Another great essay. I like the mix of common sense and academic economics. I remember some of our younger professors' excitement about game theory, I guess it would have been in 92 or 93. They were more interested in the math of it than what it could actually tell us about how to make decisions or detect bullshit. I remember now a story I wanted to tell you. I grew up in Idaho in the Treasure Valley and our local entrepreneurial piratical hero was a guy named J.R. Simplot. He started out fattening hogs on beets and potatoes that had fell off the railroad cars and shooting wild horses to feed the hogs some protein. So he got to be the potato king of Idaho eventually and tried to beat the big boys back in Chicago who were manipulating the potato market. JR had a lot of spuds to sell and Chicago was holding the price down to make money on the difference between the wholesale price and the retail price regular people had to pay. So JR just bought up all the spuds he could and put them in his vast storage facilities. Time came for the contracts to end and the Chicago boys couldn't deliver and were short so the price of spuds took off with JR holding all the spuds. He was going to get richer and the Chicago boys were going to go bust. And here was seventy some year old JR's punchline he told a whole gymnasium full of high school football players, their coaches and their parents. He said that we don't live in a country with free markets. There are markets, yes, but somebody owns them, and the people who own them control them and make the rules that they run by. And when it looks like the market owners will lose too much money, they just change the rules so that they'll win or at least not lose. So the market owners made a rule that Idaho potatoes couldn't be used to fulfill the contracts, that they had to be Maine potatoes. Well, it made a Mexican standoff and JR had to go to Chicago and make some kind of face saving deal for the Chicago boys. He still made some money but the main thing was that Chicago didn't lose and kept their market and went on as before. So game theory is a nice little mind puzzle right up there with Sudoku or some such and has to have a lot of Ceteris Paribus sauce on it to make it go down. Again, great essay and thank you for it.
Your story about Simplot is great :). He sounds quite the character -- like something out of a William Faulkner novel. When I first read the name Simplot it rang a bell somewhere -- yeah I looked it up -- I've definitely heard of the JR Simplot Co. And of course he lived to 99. You should write up some of the stories about him and growing up in Idaho. I bet they would be fascinating and fun, especially for a city kid like me.
Ceteris Paribus indeed. Had to look it up tbh, since my Latin is basically non-existent, but that seems to be the go-to for all this stuff. The obvious rejoinder being "yes, but can we say all things are equal, or even define the parameters of 'all things'?" To which the invariable answer is furious hand-waving - like a religious gesture that casts off evil spirits.
You know, I slept on it a little and for the first time in all these years I wonder if I missed JR's point. I wonder if he was trying to tell us sixteen and seventeen year olds that the American game is rigged, all the way to the top. That Washington and Wall Street and Hollywood CAN'T lose, because they'll get together when they're losing, REALLY LOSING, and just change the rules. That a Selection becomes an Election, Injustice becomes Justice, Censorship becomes Free Speech. Why else would he have told us kids that story. I remember the teachers/coaches being pretty quiet on the bus ride home. Good old JR.
Good story, along with insight. I think most of us Americans prefer to be left alone, to our selves, but at heart, we are sore loser above all else, in spite of whatever religious or moral up bringing we have had. Being sore losers can, and often does, turn some of us into cheaters; especially the incumbent, greedy, power-hungry mob who would prefer to control the rest of us who want to be left alone.
"Game theory, and related studies such as economic behavorial choice theory posit “rational actors”, logic models and linear controlled inputs and outputs that simplify reality and attempt to predict behaviors and outcomes in complex interrelations and systems. The theories that result are riddled with paradoxes and cannot model for seemingly rational or irrational behavior because there is no useful definition of rationality that works outside of simplistic logic games"
Wouldn't this be a-prori true due to Godel's incompleteness theorem which basically posits any logically consistent system contains at least one not rationally provable assumption that is the basis from which all the rest of the rational corollaries are entailed?
I'd say it's related for sure. Economists ignore this all the time with the hand-wavy word "externalities". The joke is economists say "assume a wrench" as if whatever is missing from their "logical" system can be conjured out of nothing.
In pure game theory Godel's incompleteness theorem should be smacking us in the face constantly.
Yes Shakespeare said a lot when he said, "there is more in heaven and Earth than are dreamed of in you philosophy Horatio." Horatio was the original midwit models over reality guy. And was mercilessly mocked in that Dylan song about Mr. Jones. The poets always got this, Walt Whitmen and Bukowski couldn't stand midwit nerds.
