Prisoner’s Dilemma, continued
Posted by Arman on December 27, 2007
So last time I talked about the Prisoner’s Dilemma, I brought up an example regarding gaming consoles: how Microsoft and Sony would save a ton of money if they cooperated and built one single console instead of having one each. My primary reasons for why this would be logical is that they would only need one development team and budget, one marketing campaign, one support structure, and developers would only need to learn one console architecture.
Something that speaks against the whole thing is of course the benefits of competition in the market (there’s also stuff like the Blu-ray/HD-DVD format war, but if it’s going to happen it’s probably a few console generations in the future anyway). We can’t be sure that Microsoft and Sony would spend all the saved money on making the new console even better, and thus attracting more people to gaming. If that happened, gamers and developers would benefit. However, one less console on the market might also mean higher prices. The cost of the new console as well as the licensing fee for developers might increase because of Microsoft and Sony’s new, stronger position on the gaming market.
In short, I’d say that the idea is good in theory, but how it plays out in practice is a whole different thing.
Another place where the prisoner’s dilemma has cropped up in gaming is in this gamasutra interview with Japanese gaming composer Akira Yamaoka. The interviewer and Yamaoka agree that the Japanese gaming industry is falling behind its American counterpart, especially in the technical field. The primary reasons for why Japan is behind are aging game developers and language barriers, argues Yamaoka. But another reason also comes up: American developers cooperate on technical problems, trading solutions and helping each other out. The small time it takes to help the other team out with a big problem is a great investment, as the help is returned by the other party. But this kind of cooperation isn’t seen as much in Japan, and so their entire industry suffers as a result. Says Yamaoka,
Like back in the Famicom days, people didn’t want other companies to see what they were doing to maximize the console. And it’s not even company to company, even the same company with two different projects, those two teams won’t share driver research or resources like I was talking about before.
The selfishness of each individual company, and reluctance to help a competing company (or even development team within the same company!), is therefor one reason why Japan is falling behind. This is a terrible shame, as Japanese games are traditionally considered to be innovative and strong story-wise, for example. The technical field is there primarily to serve the designer’s goals, and the better the tools are to do that, the better the execution can be. It is this edge that is lost as a result of what is happening.
Liber said
Meh. You seem to have a fetish for big huge centralized things. Maybe Freud would an interesting comment on that
Anyway, I think that if both Sony and Microsoft would make a ton of money by merging into one giant company, or cooperating through joint venture – they would have done that already. Hard money is more interesting to shareholders than diffuse company pride.
“We can’t be sure that Microsoft and Sony would spend all the saved money on making the new console even better, and thus attracting more people to gaming. If that happened, gamers and developers would benefit. However, one less console on the market might also mean higher prices. The cost of the new console as well as the licensing fee for developers might increase because of Microsoft and Sony’s new, stronger position on the gaming market.”
Bingo. Consumers never benefit from monopolies. Although free market monopolies never last for long due to competition if the huge monster slacks off, it would not benefit anyone in the short run.
Arman said
“Hard money is more interesting to shareholders than diffuse company pride.”
Sure, theoretically. But as the example I brought up shows, companies aren’t always prone to do what’s best for their shareholders. Exchanging technical advice would have been a logical course of action for the Japanese companies, and yet they haven’t done that nearly as much as the American companies.
“Although free market monopolies never last for long due to competition if the huge monster slacks off, it would not benefit anyone in the short run.”
Ever heard of economies of scale? An established giant can operate much more efficiently than smaller, newer actors on the market. The smaller ones are therefore likely to be bought up by the giant. Therefore, the giant is in fact likely to slack off more than you indicate. There is no need to invest in that extra piece of innovation, because economies of scale has already provided an advantage for free.
As for monopolies, they can in fact be of great benefit if they are managed well – and economies of scale is one reason out of many. Responsibility for society as a whole is another. Take the monopoly on sales of alcoholic beverages in Sweden, for example. The National Institute of Public Health published a report which concludes that privatizing the sales of alcohol would have a very grave impact on society. According to the report, the number of deaths would increase with over 1 500, 16 million more days on the sick-list and 14 000 more reported instances of assault. Per year.
