Beauty Pageant (Keynes)

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The beauty contest developed by John Maynard Keynes , also known under the English term Beauty Contest , is an economic experiment within game theory to investigate human decision-making behavior. It does not depend on your own behavior, but on the behavior of the other experiment participants.


The model was named in line with earlier with beauty contests associated contests in American newspapers. In this competition, the prize was raffled among the participants who had chosen from the photos available for selection that which had also been selected as the most beautiful by most of the others.

Optimal decision

The aim of a participant hoping to win is not to choose the most beautiful photo according to his taste, but the photo that he ascribes the highest chances of winning and that he expects to be selected by most of the others. He will also consider that the other participants also choose according to the same criterion. Keynes: “We have reached the third degree where we use our intelligence on what opinions most people have about the opinion of most people. And there are some, I believe, who practice the fourth, fifth or even higher degree. "

For the decision maker, the optimal decision depends on what the others think and how he decides (since he assumes them to have a similarly rational train of thought to his own). Since this consideration applies to all participants, there are an infinite number of levels of reflection ("I think that the others think that I think that the others think ...").

If all participants are completely rational subjects, then a theoretical solution results, which can vary depending on the design. This theoretical solution is a Nash equilibrium . The problem with the experiment is that not all participants are completely rational decision-makers and therefore cannot go through all stages of reflection. If the completely rational participant knows about these limitedly rational participants, then he must mentally take a further step and reflect backwards again.


The model describes situations in which individuals may act against their own convictions for rational motives. In particular, as Keynes originally intended, it is used to explain speculative bubbles in various markets.

According to Keynes, it can be irrational for an individual investor to invest in stocks that they themselves consider worth buying, but which they also know that a large proportion of the other market participants do not share this opinion (or, in turn, believe that a large part of the other market participants are of the opinion ...). The reason can be that the “right” trend may only prevail over the long term or that the opinion of the masses turns out to be a self-fulfilling prophecy .

Further examples:

  • Penalty Shootout (Which corner does the shooter shoot in?)
  • Chase between Sherlock Holmes and his opponent Professor Moriarty (Where does who get off the train?)
  • Lotto (Which numbers should be ticked rationally against your own preferences so that you don't have to split the jackpot if you win?)
  • The November 1997 issue of Spectrum of Science contained a number selection game in which participants were asked to name any number between 0 and 100 and whoever received a cash prize that came closest to two-thirds of the average of all the numbers mentioned.
  • Elections (which party should one choose, possibly deviating from one's own preferences, so that one does not "give away" one's vote?)


In sociology, the fact that subjective perspectives can shape reality is treated under the heading of Thomas' theorem . In Niklas Luhmann's theory of social systems , reflexive social expectations are also referred to as expectation expectations .


Web links


  1. ^ John Maynard Keynes: The General Theory of Employment, Interest and Money. London 1936, p. 156.
  2. Reinhard Selten & Rosemarie Nagel: The number selection game - results and background . In: Spectrum of Science . February 1998 ( PDF )