|
Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition Authors: Miller J. D. Published year: 2005 Pages: 46-47/260 |
Mass coordination games often determine where individuals live. Many people, unfortunately , prefer to live in neighborhoods in which they are not a racial minority, and as a consequence, neighborhoods often become ethnically homogenous.
Imagine that two different ethnic groups, labeled X and Y, live in a city and assume that no one wants to live in a neighborhood in which he is a minority. Total ethnic homogeneity is the only stable outcome. If, for example, only type X lives in a certain neighborhood, then in the future no one but type X will want to move in, and so the neighborhood will remain nondiverse forever. Could a neighborhood ever be ethnically diverse, however?
Unless a neighborhood is equally divided between X and Y, then one of the groups must mathematically be in the minority, and this minority group will gradually move out. Is it stable for a neighborhood to be equally divided between Xs and Ys? Unfortunately, random shocks will always undermine ethnically balanced neighborhoods. Just by chance, in every neighborhood there will always be more of one group than another. These random shocks will be accelerated by deliberate action when one group unexpectedly finds itself in the minority and leaves the neighborhood. Consequently, the only stable outcome is for all neighborhoods to be ethnically homogenous even though both groups wouldn’t object if, 40 percent of their neighbors were from a different ethnic group.
The same mass coordination games that result in neighborhoods becoming ethnically homogenous will also cause some cities to have a higher percentage of homosexuals. Most humans prioritize being able to find a sexual partner. The task of finding a mate can be more challenging for homosexuals since they make up a small percentage of the population. Consequently, when a homosexual decides where to live, the percentages of gays in different areas will rationally play a large part in his settlement decision.
When many homosexuals desire to live in a city with a large proportion of people with their sexual orientation, the consequence will be that a few cities will become known for having a large gay population. Once a city like San Francisco or Northampton, MA, gets a relatively large number of homosexuals, other gays will be attracted to the city, accelerating this effect.
The high percentage of gays in San Francisco shows the accidental nature of coordination games. There is no reason why San Francisco should have such a large gay population. Coordination games, however, often result in one city or product being extremely popular with a population group.
English is a useful language to know because many are fluent in it. Many students at Smith College, where I teach, use the Smith dailyjolt because it too can be easily used to communicate with many people. The Smith dailyjolt is a bulletin board on which students can post anonymous comments about anything. (During course selection time they write about their professors, seemingly without taking into account that their professors have access to the dailyjolt too.) The dailyjolt provides separate bulletin boards for many different colleges. I have noticed that many other colleges’ dailyjolts aren’t much used. There are clearly network externalities associated with a web bulletin board. I suspect that Smith students like writing for the Smith dailyjolt because they know that many other students will read and respond to their postings. The dailyjolt at Smith is popular today because it was popular in the past. Similarly, other schools ’ dailyjolts are unpopular because few students have ever used them.
The popularity of the Smith dailyjolt provides a lesson for firms marketing goods with network externalities. The key to success results from getting many people to coordinate on your product. Consequently, when marketing goods with network externalities, perception becomes reality. If your new product has network externalities and many people think it will become popular then it has a good chance of actually becoming popular. Remember, people use products with network externalities because they like them, and because they think other people will use them.
The leading Internet news site belongs not to big media but to the eccentric reporter, Matt Drudge. The Drudge Report’s popularity stems from its being the first to break many news stories. Indeed, Drudge was the first to tell the world about Monica Lewinsky and Bill Clinton. I’m not exactly sure how the Drudge Report gets all of its scoops, but I suspect that coordination games create a virtuous circle for Drudge.
If you have an interesting story you want widely disseminated over the net, then the Drudge Report is an ideal venue for your story. Consequently, the circular logic that dominates coordination games benefits the Drudge Report. The Drudge Report gets the best scoops because it is popular. But the Drudge Report stays popular only because it often has the best in breaking news.
|
Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition Authors: Miller J. D. Published year: 2005 Pages: 46-47/260 |