Search the Site

How to Call Someone's Bluff and Keep Your Gold

DESCRIPTIONPhoto: rastafabi

I’m watching Deadwood, the remarkably well-written HBO series of a few years ago. In Episode 16, several wealthy townspeople, including the hotel owner, are spreading rumors that the gold field claims will soon be voided.
One claimant thinks the rumors are bluffs circulated to get current claimants to sell out cheaply to large mining interests. Since the hotel’s revenue comes from the derived demand from gold mining, this claimant creates a strategy to induce the hotel owner to reveal the truth: she names a low price and offers to buy his hotel.
If the claims were to be voided, the hotel owner’s revenues would drop and he should be happy to sell out cheaply. But he refuses to sell, which tells her that he views the hotel as yielding a large stream of returns. She concludes the rumors are false and that her stake is still valuable. When asked, she thus refuses to sell her claim on the cheap.