I’m trying to lose the extra Robiola-weight I acquired last year by all too frequent visits to Formaggio Kitchen.  Jogging is boring and it is too cold for cycling so I have started to attend spinning classes.  (Spinning is basically cycling on a stationary bike which has a weighted flywheel.)  Today, the instructor split the nine of us in class into three teams of three and had us play a game.

At first, she said at least one team had to be standing and at least one sitting at any point in time.  If this condition was not met, the instructor would choose one team and single them out for punishment. The punishment involved putting huge weight on the flywheel and pedaling hard.  I believe this sort of varying speed and endurance regimen in known as Fartlek exercise – that was how it was described to us.

Standing is harder work – our team has one member who was particularly reluctant to stand.  There is a free-rider problem and if it cannot be resolved, there is punishment.  There is a Chicken-like flavor to the game: if two teams can somehow “commit” to sit, the third’s best response is to stand to escape a 1/3 chance of a big punishment.  There are multiple pure strategy equilibria and an inefficient mixed strategy one.

But the Coase Theorem applied:  Each team appointed a leader who would shout “stand” or “sit” and we rotated turns standing using thirty second intervals timed using the clock on the wall of the exercise room.  No inefficient punishments and intertemporal transfers.

But there were errors, largely by miscommunication within a team as people got more tired and as the instructor kept on changing the rules and confusing everyone deliberately.  The punishment is meant to be directed at team that mis-coordinated but this can be hard to determine.  This makes the punishment  a little random.  One team blames the other for the punishment and can vindictively trick the other into a false move that can get them punished.  Also, coming out of the punishment and coordinating again with the other teams is hard and can lead to another punishment cycle.

So, there were inefficiencies caused by bounded rationality/miscommunication and occasional bouts of vindictiveness.  But at least in our little exercise room, things worked out and the Coase Theorem applied 99% of the time.  It was remarked that perhaps similar exercises might be performed before the next round of global warming negotiations to give everyone the skills to get along.