This monopoly works, as it is run by the state, which in turn is controlled by the people. If the monopoly wasn’t controlled by the state, but rather by capital, its only purpose would be to make as much money as possible. That would completely disregard any thoughts about damages to society. And thus, it wouldn’t be a good monopoly.
Social democracy has always been about marrying the benefits of capitalism with a strong sense of having an alternative where capitalism fails. The mission statement makes this very clear on the English page of Systembolaget, which manages the Swedish Alcohol Retail Monopoly:
“Systembolaget, the Swedish Alcohol Retail Monopoly, exists for one reason only: To minimize alcohol-related problems by selling alcohol in a responsible way, without profit motive.”
Liber said
“Sure, theoretically. But as the example I brought up shows, companies aren’t always prone to do what’s best for their shareholders. Exchanging technical advice would have been a logical course of action for the Japanese companies, and yet they haven’t done that nearly as much as the American companies.”
Okay, sucks for them. If they keep doing that they may be driven out of business. Free market at work.
“Ever heard of economies of scale? An established giant can operate much more efficiently than smaller, newer actors on the market. The smaller ones are therefore likely to be bought up by the giant. Therefore, the giant is in fact likely to slack off more than you indicate. There is no need to invest in that extra piece of innovation, because economies of scale has already provided an advantage for free.”
You make it sound like the huge monster company could just buy _anything_ if they want to, the truth is that the small company must agree on it as well.
If they refuse to take the money and start to push their own innovation (which presumably is superior to the big company’s product), we’ll have the benefit of competition. Eventually the big company would have to adapt the new innovation or it’ll see its market share decline.
Now IF the owners of the small company accepts being bought out, we would have a new situation where challenging the big corporations suddenly becomes very profitable. And with free market dynamics, more entrepreneurs will try to do the same and suddenly the big company has a helluva lot more competition than before. Some may be bought out, but that can’t continue in the long run – eventually the huge company will have to adapt to the improvements put out by the smaller entrepreneurs in order to keep its position in the market.
We may still have one big company, but it would be selling a much better product than before, due to competition.
“As for monopolies, they can in fact be of great benefit if they are managed well. Take the monopoly on sales of alcoholic beverages in Sweden, for example. The National Institute of Public Health published a report which concludes that privatizing the sales of alcohol would have a very grave impact on society. According to the report, the number of deaths would increase with over 1500, 16 million more days on the sick-list and 14 000 more reported instances of assault. Per year.”
Yes, and we would probably have a lot less deaths and injuries if we criminalized smoking cigarettes and eating at McDonalds too. And forcing people to wear bike-helmets 24/7. The question is if we should have collective punishment because some people get themselves in trouble? Ban all knives because it’s the most frequent tool used in murder? Where do you draw the line, and why?
And by the way, nice source (National Institute of Public Health)… the federal government defending its own activities, who wuddhha thoouught?
“This monopoly works, as it is run by the state, which in turn is controlled by the people. If the monopoly wasn’t controlled by the state, but rather by capital, its only purpose would be to make as much money as possible. That would completely disregard any thoughts about damages to society. And thus, it wouldn’t be a good monopoly.”
If Systembolaget really was controlled “by the people” as you so nicely put it, believe me, the prices would be much lower. Because that’s what people want.
It’s controlled by politicians who see the alcohol monopoly as a good way to increase the tax revenue. Systembolaget is indeed there to make as much money as possible, only the money goes to politicians to be used as bribes aimed at the middle-class (who obviously can’t connect the dots where the extra money they spent paying the alcohol tax at Systembolaget, is coming back to them as, say, child support. They’ll praise the social democrats for that extra 1000 kr sent to them, without realizing that a normal married couple pays ~30.000 every month in taxes).
““Systembolaget, the Swedish Alcohol Retail Monopoly, exists for one reason only: To minimize alcohol-related problems by selling alcohol in a responsible way, without profit motive.””
That’s like asking a CEO of a business to make an objective analysis of how the company is performing. Puh-lease.
http://monopolet.blogspot.com/2006/02/statens-alkoholvinst-25-miljarder-utan.html
Arman said
“Okay, sucks for them. If they keep doing that they may be driven out of business. Free market at work.”
