When game theorist sought out to model what is the driving mechanism behind human behavior, they looked into the abstract math behind motivation, incentives, and rational vs irrational behavior. What they came away with was that there are two types of people who are most likely to act in their own self interest; psychotics and corporations.
Let me explain, on Tuesday AIG said that it's board will begin assessing whether they will involve themselves in a shareholders case against the U.S. Government for a $182 billion bailout in 2008. AIG shareholders are bringing the lawsuit up on grounds that the government didn't provide just compensation in taking over an 80% stake of the finical insurer.
For anyone trying to see the connection to game theory, let me just say that AIG's behavior is at the very least perceived as psychotic.
To quote Mark Williams, a former Federal Reserve Bank examiner who teaches finance at Boston University. “If A.I.G. enters this suit it would be the equivalent of a patient suing their doctor for saving their life,” Williams says. “Government action gave A.I.G. a second life.”
Of course, anyone involved with health insurance will tell you that the dr. analogy may not be the best one to point out the absurdity. In this litigious culture a valid case can be made for suing almost anything, even the act of saving a life or a corporation.
But the real question is whether AIG has a legitimate case. Certainly Hank Greenberg (not the baseball player), former chief executive officer of AIG thinks so. According to Greenberg, the terms of the bailout were too draconian, depriving shareholders out of billions of dollars, in turn violating the fifth Amendment's ban on government seizure of property.
As reported by CNBC's, John Carney…, "Greenberg's legal team, led by David Boies, argues that the government pushed away sovereign wealth-funds and other foreign investors who might have been willing to invest in the company before it was bailed out. This, they argue, prevented AIG from being able to raise capital and contributed to its downgrading by ratings agencies, which in turn put the company into even more dire straits. This forced AIG to accept the unfair terms the government offered in its loan agreement, the lawyers say."
This argument may beg the question, if AIG was in such an advantageous situation as to bring in 'sovereign wealth-funds,' as well as foreign investors, then why was the government stepping in to bail them out in the first place.
In other words, to use a baseball story, legend has it that after signaling for the bullpen to pull his starting pitcher, Yankee manager Joe Torre went out to the mound The starter protested; it's ok skip, i feel good, to which the Torre replied, " if you feel good,then what am i doing out here?
Perhaps the wisdom of former Yankee manager Joe Torre can shin some light on this case. Legend has it, that after walking out to the mound to pull his tired starting pitcher, Torre was met with the protest of "It's OK skip, i feel good," to which Torre replied, "if you feel good, then what am i doing out here?"