User Optimization

The Winner Takes It All

 The winner takes it all

The loser has to fall

 It's simple and it's plain
Why should I complain 

You should complain because the winner taking it all is only one way that a game can be played. 

Everyone loves a winner.  However, whether the winner is a society or an individual depends on one’s strategy and the rules of the game.  In Games Theory there are two major strategies: User Optimization and System Optimization.  The first strategy could be characterized as “I do what is best for me”.  The second strategy could be characterized as “All for one and one for all."  The first strategy involves finding the solution that is best for that individual.  The second looks at the sum of the solutions by all of the individuals in that system and picks the set of solutions that are best for that system. 

The System Optimal solution requires that some individuals  “take one for the team”, that is they must accept a solution that is not best for them, because that is the best solution for society.  A System Optimal solution has been shown to be different than a User Optimal solution but may not be intuitively obvious.  Individual User Optimal solutions will be chosen when there are no constraints on an individual.  If one user chooses a solution that is best for him, every other similar individual should make that same choice.  However, the aggregate of these solutions is not the System Optimal solution.  For example, when choosing a route, each user will choose the  route that maximizes their utility, minimizes their time and cost.  In my discipline of transportation planning, this is known as Wardrop’s Principle.  A misconception that the sum of these User Optimal solutions is the System Optimal solution has led to Braess' paradox, where eliminating a link which forces travelers to change their paths could result in a better system utility. If the User Optimal and System Optimal solutions are accepted to be different, then there is no paradox.

Humans are a social animal, but they are also individual animals.  Societies prefer team, group,  sports.  The Super Bowl generates more viewers and more interest than the individual championships in track and field.  The best player in a team sport may not play on the best team.  Giannis Antetokounmpo might have been the NBA’s Most Valuable Player in 2019, but in that year the Toronto Raptors, not Giannis’ Milwaukee Bucks, won the NBA Championship.   

There is a way to make the user optimal solution be closer to the system, societal, optimal solution. That is by charging an extra utility for using a certain item.  Economists call this adding a shadow price. It is one of the reasons why tolls are charged on public roads. Customs, Rules, Regulations, and Laws are among the ways that society imposes these additional costs for using an item.  When this shadow price is added to the actual price, then the individual user chooses a solution that considers this shadow price.  The shadow prices that are added can be chosen such that the User Optimal solution becomes closer to the System Optimal solution.  The problem is that the society that imposes the shadow prices is also the same society that collects and distributes these shadow prices.  Society must trust that the shadow prices are imposed for the good of society and not the good of the those in charge of society.  It becomes a matter of “Who Watches the Watchmen/Quis custodiet ipsos custodes?”