The recipe has an appealing common-sense simplicity. First, let the people choose. Second, let suppliers compete to give us what we want. Finally, let the invisible hand of the free market provide efficiency, innovation, responsiveness, and growth. (Location 119)
Note: Fucking Tim Harford
The way forward for economies, according to this view, is to privatize and deregulate, a program implemented within the industrialized world and later exported to the rest of the world in the form of the International Monetary Fund’s “Washington Consensus.” The role of government is to get out of the way and provide space for the energy of the entrepreneurial classes, who are to be amply rewarded for their efforts. Unregulated private industry is the best provider of choice and efficiency. (Location 169)
The cause of the bad outcome is the presence of what economists call externalities, the impact that one player’s choice has on those around him or her (hence “external”). (Location 445)
An equilibrium outcome is one for which no one participant can improve their own outcome by their actions alone. If either prisoner chose to stay silent rather than to confess, they would be rewarded not by the co-operation outcome, but by a long jail term. It requires concerted action by both players to improve the equilibrium outcome. (Location 485)
These multi-player prisoner’s dilemmas are also called free-rider problems, “tragedies of the commons,” and public goods problems. (Location 619)
Choice and preference are out of alignment, and externalities have produced a bad equilibrium. (Location 647)
On landing in England in 1066 William the Conqueror is supposed to have burned the boats that brought his army there. This removed the “choice” for his men to flee and ensured that his soldiers would fight harder. End result: military victory and a better chance of survival for each soldier. (Location 794)
Note: This sort of thing is asinine
When a major store captures a substantial portion of a particular market, a shift occurs in the balance of power between retailer and suppliers. A huge company like Wal-Mart becomes an essential customer for manufacturers, and essential customers can dictate terms to their suppliers. Wal-Mart is able to demand deep discounts from its suppliers. An essential customer’s game of divide and conquer can put suppliers in a prisoner’s dilemma, in which their choices are to sell at wafer-thin margins or to miss out on a large market. Wal-Mart will buy from the supplier that offers the lowest prices – and to win in this competition a supplier may have to cut costs, change its way of operating, move jobs to ever-cheaper Third World sweatshops, and still receive only a slim margin from the sale. If all the suppliers hold out, perhaps Wal-Mart would have to back down and the suppliers could get a better deal, but no matter what the other companies do it is in the short-term interests of each of them to take the deal and sell to Wal-Mart rather than to sell nothing. As a result, the suppliers are trapped. (Location 997)
They argue that many on the “countercultural left” have misunderstood the nature of the consumerism they oppose, believing that consumerism is all about conformity (“little boxes made of ticky-tacky and they all look the same”) when in fact modern capitalism thrives on selling goods that allow people to distinguish themselves from others: from the Burberry coat to Tommy Hilfiger to Timberlands boots to high fashion, many consumer purchases are about being different from the mainstream. (Location 1201)
Ian McEwan’s story shows how, when circumstances are unfavourable, co-operation fails even among well-intentioned people. (Location 1290)
Note: No it fucking doesn’t
The importance of being unexploitable in order to promote co-operation is a condition that he did not expect. (Location 1338)
The picture that Axelrod paints suggests that repetition alone can be enough to move us from the free-rider trap to a co-operative solution that is better for each and every player. (Location 1343)
Note: See seeing round corners
It is the equivalent of Murdoch’s price cut in Staten Island: a signal that defection is not worth it. It prevents price-based competition, and leads to higher prices all round. (Location 1408)
Loyalty plans are another signal to other companies: a mechanism for promoting mutually beneficial co-operation at the expense of the consumer. (Location 1413)
An action that is apparently a gesture to consumers turns out to be a signal to other companies. (Location 1414)
The possibility of reciprocal action is not the only thing that favours small long-lived groups when it comes to co-operation. (Location 1427)
Sending these signals is a form of communication: those who read each other’s signals well can establish mutually beneficial co-operation. (Location 1443)
Ostrom describes communal management of meadows in Switzerland and Japan, and irrigation systems in Spain and the Philippines, and makes reference to the successful management of the commons in England until the Enclosure Acts of the late 18th and early 19th centuries allowed property owners to drive commoners off the land. Ostrom’s examples show that the story of the commons need not end in tragedy (Location 1470)
One of the most obvious sources of power in a world of choices is the ability to set the agenda, or to change the game. (Location 1624)
