Traveler's Dilemma, explained.
The traveler’s dilemma rewards the lower of two claims and penalizes the higher, creating an incentive to undercut a matching claim.
Why it happens
A small reduction can earn the bonus while lowering the common base payment. Repeating that argument through successively lower claims can point toward low claims, despite much larger joint payments being available at high matching claims.
The traveler’s dilemma contrasts repeated undercutting arguments with the high joint payoffs available when players make high matching claims.
Read the result
The partner always claims 18 here. Submit several claims and compare both payments. Adjusting the bonus changes the incentive; it does not turn the fixed bot into an empirical model of people.
A worked example
A one-token undercut
Two claims of 18 with bonus two pay each traveler 18.
A claim of 17 against 18 pays the lower claimant 19 and the higher claimant 15.
The undercut improves one payment while lowering their combined total from 36 to 34.
OPTIONAL DEEPER DETAILGo deeper: inside the model
Inside this model
A disclosed partner claims 18. Equal claims receive that number. Unequal claims receive the lower number, plus the bonus for its owner and minus the bonus for the other. Claims and the bonus are adjustable.
Where this idea is useful
A practical use
An incentive intended to encourage truthful claims can instead reward strategic undercutting.
A common misconception
“Lower claims always improve the outcome.”
They may improve one player’s relative payoff in a particular matchup while reducing total returns or that player’s own absolute payment.
What this explanation leaves out
- The disclosed partner is not a population of human players. Payoffs can be negative and are teaching tokens.
Why is the partner’s claim disclosed?
It isolates how the payment rule works before adding uncertainty about another player’s choice.
Which incentive intended to reveal honesty might instead reward strategic undercutting?
Associated thinkers
Further reading
Explore the original research or the teaching reference behind this experiment.