Cheap Spam and Cheap Talk: Scam Artists Don’t Know Their Game Theory

Cheap Spam and Cheap Talk: Scam Artists Don’t Know Their Game Theory

First, thanks to any Profhacker readers. Last Friday and yesterday were the highest views on this blog. 111 and 122 days respectively- more than after the posting to Law Courts Listserv. Some good comments on Profhacker too.

So, Part II of the Altruism study is forthcoming later today or tomorrow. But for right now, a topic literally came to me. In my inbox anyways. It also happens to be a great example of a game theory term that has been a blog post draft form since McAdams. The term is cheap talk.

Usually for definitions of common game theory terms, I go to Wikipedia or some other site and click on the papers it cites at the bottom. Well, I didn’t like the Wikipedia article or any of its papers on cheap talk. So, instead I will use Stanford’s Plato Encyclopedia of Philosophy:

The prisoners’ agreement comes to naught because they have no way of enforcing it; their promises to each other constitute what game theorists call ‘cheap talk’.

http://plato.stanford.edu/entries/game-theory/ section 2.4

Cheap talk to me means basically an unenforceable commitment.

For our Prisoners’ Dilemma scenarios, if communication were allowed, cheap talk would come in the form of “I promise to play C on the first round- trust me”. If what you are saying is basically “take my word for it”, you are engaging in cheap talk. Now, I think this term is important for the Autocrat’s Dilemma. His dilemma was that he could really make any credible commitments or promises. Oh, I promise to feed the peasants tomorrow and then pay my captains the following day. His supporters had little incentive to “take his word for it” so that court of captains or whomever acted as his promise keeping mechanism. If they sat in court and decided that s/he broke their promises they would pull the plug on their power. That way, people would know the autocrat would have constraints and would probably not make promises they would not keep.

Ok, why is there spam in the title post? Well, cheap talk occurs outside of journal articles. It happened in my email inbox:

Dear Friend,

I am Dr Raymond Chien Kuo Fung Independent Non-executive Director Chairman of Hang Seng Bank Ltd, Hong Kong.

An Iraqi named Ahmed Sadoun Salih,a business man made a numbered fixed deposit of Forty Four million Five Hundred Thousand United State Dollars only in my branch. Upon maturity several notice was sent to him, even during the war, Five years ago (2006). Again after the war another notification was sent and still no response came from him. We later found out that Ahmed Sadoun Salih and his family had been killed during the war in Gunfire that hit their home at Mukaradeeb where his personal oil-well was.

After further investigation it was also discovered that Ahmed Sadoun Salih did not declare any next of kin in his official papers including the paper work of his bank deposit. And he also confided in me the last time he was at my office that no one except me knew of his deposit in my bank. So, Forty Four million Five Hundred Thousand United State Dollars is still lying in my bank and no one will ever come forward to claim it. What bothers me is that according to the laws of my country at the expiration seven years six months the funds will revert to the ownership of the Hong Kong Government if nobody applies to claim the funds.

Be informed that the fact that you are a foreigner gives you the priviledge to stand in as my deceased client beneficiary as my deceased had no relation all his family died with him during the war and i can not use my relation because its no accepted here in Hong Kong. Also I am very confident that we will be able to establish the trust that is needed to complete this deal and all that I need for the time been is your willingness and commitment so that we can end this in the next one weeks.I like to inform you that I got your email account from my country commerce center.

What you need to understand about this transaction is that I will make sure that it passes through all international banking laws regards to this I will take care of all the expenses and the cost of retaining the service of my Attorney to give the transaction the proper documentation that is required to perfect the finishing.Your only obligation in this transaction is to accept to stand in as the only existing business partner of my deceased client and you will have to set up offshore account that can accomodate these funds with my principal bank which I will give you information later once we finalize this deal. Please note that whatever you shall spend in opening the account you shall deduct it from the $44.5million before we share 50/50, secondly the account will be opened in your name and you shall be the only one to have access to this account.

Further more I sending you my personal information.. below;

Name: Dr Raymond Chien Kuo Fung
Address:Garfield Robbins International, Location: Hong Kong.
My Personal Mobile phone number: +85-281-703-915

Working Identity Card Number:NO:102/c/86. Also see attachment for a copy.