Another great essay. I like the mix of common sense and academic economics. I remember some of our younger professors' excitement about game theory, I guess it would have been in 92 or 93. They were more interested in the math of it than what it could actually tell us about how to make decisions or detect bullshit. I remember now a story I wanted to tell you. I grew up in Idaho in the Treasure Valley and our local entrepreneurial piratical hero was a guy named J.R. Simplot. He started out fattening hogs on beets and potatoes that had fell off the railroad cars and shooting wild horses to feed the hogs some protein. So he got to be the potato king of Idaho eventually and tried to beat the big boys back in Chicago who were manipulating the potato market. JR had a lot of spuds to sell and Chicago was holding the price down to make money on the difference between the wholesale price and the retail price regular people had to pay. So JR just bought up all the spuds he could and put them in his vast storage facilities. Time came for the contracts to end and the Chicago boys couldn't deliver and were short so the price of spuds took off with JR holding all the spuds. He was going to get richer and the Chicago boys were going to go bust. And here was seventy some year old JR's punchline he told a whole gymnasium full of high school football players, their coaches and their parents. He said that we don't live in a country with free markets. There are markets, yes, but somebody owns them, and the people who own them control them and make the rules that they run by. And when it looks like the market owners will lose too much money, they just change the rules so that they'll win or at least not lose. So the market owners made a rule that Idaho potatoes couldn't be used to fulfill the contracts, that they had to be Maine potatoes. Well, it made a Mexican standoff and JR had to go to Chicago and make some kind of face saving deal for the Chicago boys. He still made some money but the main thing was that Chicago didn't lose and kept their market and went on as before. So game theory is a nice little mind puzzle right up there with Sudoku or some such and has to have a lot of Ceteris Paribus sauce on it to make it go down. Again, great essay and thank you for it.
My pleasure.
Your story about Simplot is great :). He sounds quite the character -- like something out of a William Faulkner novel. When I first read the name Simplot it rang a bell somewhere -- yeah I looked it up -- I've definitely heard of the JR Simplot Co. And of course he lived to 99. You should write up some of the stories about him and growing up in Idaho. I bet they would be fascinating and fun, especially for a city kid like me.
Ceteris Paribus indeed. Had to look it up tbh, since my Latin is basically non-existent, but that seems to be the go-to for all this stuff. The obvious rejoinder being "yes, but can we say all things are equal, or even define the parameters of 'all things'?" To which the invariable answer is furious hand-waving - like a religious gesture that casts off evil spirits.
You know, I slept on it a little and for the first time in all these years I wonder if I missed JR's point. I wonder if he was trying to tell us sixteen and seventeen year olds that the American game is rigged, all the way to the top. That Washington and Wall Street and Hollywood CAN'T lose, because they'll get together when they're losing, REALLY LOSING, and just change the rules. That a Selection becomes an Election, Injustice becomes Justice, Censorship becomes Free Speech. Why else would he have told us kids that story. I remember the teachers/coaches being pretty quiet on the bus ride home. Good old JR.
Good story, along with insight. I think most of us Americans prefer to be left alone, to our selves, but at heart, we are sore loser above all else, in spite of whatever religious or moral up bringing we have had. Being sore losers can, and often does, turn some of us into cheaters; especially the incumbent, greedy, power-hungry mob who would prefer to control the rest of us who want to be left alone.
"Game theory, and related studies such as economic behavorial choice theory posit “rational actors”, logic models and linear controlled inputs and outputs that simplify reality and attempt to predict behaviors and outcomes in complex interrelations and systems. The theories that result are riddled with paradoxes and cannot model for seemingly rational or irrational behavior because there is no useful definition of rationality that works outside of simplistic logic games"
Wouldn't this be a-prori true due to Godel's incompleteness theorem which basically posits any logically consistent system contains at least one not rationally provable assumption that is the basis from which all the rest of the rational corollaries are entailed?
I'd say it's related for sure. Economists ignore this all the time with the hand-wavy word "externalities". The joke is economists say "assume a wrench" as if whatever is missing from their "logical" system can be conjured out of nothing.
In pure game theory Godel's incompleteness theorem should be smacking us in the face constantly.
Yes Shakespeare said a lot when he said, "there is more in heaven and Earth than are dreamed of in you philosophy Horatio." Horatio was the original midwit models over reality guy. And was mercilessly mocked in that Dylan song about Mr. Jones. The poets always got this, Walt Whitmen and Bukowski couldn't stand midwit nerds.
Only 3 comments on this article, That;s criminal. All my readers should read this and weigh in and give this article the discussion it deserves.