Are we all selfish?
The assumption of a rationality underlies amongst other things the entire discipline of economics. Agency theory which extends the notion of rationality into selfishness forms the bulwark of most of what is taught to students in management schools all over the world.
However, as this recent article in Scientific American points out the basic assumption of rationality might be under question. Using a game that is a modified version of the well known Prisoner’s Dilemma called The Traveller’s Dilemma Prof. Kaushik Basu tries to understand this basic assumption. The game itself is very simple with inductive logic at the heart of it: X and Y are asked to value an item with X paying x and Y paying y with a payoffs of (x,y) if x = y, (x+2, x-2) if x<y and (y-2, y+2) if y<x with m <= x, y <= M. If we assume both X and Y to be selfish entities then each would say m as the value. This is how: if x=y=M they get M each but if x = M-1 and y= M , then X gets M+1. Thus X would go down one notch. Y will reason also reason as such and will push each others values down to the lowest possible m. If one has realized something very similar lies at the heart of argument that competition drives the prices down.
H owever experimental evidence as the author states runs contrary to the expectations. With M = 100 and m = 2, he found people quoting much more in the 90s than the optimal number. The idea basically is this: if X quotes 90 and is fairly sure that Y will quote somewhere around the number say 88, X would still be better off getting 86 rather than when he got 2. The question therefore is how sure is “fairly sure”. This would explain even in markets with almost all attributes of perfect competition why one can still see collusion between the players. Or why people daily make choices that would not be rational on any accounts.
Management academics such as Henry Mintzberg and Sumantra Ghosal, have pointed out that focusing solely on Agency theory, which in turn goes back to rationality as a basic assumption, to understand human traits and predict reactions as is followed in various b-schools is responsible for many of the corporate excesses of the Enron type. Experimental results such as above lead further credence to the growing belief that assigning the label of competitor-out-to-get-you to everyone as in the famous Porter model is not necessarily the best way of thinking about business. It is just one way of thinking about it because maybe human beings are not entirely rational.
Milan again :)
Two years earlier with a heavy heart I wrote this.
Today’s Champions League final between AC Milan and Liverpool was anything but like the 2005 one. And not only because it was Milan who finally won. But because in no point of the game did we see the classy Milan of 2005 who in the first half made Liverpool look like schoolboys (they did show some of that stuff against Man U though … and how I hated them for that) and because at no point did Liverpool look like a side that would snatch away victory because they wanted to. But then this is two years later.
The funny thing is that both teams started out (and continued through most of the match) as if they were playing the game a day after that fated day in May, 2005. Liverpool were wary of allowing Milan the space in middle to exploit and started out with three central midfielders in Xabi, Mascherano and Gerrard. Milan on the other hand seemed too busy looking over their shoulders if Liverpool were on the warpath like the last time. Like a chess match where both players expect the other to make the first bold move this became a cagey affair.
Pippo Inzaghi’s freakish half time goal seemed to have injected some fluidity into the match but with Gerrard probably cursing himself still for the most important miss of his career. If he he had put the ball past Dida, who knows what would have happened. What ultimately happened was that Super Pippo (Sir Alex once described him as “born offside”) latched onto a Kaka through ball before superbly rounding off the Reina and rolling the ball into the goal. As a result, Dirk Kuyt’s goal at the 88th minute remained only a consolation.
In 2005, I wrote:
The saddest part about the whole episode was that Paolo Maldini will probably not see another final to make up for this loss
How wrong was I and how glad am I that I was wrong. One of the true greats of the game, Maldini richly deserves his fifth European cup medal. And now that it is confirmed that he is staying for the next year, I will be wary of making similar conclusions again. But then probably this game showed why fans and pundits alike will always put a Zidane or a Maradona ahead of a Maldini in the lists of greatest ever.
In Concert Performance - Nikolai Dezhnev
Though often described a anti-Soviet-Communism satire, the scope of In Concert Performance far exceeds this narrow definition. It is at once, a treatise on humanist philosophy, a discussion on the nature of good and evil and a magical story of love-at-first-sight. And if it has to be read in one way, I would read it as a damning account of how mindless bureaucracy not only inhibits but butchers free spirits. And this is not true only for the Communist Russia. He does not absolve either the Department of Light or Dark of any blame. The story of Lukary, the protagonist of the story, reminded me of Stanislav Petrov who in 1983 decided that the US missile attack his computer terminal showed was a machine error and not a real attack. Had he been just a cog in the system, he would have been instrumental in starting the third world war. But his decision was made on human instincts. And for it he was/is forgotten and shunted into the shadows not only by his own countrymen but also in the other side. Breaking the chain of command is a crime whichever side you are on. Cold War must had many such heroes, and being a physicist and international diplomat Dezhnev probably knew more about them than us.