They might be. As an aside, how much do you suppose the Japanese gaming culture is worth? I’d say its worth cannot be measured in money, just like a lot of other things. This concept is obviously not something you have considered very much.
To reiterate what I said in another comment, there’s no contradiction between having a free market in a social democracy, where a free market works. You seem to be locked into some kind of mode where you still believe that you’re debating with a socialist. It seems the nuances of what I’m trying to say are getting lost on you – what a surprise.
“If they refuse to take the money and start to push their own innovation (which presumably is superior to the big company’s product), we’ll have the benefit of competition. Eventually the big company would have to adapt the new innovation or it’ll see its market share decline.”
Again, you’re using the classical argument for a free market where you have in fact encountered something you hadn’t heard before, or in any case don’t have a counter-argument for. You have entirely left out economies of scale in your equation. As I said, a bigger, established company can more easily keep its position due to it already being big. The bigger company will also have an easier time finding more venture capital or people willing to buy stocks, due to it being known, tested on the market and proved to be successful. The smaller company has the odds going against it from the start.
And if those who started the company get a (to them) heap of money for handing over the keys to the kingdom, they aren’t all that likely to say no. Even if that sum is comparatively small if we look at what company had in the works.
We need to look no further than gaming to find a prime example. Electronic Arts bought up Origin, and then closed it down. EA bought up Westwood Studios, and then closed it down. EA bought up Bullfrog, and then closed it down. EA bought up Swedish developer Digital Illusions CE, and made it into a Battlefield series production machine (after promptly closing down its Canada offices, of course). Likewise, EA bought up Maxis, this incredibly innovative studio which made The Sims, and then turned it into its The Sims sequels-and-expansions-and-stuff packs-studio.
Who knows what kind of creative games Maxis would have produced if they hadn’t received that kind of treatment by EA? This kind of stifled creativity has been commonplace with EA (let’s not even begin to talk about their sports division), and the only reason they have been able to keep it up is their overwhelming position on the market. If capital underestimates the power of innovation, then innovation will suffer. Only lately have EA indicated a change of course. We have begun to see some small changes, but it’s too early to see if it’s a serious gesture. Still, for the last decade EA’s been the behemoth that has slowly moved forward, because it can afford to. Ergo, less innovation than you think.
“Yes, and we would probably have a lot less deaths and injuries if we criminalized smoking cigarettes and eating at McDonalds too.”
Okay, good. So you agree with me. More deaths and injuries if we privatized the alcohol retail monopoly. Great to know. Oh, and two wrongs don’t make a right.
“Where do you draw the line, and why?”
The line is drawn on a case-to-case basis. I presume we are in agreement over the alcohol retail monopoly, which is what I brought up. Not smoking and McDonald’s. If you want, we can go look into those things too. Smoking is being regulated through bans of smoking in public areas, and there are laws being discussed concerning marking certain foods to inform people of their contents better. That doesn’t mean outlawing them.
You must find this very difficult to understand, because you seem to be limited to thinking in so extreme terms, and therefore you expect the same from others.
“And by the way, nice source (National Institute of Public Health)[...]”
Yeah, I tend to look for information from those who know their field the best. In this case, I wanted info on public health, so I went to the National Institute of Public Health (FHI). With your weird and backwards-logic, you’d expect the FHI to produce a report suggesting benefits of privatization. That would mean more deaths and injuries and probably more money in their budget to combat the problems, right?
Also, it’s sad to see how you first accept their findings when it suits you, and then reject them for the sole purpose of making a tired attempt at undermining the source.
“If Systembolaget really was controlled “by the people” as you so nicely put it, believe me, the prices would be much lower.”
Systembolaget is controlled by the people, through the parliament. Again, you contradict yourself, saying “Systembolaget is indeed there to make as much money as possible[...]“. Lower prices would mean a higher consumption, and thus more damages to society.
And of course the money is redistributed to people: that’s the entire point of having taxes in the first place. You seem to think this is a bad thing. As for how, exactly, the money is used, I bet it comes to great use in the health care sector dealing with all the damages alcohol bring.
