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The Power of Stupidity

One of the underlying assumptions to game theory is that given a set of strategies, a player will always choose a strategy to maximize his or her own payoff. Such a player is considered to be rational. But let’s be honest, how often is that actually the case? For a species that supposedly rose to dominance due to our superior intellect, we humans let a lot of things stand between ourselves and rational thought. We are proud, we are petty, and we are careless. We throw caution to the wind yet cling tightly to our grudges and our prejudices. For whatever reason, there are often times when we make choices that can only be described as “stupid”. What happens then? There is more to this question that you might think.

First, a little background. What exactly is a “stupid” choice? In an essay titled “The Basic Laws of Human Stupidity”, economic historian Carlo Cipolla defined stupidity as follows: “A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses.” Clearly, a stupid person is not someone you want to be dealing with, as by definition he is a danger to himself and those around him. However, this leaves us with yet another question: why does stupidity exist, and in such abundance? If stupidity really is such a fatal flaw, why weren’t all the stupid people eliminated ages ago, if not by predators or disgruntled peers, then by themselves?

The answer to this question may be that stupidity isn’t always such a weakness after all. Under the right conditions, stupidity can be a strength.

Back in 1997, avid poker player Andy Morton made the observation that much of poker strategy depended on your opponents’ making the proper play, such as folding when you hold the highest hand. If enough opponents stupidly enter a round with weak hands, they collectively increase their chances of winning at your expense. This aptly named Morton effect applies not just on the poker table, but also in real life.

Consider the following scenario:

You and two of your friend are independently offered the use of one of two tennis courts. Each of you must decide on the spot which offer to take: 45 minutes at court A or 60 minutes at court B. If all 3 of you opt for the same court, you each play for 2/3 of the total time available. If one of you selects a court different from the other two, he is alone and unable to play tennis while the other two get to play for the full time allotted. Which tennis court do you choose?

Being the rational thinker that you are, you take a moment and consider your options:

If you opt for court A:

  • You get no playing time if no one else picks A
  • You get 45 minutes of playing time if one other person picks A
  • You get 30 minutes of playing time if both others pick A

If you opt for court B:

  • You get no playing time if no one else picks B
  • You get 60 minutes of playing time if one other person picks B
  • You get 40 minutes of playing time if both others pick B

You conclude that court B is clearly the better option, giving you 60 minutes of playing time as opposed to 45 if one other person shows up, and 40 minutes of playing time as opposed to 30 if both players show up. But what happens if the two other players select court A? They wind up playing for the full 45 minutes, and you don’t get to play at all.

The above scenario shows us how two stupid choices can lead to an unbeatable outcome. Individually, each of your friends is guilty of making a stupid choice. By selecting court A over court B, he instantly slashes 15 minutes off of the time he and his partner could have spent on the tennis court. However, collectively your two friends are not stupid at all. With you opting for court B, 45 minutes is the most playing time they could have managed together. Without meaning to, your two friends have inadvertently stumbled upon the optimal payoff for themselves. Still, it’s important to note that your friends’ “stupid” choices do wind up harming the group as a whole, reducing the total playing time from 120 minutes to 90 minutes. Ironically, it is the rational player who winds up suffering most of the loss.

This does not mean that the rational player is completely helpless. Given that the stupid strategy is chosen with enough regularity, a rational player can anticipate a stupid choice and act accordingly. Imagine that a month after the tennis fiasco you are asked once again to choose between courts A and B to play tennis with two of your friends. The conditions are exactly the same as before, but in the past month you have learned that 4/5ths of your friends mistakenly believe that court A is a superior choice. Which court do you choose now? Knowing that your friends will choose court A 4/5ths of the time, the rational choice now would be to side with the majority and choose court A. Your friends show up as expected, and you each play for 30 minutes. It was entirely possible for you to pocket twice as much playing time on court B, but the risk of being abandoned is too great. Under this line of thinking, it is entirely possible for three rational players to still wind up choosing court A, each fearing that they are the only ones who realize that court B is a better choice. Here we see how just the threat of stupidity is enough to poison the entire game, forcing rational people to make stupid decisions.

This leads us to a frightening conclusion:

In a population dominated by stupidity, rational people are forced to behave stupidly. In other words, when found in abundance, stupidity does not just survive, it spreads.

How stupid is that?

Source: http://www.science20.com/hammock_physicist/survival_stupidest-77846

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