82,891
edits
Finite and Infinite Games: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 47: | Line 47: | ||
Side-bar for legal eagles: the common law — based as it is on the doctrine of precedent; you know, “what has been decided before” — is dispositionally historic. ''Until it isn’t.'' For what are the great cases, the law reports and textbooks if they are not a catalogue of all the times the courts ''made something new''? | Side-bar for legal eagles: the common law — based as it is on the doctrine of precedent; you know, “what has been decided before” — is dispositionally historic. ''Until it isn’t.'' For what are the great cases, the law reports and textbooks if they are not a catalogue of all the times the courts ''made something new''? | ||
By contrast, infinite games, where the object is to find a way to carry on, care little about what has already happened, other to learn from the experience do more of what worked and less of what didn’t. What’s done is done. The challenge is figuring out ''what’s coming next''. This is | By contrast, infinite games, where the object is to find a way to carry on, care little about what has already happened, other to learn from the experience do more of what worked and less of what didn’t. What’s done is done. The challenge is figuring out ''what’s coming next''. This is necessarily prospective. Infinite games harness knowledge and experience to look ''forward''. | ||
=== The theatrical and the dramatic === | === The theatrical and the dramatic === | ||
| Line 53: | Line 53: | ||
Now, historically-focused finite games are fine'','' if that’s what floats your boat: there is no harm and much reward to be had from football, as long as everyo''ne understands the'' “theatricality” of what’s going on. But to use backward-looking techniques to resolve necessarily forward-looking, indeterminate scenarios — to treat the future as a calculable risk rather than an unknowable uncertainty — is to make a category error. | Now, historically-focused finite games are fine'','' if that’s what floats your boat: there is no harm and much reward to be had from football, as long as everyo''ne understands the'' “theatricality” of what’s going on. But to use backward-looking techniques to resolve necessarily forward-looking, indeterminate scenarios — to treat the future as a calculable risk rather than an unknowable uncertainty — is to make a category error. | ||
This is what business [[Thought leader|thought-leaders]] who use sports [[Metaphor|metaphors]] do. | |||
=== The Global Financial Crisis and the lives of the universe === | === The Global Financial Crisis and the lives of the universe === | ||
| Line 58: | Line 60: | ||
<blockquote>“We were seeing things that were 25 [[standard deviation]] moves, several days in a row”.<ref>David Viniar, Chief Financial Officer, [[Goldman|Goldman Sachs]], August 2007.</ref></blockquote>Like the [[common law]], markets are dispositionally historic ''until they aren’t''. Finite techniques work well enough, much of the time, because infinite environments can resemble finite games, much of the time. | <blockquote>“We were seeing things that were 25 [[standard deviation]] moves, several days in a row”.<ref>David Viniar, Chief Financial Officer, [[Goldman|Goldman Sachs]], August 2007.</ref></blockquote>Like the [[common law]], markets are dispositionally historic ''until they aren’t''. Finite techniques work well enough, much of the time, because infinite environments can resemble finite games, much of the time. | ||
In “ordinary market conditions”, commerce does seem to operate according to an established order, existing conventions and what is already known. Rules feel fixed. Competition is apparent. Institutions are profitable, market titans are powerful — if not necessarily “strong” — the crowd is wise and everything runs as if impelled by an invisible hand. ''Until | In “ordinary market conditions”, commerce does seem to operate according to an established order, existing conventions and what is already known. Rules feel fixed. Competition is apparent. Institutions are profitable, market titans are powerful — if not necessarily “strong” — the crowd is wise and everything runs as if impelled by an invisible hand. ''Until it doesn’t''. | ||
Why do we prefer finite, historical, backward looking techniques over forms of infinite play? ''Because they are cheaper to implement and easier to manage''. As long as the environment is predictable, a “historic” approach delivers ''efficiency, consistency'' and ''certainty''. Executives can exercise central control ''as if they were playing a finite game''. They can manage by algorithm. They can use dependable machines, and dispense with unreliable meatware. They can [[Scale|''scale'']], and their risks and returns scale proportionately. This is why they are so fond of sporting metaphors. | Why do we prefer finite, historical, backward looking techniques over forms of infinite play? ''Because they are cheaper to implement and easier to manage''. As long as the environment is predictable, a “historic” approach delivers ''efficiency, consistency'' and ''certainty''. Executives can exercise central control ''as if they were playing a finite game''. They can manage by algorithm. They can use dependable machines, and dispense with unreliable meatware. They can [[Scale|''scale'']], and their risks and returns scale proportionately. This is why they are so fond of sporting metaphors. | ||
