Faulty economics of Per un pugno di dollari...

... also known as A fistful of dollars, the first of Sergio Leone’s Dollar Trilogy. The movie that made Clint Eastwood a superstar. The movie that was inspired by Kurosawa’s Yojimbo, and then inspired many around the world, including our own Sholay. And who can forget the score by Ennio Morricone?

A quick recap of the story if you haven’t watched the movie (courtesy of http://www.imdb.com/):

An anonymous, but deadly man rides into a town torn by war between two factions, the Baxters and the Rojos. Instead of fleeing or dying, as most other would do, the man schemes to play the two sides off each other, getting rich in the bargain.

So, what is the faulty economics then?

Well, when Eastwood’s character, the man with no name, walks into the town, we’re told that the Rojos and the Baxters have fought each other into a stalemate. Then the stranger plays the families against each other, and the Rojos completely wipe out the Baxters. This is not rational behaviour. If the Rojos could wipe the Baxters out so easily, then why didn’t they do so earlier? Surely the rewards, monopoly over the smuggling route, was large enough for the Rojos to at least attempt an all out war against the Baxters?