The beginning of the novel, when the author is setting all the pieces on the board before letting the story unfold were wonderful. They are written with intensity and force, in a manner that does not let the reader wait to catch his breath while introducing him to a smörgåsbord of characters from from this world and the one beyond. The novel effortlessly flits from the Russia of 90s to the Spanish Inquisition and the Dezhnev seems as adept in portraying the futility of pursuing a Theory of Everything as he is in describing the Anna’s emotions as she sees Lukary for the first time. However, somewhere in the middle Dezhnev’s focus shifts from the story he is telling, what happens to Anna and Lukary’s love, to fairly long winded discussions on the nature of existence, good and evil and such. Of course they are interesting to read but they lead nowhere in the resolution of the main plot which then shifts a gear and moves into Russia of 1932. The novel then suddenly reads like The Day of the Jackal (another one of my favorites, but where does it fit in here) before moving back to 1990s trying to close the narrative.
While both Bulgakov and Dezhnev dealt with essentially the same topics: good vs. evil, nature of time, Russian identity, the notion of sanity in an insane world, to the extent that even many of literary devices used were also the same, where one succeeded the other failed. Dezhnev took his eye (or rather his pen, typewriter, keyboard or whatever he was using) off his characters. The beauty of The Master and Margarita lies in the fact that Bulgakov always moves forward with the story at a breathless pace and that with all the fantasy involved, it always remains a human story. At the end you might not be sure where you are but you had hell of a journey that you can identify with. The same sadly cannot be said of In Concert Performance however which only in its opening chapters matches the brilliance of the Bulgakov’s work and where too many Deux ex machinis make it feel like hiss agent was really on his back to deliver the book to his publishers.
Lest my words be construed as an indication that one should not read this work I shall only cut-and-fit what Roger Ebert wrote while reviewing Darren Aronofsky’s The Fountain: In Concert Performance “overreaches on every level” with a “big subject, big canvas” and “big ambitions” while trying to “cram just about everything” into a novel; this is definitely not a recipe for smooth reading “but I’d much rather watch somebody shoot for the moon when the stakes are sky-high than sit back while they play it safe.”
Technorati Tags: russian literature, literature, satire, books
Finally ManU!!!
The last three premier league seasons have been fairly painful for me as a ManU fan. Primarily because we did not even have a chance. It started off with that magical we-can’t-lose-ever season by Arsenal and was followed by the two don’t-you-even-dare-to-touch-the-title seasons by Chelsea under the special one. So it is no surprise that I am elated as a ManU fan that we won the title this year.
While the core of the side has remained more or less the same, the couple of new players Sir Alex got in the winter last year have proven their worth over this campaign. Nemanja Vidic was an absolute rock in the heart of the defense, while Patrice Evra grew ever more confident in defending the left side of the pitch as the season went on (to the extent that Heinze was reduced to a bit part player). And finally, Christiano Ronaldo, showed why some people were raving and ranting about him for the better part of the last three years. However, the most significant additions to the squad would probably be the introduction of Michael Carrick and the return of Paul Scholes. United’s midfield has been threadbare over the last few years. These two formed a partnership at the center of the park which allowed Ronaldo, Rooney and Giggs to showcase their attacking talents. Scholes this season is almost back to his best (though his tackling has not improved a wee bit) demonstrated by that cheeky lob for the second goal against Milan at OT. Carrick widely considered unworthy of the 18 million pounds tag has quietly and efficiently stamped his authority on the center of the pitch. Detractors say he is no Roy Keane - but then he brings different qualities to the pitch that are equally beneficial to the team. Thankfully, these two remained fit for most of the season.
However, I have to say also that we have been extremely lucky this season. Before the season started, the major crib against the ManU team was that the squad was too threadbare. While the first team was as good as any other, the substitutes bench did not evoke any sense of confidence. The fact that none of the major first team players suffered lengthy injuries allowed this dimension to remain hidden for most of season. Towards the end, when the entire first choice defense was out everyone realized how thin the bench strength is. And apaarently in defense we were well covered. The second lacunae in the team is the lack of an out-&-out striker in the mold of RVN. With the absence of one, Rooney was even more tightly marked than ever and he got very little space in the games to work his magic. The below-par season for him cannot only be attributed to his bad form. The lack of a regular strike partner is also to blame. Louis Saha has been a major disappointment this season. Reports of his not willing to play through some pain were confounding because this season was his great chance to cement his place in a great team and convince his national team manager of his worth. He sadly, did not see it that way.