“That’s like asking a CEO of a business to make an objective analysis of how the company is performing.”
You’re gravely mistaken here as well. A CEO of a business is indeed only interested in profit – and that’s no secret. Systembolaget is interested in doing what it sets out to do.
Another one of your problems (there seem to be so many) is with democracy; I’ve come to realize that. You question how well the parliament functions. You previously lashed out at democracy claiming there’s no difference between the two major political forces in Sweden. You again questioned if 100% democracy is good. You’ve repeatedly made comparisons to horrible dictators or similar extremities.
The thing is, following your views on the free market, most people would support you and what you say. Everyone’s free to start a political party in Sweden, and yet support for views as extreme as yours are sporadic at best. But if your views are sound you would have a lot of support, right? In a true democracy, the political views of the people are found in the political parties of that country. But yours aren’t. That’s not because of the thoughts about a free market – that’s a good idea in many cases. It’s because of how far you’re willing to go in implementing your ideas. And because of this lackluster support, you feel forced to attack democracy, the very foundation our society is built on.
If you believe that anyone should be able to start a political party, then we are in agreement on that point at least. As for the rest of your views, I don’t put much value in them – and neither does the Swedish people. As I’ve said before on numerous occasions, there’s no contradiction between social democracy and having a free market, where the free market can do good. But it’s not the optimal solution everywhere in society. And that’s where the alternative comes in.
Not only is it absolutely astonishing and ludicrous to suggest democracy doesn’t work in Sweden, it’s cowardly and a true sign of how confused you are. It’s become more and more apparent the more we have discussed, and this latest comment you made really was a fascinating culmination of contradictions and inconsistencies.
If you want to push the issue further, then by all means go ahead, but unfortunately it doesn’t seem we’re going anywhere forward with this discussion.
Liber said
“They might be. As an aside, how much do you suppose the Japanese gaming culture is worth? I’d say its worth cannot be measured in money, just like a lot of other things. This concept is obviously not something you have considered very much.”
You can’t objectively decide how much something is worth, it’s individual. To me, Japanese gaming culture isn’t worth a dime, to you it’s worth a lot.
To say that the value of something can’t be measured in money is a classical cliche. Consider this: money is nothing but derivate of pure_labour_. If you’re saying something can’t be valued by money, you’re just saying that something can’t be valued by how much labour one or more people are prepared to put in the cause to keep it alive. The Mona Lisa or the Japanese gaming culture is obviously something MANY people would be prepared to sacrifice a lot of work to keep in existence, therefore, it’s worth A LOT. But it’s not invaluable.
“To reiterate what I said in another comment, there’s no contradiction between having a free market in a social democracy, where a free market works.”
You haven’t specified in what fields you don’t believe free market would work. Am I suppose to guess your stand?
“Who knows what kind of creative games Maxis would have produced if they hadn’t received that kind of treatment by EA? This kind of stifled creativity has been commonplace with EA (let’s not even begin to talk about their sports division), and the only reason they have been able to keep it up is their overwhelming position on the market.”
No, the only reason they have been able to keep it up is that people buy The Sims games like hot butter. If everyone had gotten sick and tired of The Sims and sequels, EA had stopped milking it to the extreme. But since people obviously want these (In your opinion) shit games, why blame EA? Use your elitism to blame the consumers for not wanting “innovative” and “creative” games. Of course there is a market for such games too, which is why small companies like Maxis and Westwood will continue popping up and releasing new ideas, and later is rewarded by being bought up. The EA behavior simply creates incentive for new companies.
“Okay, good. So you agree with me. More deaths and injuries if we privatized the alcohol retail monopoly.”
Sure. Less deaths with mandatory pillows taped around everyone as well, to prevent people from falling and die.
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will respond to the rest later when I find the time
Arman said
“The Mona Lisa or the Japanese gaming culture is obviously something MANY people would be prepared to sacrifice a lot of work to keep in existence, therefore, it’s worth A LOT. But it’s not invaluable.”
You’ve turned it the other way around. If Japanese gaming culture is lost, no money in the world can bring it back. It’s not a product to be manufactured, it’s something that has evolved over time, and which is unique. In that respect, it is invaluable. It can’t simply be replaced with a replica that is produced for money.
