Consider the following passage from Midnight in the Garden of Good and Evil:12 There’s a woman here, a grande dame at the very apex of society and one of the richest people in the Southeast, let alone Savannah. She owns a copper mine. She built a big house in an exclusive part of town, a replica of a famous Louisiana plantation house with huge white columns and curved stairs. You can see it from the water. Everybody goes ‘Oooo, look!” when they pass by it. I adore her. She’s been like a mother to me. But she’s the cheapest woman who ever lived! Some years ago she ordered a pair of iron gates for her house. They were designed and built especially for her. But when they were delivered she pitched a fit, said they were horrible, said they were filth. “Take them away,” she said, “I never want to see them again!” Then she tore up the bill, which was for $1,400—a fair amount of money in those days. The foundry took the gates back, but they didn’t know what to do with them. After all, there wasn’t much demand for a pair of ornamental gates exactly that size. The only thing they could do was to sell the iron for its scrap value. So they cut the price from $1,400 to $190. Naturally, the following day the woman sent a man over to the foundry with $190, and today those gates are hanging on her gateposts where they were originally designed to go. That’s pure Savannah. And that’s what I mean by cheap. You mustn’t be taken in by the moonlight and magnolias. There’s more to Savannah than that. Things can get very murky. Using backward induction, can you explain where the foundry went wrong?
Consider the following passage from Midnight in the Garden of Good and Evil:12
There’s a woman here, a grande dame at the very apex of society and one of the richest people in the Southeast, let alone Savannah. She owns a copper mine. She built a big house in an exclusive part of town, a replica of a famous Louisiana plantation house with huge white columns and curved stairs. You can see it from the water. Everybody goes ‘Oooo, look!” when they pass by it. I adore her. She’s been like a mother to me. But she’s the cheapest woman who ever lived! Some years ago she ordered a pair of iron gates for her house. They were designed and built especially for her. But when they were delivered she pitched a fit, said they were horrible, said they were filth. “Take them away,” she said, “I never want to see them again!” Then she tore up the bill, which was for $1,400—a fair amount of money in those days. The foundry took the gates back, but they didn’t know what to do with them. After all, there wasn’t much demand for a pair of ornamental gates exactly that size. The only thing they could do was to sell the iron for its scrap value. So they cut the price from $1,400 to $190. Naturally, the following day the woman sent a man over to the foundry with $190, and today those gates are hanging on her gateposts where they were originally designed to go. That’s pure Savannah. And that’s what I mean by cheap. You mustn’t be taken in by the moonlight and magnolias. There’s more to Savannah than that. Things can get very murky.
Using backward induction, can you explain where the foundry went wrong?
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