I have been reading Joseph Conrad’s Typhoon, the least sentimental of Christmas stories. It describes how Captain MacWhirr and the crew of the Nan-Shan spent the day saving the ship from a storm in the South China Sea. The typhoon broke open the camphor chests belonging to the 200 Chinese labourers on board, leaving a pile of anonymous silver dollars.
The resulting problem has become known as Captain MacWhirr’s dilemma. How can you distribute a prize among a group when only the individuals concerned know the size of their contributions and must be expected to exaggerate them? Capt MacWhirr concluded that the only possible solution was to divide the money equally.
Game theorists have constructed a solution to Capt MacWhirr’s dilemma that gives an incentive to everyone on board to tell the truth. If you want the answer, I refer you to the Journal of Political Economy for 1981*. But the economists’ solution, arithmetically ingenious, is impracticable. Capt MacWhirr “got out of it very well for such a stupid man”, as his second officer observed.
The story of Capt MacWhirr is often interpreted as an account of how an unimaginative but determined individual can rise to the occasion. But Capt MacWhirr faced a second and even more common dilemma in which his intellectual limitations served him less well. He saw the signs of the oncoming storm but, having consulted the manuals of seamanship, ignored their recommendations. “Suppose”, he says, “I went swinging off my course and came in two days late, and they asked me ‘where have you been?’ ‘Went round to dodge the bad weather,’ I would say. ‘It must have been dam’ bad, they would say. ‘Don’t know,’ I would have to say, ‘I’ve dodged clear of it.’”
If Capt MacWhirr had followed the textbooks, he would have been known only as the skipper who failed to bring his ship into port on time. If Margaret Thatcher had acted to deter Argentina from invading the Falklands, rather than ordering a taskforce to remove the occupying forces after they had landed, she would probably have been remembered as an unsuccessful one-term prime minister....
Capt MacWhirr’s second dilemma explains the paradox illustrated by Jim Collins in Good to Great: more successful leaders attracted fewer column inches. Al Dunlap of Scott Paper declared his admiration for Rambo: “Here’s a guy who has zero chance of success and always wins.” But Mr Dunlap’s company was acquired by Kimberly-Clark, whose chief executive for 20 years, Darwin Smith, avoided the storm by taking the company out of the competitive coated paper businesses and into high-value-added consumer products.
A Superior Solution to Captain MacWhirr's Problem: An Illustration of Information Problems and Entitlement Structures by Gene E. Mumy
A New and Superior Process for Making Social Choices
T. Nicolaus Tideman; Gordon Tullock
Audio of book, Typhoon