Thursday, June 30, 2011
Path Dependency
I've been reading a book called "Chances Are... Adventures in Probability" by Michael Kaplan and Ellen Kaplan. This passage was so good I had to type it and shamelessly post. Enjoy.
Sometimes you play the game; sometimes the game plays you: situations that are themselves irrational but stable need to paranoid dictator to set them going. Mark Shubik (another RAND staffer) described a particularly worrying party game. He would offer to auction a dollar bill to the highest bidder; the only difference from a traditional auction was that the second-highest bidder would also have to pay. So if you bid 70 cents for the dollar and your neighbor bids 75, he gains a quarter while you lose your money-and also lose face. Even if you have to buy the dollar for $1.10, at least you've lost only a dime; the underbidder has lost much more. The bidding would usually slow as it approached the dollar mark, but once past would zoom well beyond it. People were buying a dollar for an average price of $3.40, just to avoid being the person who had bid so much for nothing. ...it applies to much more than just auction or political assassinations-it describes engineering white elephants, strikes, dead-end weapons development, and all the little conflicts that escalate relentlessly.
McGeorge Bundy, who had been Kennedy's and Johnson's security and Indochina man, once visited a Boston secondary school during the early seventies, at the height of protests against America's involvement in Vietnam. It was not a welcoming audience: the young, earnest faces surrounding him glowed with righteous disdain for the compromised warmonger. In a quiet voice, Bundy began: "I'll take you through the events as they happened, starting in 1945; when you hear me come to the place where we should have stopped, raise your hand." He started with simple, innocent matters: helping a damaged British navy, bolstering a weak France, supporting a newly independent friendly country, shoring up a local army - a policy here, a commitment there... penny bids. Each further step seemed no more than a logical way to protect the position already established, and there was already so much to lose. The audience nodded; the first hand did not go up until Bundy had reached the point of full commitment of regular troops: hot war. The students, like the U.S. government, had bought the dollar several times over. ¶ 10:59 AM
Sometimes you play the game; sometimes the game plays you: situations that are themselves irrational but stable need to paranoid dictator to set them going. Mark Shubik (another RAND staffer) described a particularly worrying party game. He would offer to auction a dollar bill to the highest bidder; the only difference from a traditional auction was that the second-highest bidder would also have to pay. So if you bid 70 cents for the dollar and your neighbor bids 75, he gains a quarter while you lose your money-and also lose face. Even if you have to buy the dollar for $1.10, at least you've lost only a dime; the underbidder has lost much more. The bidding would usually slow as it approached the dollar mark, but once past would zoom well beyond it. People were buying a dollar for an average price of $3.40, just to avoid being the person who had bid so much for nothing. ...it applies to much more than just auction or political assassinations-it describes engineering white elephants, strikes, dead-end weapons development, and all the little conflicts that escalate relentlessly.
McGeorge Bundy, who had been Kennedy's and Johnson's security and Indochina man, once visited a Boston secondary school during the early seventies, at the height of protests against America's involvement in Vietnam. It was not a welcoming audience: the young, earnest faces surrounding him glowed with righteous disdain for the compromised warmonger. In a quiet voice, Bundy began: "I'll take you through the events as they happened, starting in 1945; when you hear me come to the place where we should have stopped, raise your hand." He started with simple, innocent matters: helping a damaged British navy, bolstering a weak France, supporting a newly independent friendly country, shoring up a local army - a policy here, a commitment there... penny bids. Each further step seemed no more than a logical way to protect the position already established, and there was already so much to lose. The audience nodded; the first hand did not go up until Bundy had reached the point of full commitment of regular troops: hot war. The students, like the U.S. government, had bought the dollar several times over. ¶ 10:59 AM
