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
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?”