When the assumption of finitude breaks down — when normal and fat-tailed distributions diverge — scale becomes a monster. Just ask David Viniar, or Myron Scholes, or John Meriwether, or Dick Fuld, or the prime brokers to Archegos. | When the assumption of finitude breaks down — when normal and fat-tailed distributions diverge — [[scale]] becomes a monster. Just ask David Viniar, or [[Black-Scholes option pricing model|Myron Scholes]], or [[Long-Term Capital Management|John Meriwether]], or [[Lehman|Dick Fuld]], or the prime brokers to [[Archegos]]. | ||
Suddenly probability metaphors fail. ''One'' twenty-five standard-deviation move is preposterous. You would not expect one in several trillion trillion lives of the universe, let alone “several days in a row”.<ref>You would expect a “25-sigma move” on one in 1.3 billion billion billion billion billion billion billion billion billion billion billion billion billion billion days, which is several trillion trillion trillion trillion times as long as the life (to date) of the known universe. More on this fascinating topic on our [[normal distribution]] article.</ref> | Suddenly, probability metaphors fail. ''One'' twenty-five standard-deviation move is ''preposterous''. You would not expect one in several trillion trillion lives of the universe, let alone “several days in a row”.<ref>You would expect a “25-sigma move” on one in 1.3 billion billion billion billion billion billion billion billion billion billion billion billion billion billion days, which is several trillion trillion trillion trillion times as long as the life (to date) of the known universe. More on this fascinating topic on our [[normal distribution]] article.</ref> | ||
[[File:Normal vs fat-tailed distribution.png|center|thumb|600x600px|The green bit: normal, but dull. Most events happen here, whether in a finite or infinite game. The orange bit: normal but entertaining. Most non-dull events happen here (if an infinite game); almost all of them (if a finite game). The red bit: terrifying/thrilling. Almost no such events happen in a finite game; a small but significant number will happen in an infinite game.]] | [[File:Normal vs fat-tailed distribution.png|center|thumb|600x600px|The green bit: normal, but dull. Most events happen here, whether in a finite or infinite game. The orange bit: normal but entertaining. Most non-dull events happen here (if an infinite game); almost all of them (if a finite game). The red bit: terrifying/thrilling. Almost no such events happen in a finite game; a small but significant number will happen in an infinite game.]] | ||
| Line 74: | Line 76: | ||
Power will always be restricted to a relatively small number of selected persons. Anyone can be strong.”</blockquote>It is [[Disdain fashionable things. Especially ideas.|fashionable]] in our time to speak loosely about “power” — much of [[critical theory]] resolves a manifesto against the violence [[Power structure|power structures]] do to the marginalised — and Carse’s distinction between “power” and “strength” is a good reminder to exercise care here. | Power will always be restricted to a relatively small number of selected persons. Anyone can be strong.”</blockquote>It is [[Disdain fashionable things. Especially ideas.|fashionable]] in our time to speak loosely about “power” — much of [[critical theory]] resolves a manifesto against the violence [[Power structure|power structures]] do to the marginalised — and Carse’s distinction between “power” and “strength” is a good reminder to exercise care here. | ||
Sure, social organisations can be pernicious, but most are not. Families are power structures. So are communities. [[Critical theory|Critical theories]] themselves are [[Paradigm|paradigms]] — social hierarchies of just this kind. Any form of communal organisation more developed than flapping around in primordial sludge involves some compromise of interests and some hierarchy. These don’t ''have'' to be destructive: they can be ''con''structive, enabling, levers to prosperity and betterment for everyone who wants it. If we call such a centralised, curated, defended store of knowledge for sharing a “strength structure” it does not sound so ominous. | Sure, social organisations can be pernicious, but most are not. Families are power structures. So are local communities. Cricket clubs. Parent-teacher associations. [[Critical theory|Critical theories]] themselves are [[Paradigm|paradigms]] — social hierarchies of just this kind. Any form of communal organisation more developed than flapping around in primordial sludge involves some compromise of interests and some hierarchy. These don’t ''have'' to be destructive: they can be ''con''structive, enabling, levers to prosperity and betterment for everyone who wants it. If we call such a centralised, curated, defended store of knowledge for sharing a “strength structure” it does not sound so ominous. | ||
=== Society and culture: awards versus potential === | === Society and culture: awards versus potential === | ||
| Line 86: | Line 88: | ||
In the same way finite games are backward looking and not prospective, they imply centralised over distributed decision-making. The ingenuity is in the middle — or, in a hierarchy, at the top — and those at the edges are just there to carry out instructions. | In the same way finite games are backward looking and not prospective, they imply centralised over distributed decision-making. The ingenuity is in the middle — or, in a hierarchy, at the top — and those at the edges are just there to carry out instructions. | ||
