Bluffing

Strategic bluffing is common in nature. Bluffing is a strategic concern to the military, in diplomacy and especially in business transactions where it is a standard feature of negotiation. It is a feature of many games. The optimal frequency of strategic bluffing depends on the costs to the bluffer of getting caught versus the cost to the bluffee of ignoring a warning signal that subsequently proves to be valid. In the case of diplomacy and labour negotiations bluffing is however often counterproductive, especially when it is difficult to act on threats. Placebos may be used to good effect in some therapeutic situations.

Use of decoys and bluffing was widely explored during World War II. Experiments indicates that bluffing once in seven times was most effective. In 1996 strategic bluffing was investigated by the Maryland police in the USA as a means of reducing the cost of police presence on highways. By using decoy vehicles, the police were able to avoid the cost of using manned vehicles and effectively increasing the number deployed on patrol duty. It has been estimated that as many as three out of four patrol cars could be decoys without jeopardizing the credibility of the enforcement process. One expert considers that a good poker player should bluff one in four times, but not uniformly during a session.