Politics and Game Theory

For the last two weeks the entire country has been focused on the political games being played in Washington. The burning question being, why can't all sides come to some sort of compromise. Justin Fox in an article written for the Harvard Review uses the concepts of Game Theory to offer some explanation. 

Fox suggests that  the current impasses is similar to game theory whereby it is an     "interaction among “agents” who “base their decisions on limited information about actions of other agents in the recent past, and they do not always optimize.” 

The recent past being the passing of the Affordable Care Act. It is obvious that this decision did not optimize for both parties. The liberals see it as a win for the uninsured and the president sees it as his signature piece of legislation. The conservatives see it as another Big Goverment program destined to destroy the fledgling economic recovery by draining the already overburdened taxpayer. The limited information being, nobody can predict the future, hence we really don't know how the new legislation will effect the economy. 

For all anybody knows Big business might realize great savings by dropping health care coverage, preferring the less costly penalty. United Parcel Service (UPS) has choosen this option. What if they were to utilize the saving to hire more people and buy more trucks. Then everybody wins. But, as I mentioned above nobody can predict the future.

So how does this impasse end?

The answer lies in the reason for the divided. Game Theory goes on to suggest that, "Excessively polarized behavior may be the unhappy result of dependence on tacit coordination and maneuver.” 

This is where we enter into the game. The electorate needs to verify any tacit  or unspoken belief. Call your representative and let him know how you feel. If the elected official is assured of his political future he may decide to further is career by being the one to step into the political devide. Alternatively he or she may decide to end their political career by doing the same. So keep up the pressure. 

References to game theory taken from an article written by Justin Fox. This article titled "understanding the game being played in Washington" was written for the Harvard Business Review, October 4, 2013.

Today Financial Headlines

Considering today's financial headlines this headstone seemed appropriate (according to CNBC)

"...Gold's decline is feeding on itself" ...now at a three year low

GDP growth down to 1.8%...

"Cramer: Wind Now 'Out Of The Sails' for Housing

1.2 million in U.S. Currency missing. A U.S. bank was repatriating cash from it's 

Swiss branch office when it discovered 12 packets of $100.00 dollar bills missing. Each packet contianed $100,000.00. Bummer

"Dish network withdraws offer to buy Clearwire." Now I have to unload my rsther large position I had in Clearwire. So much for insider information. Just kidding

如果你有耐心的愤怒在那一刻，你会逃脱悲伤百天，

如果你有耐心的愤怒在那一刻，你会逃脱悲伤百天，

A Chinese proverb that is relevant to any numbers of life’s daily situations, from waiting in long lines to dealing with business associates. Loosely translated it means,"If you are patient in one moment of anger, you will escape one hundred days of sorrow."

Reference:

DeVos, D. (April 2013). How I Did It. Harvard Business Review. p. 42.

McDonald's hot coffee lawsuit, page two

Most people have the wrong impression of the McDonald's hotcoffee lawsuit.

The headline reads, “Little old lady is awarded millions by burning herself with a cup of coffee”. That statement is true but in typical Paul Harvey style, there is a page two. After reading that proverbial page two, you realize this case is the perfect example of the legal system PROTECTING the consumer from a corporate Goliath. Unfortunately, many do not read page two, and incorrectly use it to describe a subculture of opportunists who will sue if the opportunity presents itself.

I recently read an article by a strength and conditioning coach subtitled, "... safety first rules are making society fat and weak". Among other things the coach talked about, schools removing climbing ropes from gymnasiums because little Johnny might burn his hands on the hemp or nylon rope. The author implies that this was done because schools are afraid little Johnny's parents will sue if he comes home with burns on his hands. The coach is well credentialed and hence very believable that is until the closing paragraphs. In closing the coach emphasizes his point by exclaiming, "We live in a world where people want to cash in and sue someone because they spilled a cup of coffee on them at McDonald's". (Kerns, April 2013) I am in agreement with this premise but the coach could not be more wrong citing the McDonald's coffee case as an example.

As a matter of fact one juror in this case stated,” the case was about callous disregard for the safety of the people.”(Know the Facts, 2013) That statement is the opposite of what the coach was trying to convey.   Some of the other facts of the case that do not support the coach's argument include:

• ·         a corporate attitude that proclaimed, “the number of burn complaints are negligible when compared to the billions of cups of coffee served each day”
• ·         franchises being required to brew coffee between 180 and 190°F (temperatures known to cause third-degree burns)
• ·         700 previous third-degree burn complaints

To be fair the coach is not the first one to use this case as a negative reference. Furthermore, I agree wholeheartedly with his idea that society is slowly becoming wussificated. I just wish he had not fallen victim to the grade school whisper game. You know the one I'm talking about. The teacher whispers a fact to the first person in the first row and by the time it reaches the last person in the last row it has become completely distorted.

References:

Kearns, K (April 2013) “Over Protection Is ’Not Recommended’ “, Train Hard Fight Easy, pg. 32

"Know the Facts:" Resources for Consumers , “The McDonald’s Hot Coffee Case “ http://www.caoc.org/index.cfm?pg=facts, retrieved, 29 March 2013