Treasury recently doled out billions of dollars to US banks -- some of which did not want the money. Why did Treasury give big bucks to banks that didn't want them? The answer lies in the basics of game theory.
It is a classic prisoner's dilemma. Had the Treasury allowed certain banks not to take the money, those that did take the money would immediately be identified as being weak banks. There would be a tremendous run on the "weak" banks and they would be forced to closed, potentially taking Treasury's "investment" with them. If none of the banks took the money, they would not be immediately crucified, but ran the risk of bringing down the entire US economy, a big problem for Treasury. Only by forcing the cash to go to all banks did Treasury ensure the desire equilibrium was met (all banks are better off and the US economy is saved).
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