The Illusions of Choice
A definite for the reading list is: No One Makes You Shop At Wal-Mart: The Surprise Deceptions of Individual Choice by Tom Slee. Anything that sites George Akerlof, Thomas Schelling, and Jane Jacobs as sources was bound to end up here. This is also the only book that I know to be classified as “Social Issues / Philosophy / Business” (…partridge, pear tree . . . .)
By applying the lessons of game theory to the kind of thing that happens in day-to-day life, Slee comes up with some startling and important observations. The most basic of which is: Individual decisions often add up to broad consequences that the individuals involved wouldn’t have chosen. Which is to say that by choosing the best individual strategy, people often chose what is a sub-optimal strategy for everyone involved. (John Nash again.) This is a version of the famous “prisoners’ dilemma,” but insightfully applied to things like the takeover of small towns by Wal-Mart and litter in public parks. This is why bad things happen to good people (and communities.) Choices “tangled” together sometimes have unfortunate additive effects. (Suburban sprawl? The tragedy of the commons.)
He also takes on “MarketThink” (see The Fraud Problem below) and points out that Imperfect Information introduces power into “free exchanges” and makes the unknown but higher quality business lose out to the common sure thing as risk avoidance leads to fewer choices overall, and also the related Herd Choice phenomenon covered by Gladwell in Tipping Point.
This is also one of the few places I’ve seen transaction costs covered. The costs of making a choice or a change has massively negative effects on the freedom of the labor market, and in fact holds most markets from functioning as they theoretically ought.
While his recommendations of “collective action” (whatever that is,) disappoint at the end, the analysis is fascinating and too long overdue in a book this easy to read.
By applying the lessons of game theory to the kind of thing that happens in day-to-day life, Slee comes up with some startling and important observations. The most basic of which is: Individual decisions often add up to broad consequences that the individuals involved wouldn’t have chosen. Which is to say that by choosing the best individual strategy, people often chose what is a sub-optimal strategy for everyone involved. (John Nash again.) This is a version of the famous “prisoners’ dilemma,” but insightfully applied to things like the takeover of small towns by Wal-Mart and litter in public parks. This is why bad things happen to good people (and communities.) Choices “tangled” together sometimes have unfortunate additive effects. (Suburban sprawl? The tragedy of the commons.)
He also takes on “MarketThink” (see The Fraud Problem below) and points out that Imperfect Information introduces power into “free exchanges” and makes the unknown but higher quality business lose out to the common sure thing as risk avoidance leads to fewer choices overall, and also the related Herd Choice phenomenon covered by Gladwell in Tipping Point.
This is also one of the few places I’ve seen transaction costs covered. The costs of making a choice or a change has massively negative effects on the freedom of the labor market, and in fact holds most markets from functioning as they theoretically ought.
While his recommendations of “collective action” (whatever that is,) disappoint at the end, the analysis is fascinating and too long overdue in a book this easy to read.
posted by KP | 31.7.07
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