that, if he *doesn’t* give me 1/2 the money, then *he* should not be trusted.

It comes down to that earlier implicit agreement to split the money: by setting that up, I set myself up as the good guy for everyone to see (including his family and friends). This works best in my favor if, after threatening “Steal,” I actually play, “Split.” Thus, I play, “Split” and let social pressure do the rest.

Very, very cool video. Again: Jeff – thanks for sharing!