Tuesday, October 27, 2009

El Farol Bar problem

I found this interesting game theory problem in the book Traffic (171):

This is a problem sketched out by the economist W. Brian Arthur, after a bar in Albuquerque, New Mexico. The hypothetical scenario imagines that one hundred people would like to go to the bar to listen to live music, but it seems too crowded if more than sixty show up. How does any one person decide whether or not to go? If they go one night and it's too crowded, do they return the next night, on the thought that people will have been discouraged - or will others have precisely the same thought? Aurthur found, in a simulation, that the mean attendance did indeed hover around sixty, but that the attendance numbers for each night continued to oscillate up and down, for the full one hundred weeks of the trial. Which means that one's chances of going on the right night are essentially random, as people continue to try to adapt their behavior.
The interesting part of this problem, born out of a real observation of trying to have a fun night at the bar, is that while you are trying to act based on guesses of what others are going to do, they are doing the same thing about you. While you are modifying your behavior based on what they did last night, they are doing the same thing.

The moral of the story? Today is a different day than yesterday.

We like static thinking. In the good times, and even in the times that are a little rough, we hope that everything will mostly be just like it was yesterday so that I can basically predict what today and tomorrow will be like. But you can't, not even for the people and the organizations and the circumstances that you think you know best.

I am all for making plans. But the problem is we like making plans based on static think. I heard this analogy, and unfortunately I cannot remember where the analogy came from; if you know, post it, and I'll give proper citation. The metaphor goes something like this (with a little of my own concoction thrown in):

Many people look at the future like a well-built highway -- straight roads, well-defined boundaries, and with the proper markings that show you where you are and how far you've gone. The beat of time is the stripes along the middle that are always the same length and look just like the last hundred miles that you've traveled. You can plan out your route with expectations that little will change along this road. People with this view of the future try to build their lives into lamborghinis - luxuriant, shiny, and it gets to the goal in a hurry.

But the future doesn't look like that, it's not static, and they run into obstacles that puncture the tires, dent the sides, if not an all out crash. The economy tanks, their 401 crashes, their kids have problems, they hate their new boss, etc. And here's the weird thing - we still hope that the future is static, either because we can navigate ourselves out of that world that we knew, or we happy just whining about what we know.

Here is a better view of the future: it's more like the Baja 1000. You can see what is on the hill in front of you for a short distance, but other than that you have no idea what is on the other side. Be prepared for anything. You need grit and determination more than shiny and fast. You will get dents and scrapes, but that only helps prepare you for the next round.

Keep the expectations of your environment and circumstances down, and expectations of yourself up. Work your tail off for what is in front of you.

Enjoy the ride!

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