If the fishermen in the Baltic Sea are greedy enough to fish so much that the fish is wiped out, how can money buy the fish back? Laws on the other hand, can prevent this by issuing limits to fishing.
“You haven’t specified in what fields you don’t believe free market would work. Am I suppose to guess your stand?”
The social democrats is the biggest political party in Sweden. Their views are hardly secret, you can always check out their website. Oh, and you haven’t specified in what fields you don’t believe free market would work either. Am I to assume that you believe it should be applied everywhere? Am I to assume that all laws should be removed because they infringe on people’s individualism?
One example where a free market wouldn’t work is one that I’ve already mentioned: retail alcohol. Another is health care and education. Those are either fully or in part controlled by the state today. In short, in areas where we simply couldn’t afford the possible negative effects of a free market, it should be regulated. The American health care system is abysmal. The Swedish one is among the best in the world. So is our education system.
If the highest education is provided only to those who make the most money, society as a whole will suffer. The point is that there are certain areas where money should matter less. In a way, the importance of money is diminished in these areas. Lack of money shouldn’t stand in the way of an education, or proper health care. These are my views, of course, and they are shared by a lot of other people as well.
There are other examples where the state can make a difference by starting companies. SBAB could loan money to people who wanted to buy a house, and contributed to lower interest rates. The current government is planning on selling it. Vattenfall could be used as a tool to increase awareness about energy and climate issues. Far from everything needs or should be owned by the state, though. Each situation should be carefully examined (case-to-case basis, remember?). There’s no point for the state to own for owning’s sake. Selling out companies that are owned by the state solely for the sake of the state owning as little as possible is also wrong. There should be an actual need. Systembolaget is an excellent example of how the damaging effects of alcohol are limited through a state monopoly.
If the Social Democratic government hadn’t started the Million Programme in the 60’s to create 1 000 000 dwellings, who would have? The construction companies at the time certainly couldn’t handle the situation on their own. People were literally screaming for somewhere to live. The state realized they could help the companies by giving them subsidies. Did they do this out of altruism? Not very likely. Those apartments came in handy for a lot of people to lead stable lives. They helped develop Sweden by giving people some security in their lives. This was of benefit for everyone, not only those who previously had nowhere to live. I quote you: “And you know what it’s called when political parties cooperate with the business? Hint: Mussolini had it, and it begins with an F.” The Million Programme was of great importance to Sweden. Companies couldn’t handle it on their own. The free market, in other words, wasn’t in a position to change things fast enough. The state helped provide that. You’re saying that giving people someplace to live, in this manner, is fascism? Ridiculous.
“But since people obviously want these (In your opinion) shit games, why blame EA? Use your elitism to blame the consumers for not wanting “innovative” and “creative” games.”
I don’t believe that they are shit games, nor would I dream of blaming consumers for buying the expansions. I believe that the original concept of The Sims is a brilliant idea. My beef here is more with what could have been produced instead of what we got. Because of EA’s position on the market, and fear of screwing up a working concept, they simply made the expansions. They’ve made a ton of money, but that also meant that Maxis wouldn’t work on more innovative ideas instead, ideas that may have brought in even more money in the long run. It is my opinion that EA’s overall lack of innovation has made the company stagnate. And because they are the biggest publisher, it’s affected the entire industry.
I’m criticizing their business calls, really, but it’s not as easy as you make it out to be (new companies instantly emerging to beat them). Because of EA’s overwhelming position on the market, their decisions have an enormous impact. The repercussions are felt in places where new or existing companies can’t immediately reach. It could take years before we see those companies make their impact, and every year is precious.
As I said, there are signs of EA learning its lessons. Spore is looking good so far, DICE is working on Mirror’s Edge, but still… the past hasn’t always been pretty for EA. And what’s happened has happened.
“Sure. Less deaths with mandatory pillows taped around everyone as well, to prevent people from falling and die.”
You have completely ignored my arguments on this issue and are simply repeating what you said in your previous post. First of all, two wrongs don’t make a right. Second, read what I said again. Case-to-case basis. Also, regulation where it’s due, not because it’s possible.