Thus, football managers formulate strategy and recruit players best able to execute it, drilling them with pre-formulated tactics, plays and set-pieces. Indeed, managers are so important that they are not ''allowed'' to intervene during the match and must delegate that role to an on-field captain who directs operations as the game unfolds. Under these circumstances, a well-coached team of ordinary players may prevail over a disorganised assembly of better athletes. This is the lesson of Michael Lewis’ [[Moneyball: The Art of Winning an Unfair Game|''Moneyball: The Art of Winning an Unfair Game'']]'','' and the falsification of the “Galácticos” strategy of buying the best players money can buy, and expecting their virtuosity to prevail.<ref>There are [https://www.theatlantic.com/entertainment/archive/2011/09/the-many-problems-with-moneyball/245769/ those who doubt the Moneyball story], and [[Blockbusters: Why Big Hits and Big Risks are the Future of the Entertainment Business|those who think the Galácticos largely had it right]].</ref> | Thus, football managers formulate strategy and recruit players best able to execute it, drilling them with pre-formulated tactics, plays and set-pieces. Indeed, managers are so important that they are not ''allowed'' to intervene during the match and must delegate that role to an on-field captain who directs operations as the game unfolds. Under these circumstances, a well-coached team of ordinary players may prevail over a disorganised assembly of better athletes. This is the lesson of Michael Lewis’ [[Moneyball: The Art of Winning an Unfair Game|''Moneyball: The Art of Winning an Unfair Game'']]'','' and the [[falsification]] of the “Galácticos” strategy of buying the best players money can buy, and expecting their virtuosity to prevail.<ref>There are [https://www.theatlantic.com/entertainment/archive/2011/09/the-many-problems-with-moneyball/245769/ those who doubt the Moneyball story], and [[Blockbusters: Why Big Hits and Big Risks are the Future of the Entertainment Business|those who think the Galácticos largely had it right]].</ref> | ||
Elite coaching works because rules are fixed, variables | Elite coaching works because rules are fixed, variables known, and there are tight parameters around what players can do, where they can do it. | ||
Now as far as business is a ''finite'' game, there is much to take from this. Out in the field, [[form]] dominates [[substance]]: the most vital talents are those who formulate rules, work out [[Algorithm|algorithms]], devise [[Playbook|playbooks]] and source — or ''outsource'' — the personnel who will faithfully and efficiently follow the plan. | Now as far as business is a ''finite'' game, there is much to take from this. Out in the field, [[form]] dominates [[substance]]: the most vital talents are those who formulate rules, work out [[Algorithm|algorithms]], devise [[Playbook|playbooks]] and source — or ''outsource'' — the personnel who will faithfully and efficiently follow the plan. | ||
''If'' business is a finite, zero-sum game, there are a few implications: | |||
Firstly, ''brilliant minds belong at the top of the organisation'': they do the most inspired thinking. They come up with the best plan. Securing “the person with the best plan” is worth paying ''extraordinary'' amounts of money for. | Firstly, ''brilliant minds belong at the top of the organisation'': they do the most inspired thinking. They come up with the best plan. Securing “the person with the best plan” is worth paying ''extraordinary'' amounts of money for. | ||
Secondly, the organisation’s sacred quests are the ''creation of excellent process'' and ''optimising the cost of carrying it out''. | Secondly, the organisation’s sacred quests are the ''creation of excellent process'' and ''optimising the cost of carrying it out''. | ||
| Line 104: | Line 106: | ||
But if business is an ''infinite'' game, we have a different proposition. The rules aren’t fixed. We we can’t predict where the game will go or what other players will do or, for that matter, who’s even playing. There is no common end-goal. A super-coach with a pre-determined strategy is no good. Here you ''do'' want Galácticos — only ones with a talent not for closing out historical conflicts, but seeing new possibilities, creating new metaphors, building new narratives. | But if business is an ''infinite'' game, we have a different proposition. The rules aren’t fixed. We we can’t predict where the game will go or what other players will do or, for that matter, who’s even playing. There is no common end-goal. A super-coach with a pre-determined strategy is no good. Here you ''do'' want Galácticos — only ones with a talent not for closing out historical conflicts, but seeing new possibilities, creating new metaphors, building new narratives. | ||
Carse calls these players “''poietai''” — a Platonic concept meaning something like “poet” — an unfortunate label if you want to | Carse calls these players “''poietai''” — a Platonic concept meaning something like “poet” — an unfortunate label if you want to go across with sports-obsessed [[Master of Business Administration|MBA]]<nowiki/>s — which we might also render as “''creatives''”. | ||
In any case, infinite players are not ''competing'', but ''creating''. | In any case, infinite players are not ''competing'', but ''creating''. | ||