Economics in Pretty Woman

What does the classic movie teach us about Bargaining and Game Theory

What bargaining and economic lessons can we learn from the movie Pretty Woman? That's what we explore in this video.

In the video below, we examine two clips and the economic lessons within. In the first clip, we explore the negotiation between Vivian and Edward, where they agree on a price of $3,000 for her services for a week. This negotiation demonstrates the fundamental principle that in voluntary exchanges, both parties are better off, leading to an expansion of value within society. We also delve into more advanced bargaining concepts.

In a second scene, Edward cleverly influences his opponent's alternatives to a negotiated agreement to secure a better outcome. Discover how understanding your BATNA (Best Alternative to a Negotiated Agreement) can give you the upper hand in negotiations.

This is part of a class on game theory, which will cover more lessons on bargaining and game theory in general.