I hope that the above is well clear to you,if so kindly send me the following;
1. Your Full Name
2. Your Current Home Address
3. Your Personal Phone Number
4. Occupation
5. Fax
6. A scanned copy of your means of identification Either International Passport,Driver’s License or Working ID card.

Mind you your names and address will be use by my Attorney to prepare the needed documents that will back you up as the sole beneficiary of my deceased client funds while I shall contact you with your phone number for further discussions.

Once again thanks for your interest and willingness to partner with me in pulling out my late client funds from my bank,I am anticipating to reading from you very soon.

Sincerely
Dr Raymond Chien Kuo Fung

Now, I stand to gain 44.5 million from making this deal.

So, C represents faithfully executing the promise made. If both of us cooperate, I get 44.5 million bucks! It’s not clear what Dr. Raymond stands to get, so he gets a ?. If I play the sucker’s move and Dr. Raymond defects, then he gains exactly what I give him. The next step of these scams is usually for the scammer to ask for some bank information so he can forward the money. Then, you find that your credit cards have been making odd purchases all over the world.

If Dr. Raymond knew his game theory, he would understand why I would be skeptical to agree and cooperate. The first thing is that his email is 100% cheap talk. There is not really enforcement mechanism should Dr. Raymond cheat me. The American, Hong Kong, and Iraqi governments would likely not want to take the time to track this down, assuming any part of this story is true. Second, it’s not clear what Dr. Raymond would stand to gain. I would have to believe in extreme altruism to believe him. Third, 99% of his story makes no sense. Lastly, Dr. Raymond obviously is about 10 years late to the whole “people actually believe emails scams” game.

But, as an experiment in game theory, I replied to Dr. Raymond asking if I could get some of the money upfront instead. I tried to explain to him why I might be skeptical to accept this offer. A partial cooperation from him would elicit a partial cooperation from me. We’ll see what I get back. Don’t worry, I have no intention of ever giving him my bank account information.

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Posted on August 23, 2011, in Uncategorized and tagged , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

  1. You blogged:

    I will use Stanford’s Plato Encyclopedia of Philosophy: “The prisoners’ agreement comes to naught because they have no way of enforcing it; their promises to each other constitute what game theorists call ‘cheap talk’.”

    I see that the Stanford Encyclopedia piece uses the term this way two separate times, and those are its only mention of cheap talk. But the idea of cheap talk is really more fundamental than that article portrays it to be. The definition game theorists use is really “communication that is costless, non-binding, and unverifiable.” “Costless,” of course, means that you don’t pay anything to send a message (so in particular no message costs more than any other to send, ruling out classic “signaling games”). “Nonbinding” is the part that the Encyclopedia usage emphasizes: sending the message does not restrict your set of future choices in any way. “Unverifiable” does not always come into play, but it means that there is no way available for the speaker to certify the truth or falsehood of any claim about the state of the world, not even by paying some cost to do so.

    A good foundational article on cheap talk games is

    Joe Farrell, “Cheap Talk, Coordination, and Entry.” Rand Journal of Economics, vol. 18 (1987), pp. 34-39.

    The same concept, used in a different way, is fundamental to the literature on preference revelation mechanisms. In contrast, see the following foundational article on costly signaling:

    Michael Spence, “Job Market Signaling.” Quarterly Journal of Economics, vol. 87, no. 3 (Aug., 1973), pp. 355-374. JSTOR URL: http://www.jstor.org/stable/1882010

    Generally the story in a cheap-talk game theory model is that, although lying is unrestricted by the structure of the game, there is some equilibrium in which the reactions of one player to the signals sent by the other render it rational for the signaling player to send certain signals and not others — for example, to tell the truth about her true preferences or knowledge, or to say what she actually intends to do (and actually does). Incentives in this particular equilibrium enforce truth-telling or promise-keeping, even though there is otherwise nothing inherent in the game to force this.

    This interesting feature is totally absent from the examples in the Encyclopedia article. For example, in a PD game that is preceded by a cheap-talk communication stage, it is impossible even for equilibrium expectations to enforce any promise to cooperate.

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