moridinamael comments on Inefficient Games - Less Wrong Discussion
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It's nice to see that someone else has thought about this.
It's a popular rationalist pastime to try coming up with munchkin solutions to social dilemmas. A friend posed one such munchkin solution to me, and I thought he had an unrealistic idea of why regulations work, so I said to him:
Now, ironically, this is good news if we want to cause better outcomes with less or no coercion, because it suggests that it is not coercion in itself that does the good work, but the fact that we have changed the payoffs to construct a different game; we can interpret coercion as just one instantiation of the general process by which 'inefficient games' become 'efficient games'. Coercion is perhaps a simple way to do the thing that all possible solutions to this problem seem to have in common, but there may be others that we can assume to syntactically change the payoffs in the way that coercion does, but which we may semantically interpret as something other than coercion.
A different time, a friend noticed that people building up trust seemed qualitatively similar to a Prisoner's Dilemma but couldn't see exactly how. I was like, "Have you heard of Stag Hunt? That's the whole reason Rousseau came up with it!" PD is just one kind of coordination game.
More generally, isn't it weird that the central objects of study in game theory, despite all of the formalization that has taken place since the beginning of the field, are remembered in the form of anecdotes?! You learn about the Stag Hunt and the Prisoner's Dilemma and Chicken and all other sorts of game, but there doesn't really seem to be any systematic notion of how different games are connected, or if any games are 'closer' to others in some sense (as our intuitions might suggest).
Meditations on Moloch was pretty but in the audience I coughed the words 'mechanism design'. It just seems like pointing out the mainstream academic work makes you boring when you're commenting on something poetic. You also might like Robinson and Goforth's Topology of the 2x2 Games. The math isn't that complex and it provides more insight than a barrage of anecdotes. Note that to my knowledge this is not taught in traditional game theory courses but probably should be one day. They refer to this general class of games as the 'social dilemmas', if I recall correctly.
I wish it were more widely understood that the groups who agitate to have regulations placed on certain industries are often composed of the participants of those industries, not outsiders trying to arbitrarily place shackles on them. Companies want to construct a better game where the optimal choice for them and their competitors is one that doesn't destroy value.
Didn't you mean to write
Companies want to construct a better game where they get more profitable and doing business is hard for the competitors.
..?
I think they want both.
In the oil industry, it is in no one's interest that there be any uncertainty or vagueness in the regulations about what should be considered a "bookable reserve" which a company can formally count as part of its net assets. Everyone wants the definitions to be extremely clear because then investors can make decisions with confidence and clarity, more money flows through the system, and assets can be traded and sold easily.
A world without such regulations is worse for everyone, except perhaps the extremely skilled con artist, and even those people have to live in a system with less net cash flowing through it due to the aforementioned uncertainty.
On the net, if a company can lobby for a regulation that increases their profits, they will do so regardless of whether that regulation also creates profits for their competitors.
If possible, of course, they will select regulations that preferentially favor their own company. I'm sure this is very widespread. But it isn't the only use of regulation.
Well, yes, but your example is a sub-type of my "more profitable" claim. The companies want the definitions to be clear because otherwise there is a large uncertainty cost which will affect profits. They don't care about destroying value as long as it's not their value.
I agree that companies often lobby for regulations which decrease their risk -- but typically what they want is to ossify the existing structures and put up barriers to newcomers and outside innovation. If you are large and powerful enough to influence regulations, you want to preserve your position as large and powerful. Generally speaking, that's not a good thing.