Also all the potential title challengers had quite a few things to worry about. Arsenal were without their talisman Henry and quite a few senior players for most of the season. That coupled with their playing at the new Emirates stadium ensured that the unsure start to the season defined the entire season. Chelsea on the other hand, faced a number of issues: injuries, player tantrums and the standoff between the owner and the manager. While each contributed in some way to their “relatively” staid showing this year, the absence of Peter Cech and John Terry was the single most important factor in their losing the crown. Liverpool, on the other hand, IMO lack the quality to maintain the sustained challenge necessary for winning the EPL. The tactical nous of Benitez assures them success where playoffs are concerned but winning a league with the opponent knowing all your moves is not something they are good at.
However, all said and done, we cannot take anything away from the entire ManU squad who showed tremendous grit and passion to win this title. The number of match-changing goals they scored in the last five minutes of games this season is probably the best testament for their never-say-die attitude and makes winning this title a sweet one for all of us who support this club.
Technorati Tags: soccer, Manchester United, English Premier League
Cities of today and tomorrow
The recent edition of Economist, has a survey on cities and the phenomenon of urbanization. (Only the main article is for public viewing and the rest need subscription 
)
Apart from a couple of interesting facts: urbanization is now highest in Africa (with Lagos now listed as a mega-city, alongside the likes of London and Paris), the survey presents an interesting overview of what a city means to wide swathe of people who seem to be thronging to them in increasing numbers across the world.
The contention is simple, for the developing and less mature urban societies, primarily in Asia, Africa and Latin America, cities mean what they have meant to humanity since times immemorial. The promise of a better life than provided by living of the land. The articles do well to point out that not all these promises turn to actions and often the quality of life left behind was better. However, one things that does stand out is that in cities people have a better chance to eke out a living than in the country.
The second part of the survey concentrated more on the established (prosperous or sometime prosperous) cities and questions such as what keeps a city ticking and need (or the lack thereof of them) in developed economies. With the concept of space growing redundant with the proliferation of internet and other services, do cities really matter. It does - at least for a certain demographic section - says the survey. While the middle aged might prefer the quiet of the suburbs raising their families, the young and the old will prefer the clamor and the hustle of the city.
Personally, I like cities. Chris Anderson in Long Tail says that in cities since the population is higher one can find niches to operate in much more easily than in the suburbs where the Law of Hits will invariably crowd out anything out of the way. The second explanation, is provided by the survey, which says cities with the closeness they imply are much better places to meet new people, exchange ideas and try our new things. However, this does not explain why certain cities might be more attractive than others for people who like them. Culture - says the article - might be the answer. I personally know people, who lived in Mumbai (Bombay) all their lives and swear that nothing else in the world can be that good. I with my limited exposure tend to swear by Bangalore - rather than Delhi, Mumbai or Calcutta. While this culture is not created overnight, a city has to explicitly re-invent itself to keep itself attractive to the times. Bangalore for example, started as a pensioner’s paradise before turning into the IT hub of India. Over years, as the IT booms plateaus it will have to find something else to identify itself with. This direction - the evidence in the survey implies, relies not on the Wisdom of the Crowds, but on the direction of governing authorities who are probably the most critical elements in the success of a city.
All in all, a very fascinating study.
Technorati Tags: economist, urbanization
People reviewing and providing movies
My erstwhile roommate and colleague and now-but-soon-to-be-ex Stanford student, Ajay seems to be addicted to movies. But the best thing is that he has gotten addicted enough to start writing about them here.
And while browsing the internet randomly, the other day I found this. A more noble pursuit I cannot think of.
And while I am at it allow me to introduce Jaman. Jaman aims to be for movies what Amazon and eBay have been for traditional marketplaces. Actually, more eBay than Amazon. It is a movie download service without a single blockbuster in its list. Apart from the South Asia collection, I had heard very little of any of the movies there.
Saw this, this, this and this after downloading them from Jaman. All free and legal. And regardless of their IMDB ratings each of these movies had the director trying to do something new. Whether they pulled it off or not doesn’t really matter because they give you food for thought. If you realize what the film is trying to say but not saying it in the best way, you have a problem and thats half the battle won. Really looking forward to seeing some of the other movies from this service.
And yes, Grindhouse is deliciously gruesome and Kung-Pow is the greatest undiscovered movie gem. Thanks DJ for the latter.