Instead of thinking of the state as an external agency, we must think of the state and its ability to set the rules as a resource that is open to a struggle for control. In this larger picture the competition among a variety of interests – including corporations and consumers/citizens – for access to the rule-setting powers of the state becomes a game in itself. (Location 1635)
but MarketThink has successfully managed to discredit those rewards. (Location 1649)
Note: Glib argument - neolib has destroyed civic sense. Whither brexit (either side )
Italian economist Vilfredo Pareto posed this dilemma many years ago: [If] a certain measure A is the case of the loss of one franc to each of a thousand persons, and of a thousand franc gain to one individual, the latter will expend a great deal of energy, whereas the former will resist weakly: and it is likely that, in the end, the person who is attempting to secure the thousand francs via A will be successful.3 (Location 1651)
Corporations recognize the benefits of teamwork. Whether it is Wal-Mart requiring that employees wear identical uniforms and engage in morning singalongs, or high-pressure workplaces demanding that employees demonstrate their commitment by working long hours, companies certainly realize that individual choice and governance by the market have their limits. However keen CEOs are on market forces outside the company walls, they rarely trust the operations of their own organization to market models. (Location 1693)
That the enforcement of good corporate behaviour is subject to free-rider behaviour explains why collective actions such as publicity campaigns and boycotts are needed. If their fate is left to individual actions, corporations will always be given an easy ride. Collective actions help to address the free-rider problem by suggesting that each vote can make a difference (because others are voting too) and by bringing peer pressure to bear on individual decisions (for more on this, see chapter 11). (Location 1733)
Note: Social Media has given more voice to smaller groups
Those who see the world through the lens of MarketThink are reluctant to abandon the virtues of competition in their rhetoric, and yet the provision of public goods is not a story of competition, but of collective action. (Location 1752)
The only thing that keeps markets healthy in the face of the temptation to exploit others is a strong set of institutions to govern the transactions that take place: “property rights, predictability, safety, nomenclature and so on,” according to one list. (Location 1767)
Just as in the case of both buying Nike, neither player can improve his outcome by a unilateral action, and so this outcome is also an equilibrium for the game. (Location 1844)
Thomas Schelling identified what he called the focal point effect.1 Anything that focuses the attention of the players on one equilibrium among many may lead the players to expect that others will make choices compatible with this equilibrium, and so successfully co-ordinate their actions. (Location 1869)
Note: Focal point
There are slightly more people at Club One, but only just enough to offset the better drinks and music of El Simple. The point at which the lines meet is sometimes called the tipping point. (Location 2015)
Lotteries evoke suspicion perhaps because they are associated with gambling. But they are impartial selection mechanisms, which generally achieve a mix of pupils roughly mirroring the mix of applicants. (Location 2358)
Whether such schemes would work well is open to debate. What is clear is that any scheme of school selection based on individual choice is prone to the logic of the herd, and so to outcomes characterized by inequality and stratification. (Location 2364)
It has also become clear that, although in principle the consumer may be sovereign on the Internet, able to switch vendor at the click of a button, that’s not quite how things work. Issues such as trust and reputation mean that few people will go to an unknown site to save a few pennies when they can go to a widely recognized site instead. Do you feel comfortable giving your credit card number to this company? How do you know they will deliver what you order, on time and in good shape? And if it turns out to be not what you hoped for, will they take it back? Increasing returns and networks are at work again: the more people use a site, the more it is trusted. And if trust is an important factor when shopping for something as cut and dried as a book (which, let’s face it, is supposed to be the same product wherever you buy it), it will be vital for other items such as clothes and home furnishings. The difficulty of establishing trust in the face of uncertainty has been one of the biggest challenges facing those who would sell on the Internet. Unglamorous issues such as delivery charges and return policies have crippled many an online seller. We are drawn to those sites that others have already visited. We trust our credit-card numbers only to vendors that have already established themselves. The cycles of increasing returns are at work, and they tend to lead, as always, to a single big winner. (Location 2441)
Note: schelling points innit
alternatives to QWERTY – even high-quality alternatives that many (Location 2688)
they make an offer based on the distribution of good- (Location 2730)
do know that prospective employees already holding a job (Location 2775)
