Another example of the Nash equilibrium being worse than the group optimum is some examples of Tragedy of the Commons, things like overfishing. It's possible to create a model that shows that a more regulated environment leads to more fish per individual than the Nash equilibrium.
I don't think it's appreciated enough that some forms of regulation actually do make things better for everyone, and that acting only in one's own self-interest can lead to results that are provably worse for your own self-interest.
"I don't think it's appreciated enough that some forms of regulation actually do make things better for everyone, and that acting only in one's own self-interest can lead to results that are provably worse for your own self-interest."
As someone who is libertarian-ish, I find that a funny thing to say which doesn't jive with reality. Western countries usually have huge governments with huge amounts of regulation, and the default assumption of almost everyone around me seems to be that regulation is the way to deal with almost anything we don't like.
So saying that it's not appreciated that some regulation makes things better for everyone sounds to me like saying "it's not appreciated enough that clothes make us warm".
(Unless, of course, you're referring only to specific circles, e.g. libertarian economists).
some forms of regulation actually do make things better for everyone
Best example is that property rights are such a form of regulation. When it comes to fisheries, wildlife, open public lands, air pollution, and intellectual 'property,' the optimal regulation gets much more complicated.
I fully agree with your point, but especially for the specific example you've raised, I think there are some very difficult complications that arise from the (lack of an effective) current global governance model.
For instance, regulations are mostly only effective if they're enforceable. With fishing taking place largely in international waters, and as I understand it, enforcement falling upon the coast-guard-equivalent of whichever country's flag the boat is flying, enforcement would be very difficult.
As far as implementing better regulations, any single nation implementing the good regulations would effectively be putting their own industry at an economic disadvantage (and by extension, their citizens who must pay for the more limited supply) compared to the more lax nations.
We see this with the global climate change debate too; basically every single nation needs to agree at the same time for global progress to be made.
> acting only in one's own self-interest can lead to results that are provably worse for your own self-interest.
To be precise: everyone acting in their own self interest can be worse for everyone's self-interest, than everyone not doing that. For an individual, acting in your own self-interest is still good for your self-interest, tautologically.
Fundamentally, the problem is that people can take resources for themselves, in a way that damages the total resource pool. Each fish you take is one that can't make more fish. Every car on a road slows down all the other cars.
I had a hard time understanding how this could be true, until I read the simple math example presented. The problem seems to be one of externalities. Each individual driver is selfishly optimizing for his own travel time, but by choosing to drive in a short-congested route, instead of a longer-sparse route, he's negatively impacting the travel times of everyone else around him.
It's been well proven in economics that externalities, if unregulated, will produce sub-optimal outcomes. That the way to restore optimal outcomes is to impose a tax that's proportional to the negative externality imposed on others. In an ideal high-tech world, this can be achieved by having differential prices that each driver has to pay, to use each road/highway. In a low tech world, narrowing/closing a road is akin to imposing a tax on certain routes, which explains why it can counter-intuitively help us get to a more optimal outcome.
So if I understand it, adding road signs before the new route adding estimated travel times (that take congestion into account) will fix things? The paradox arises from considering only route length, and not congestion?
The german wiki article has an paragraph about an analogue effect in mechanics in which adding an additional spring to support a hanging weight can causes the weight to hang lower than before. Which I found quite interesting.
>if each driver is making the optimal self-interested decision as to which route is quickest, a shortcut could be chosen too often for drivers to have the shortest travel times
Does this just mean people are making bad decisions based on incomplete information?
For example, would this still be a problem if everyone was using Google Maps routing which changes routes based on congestion patterns?
I learned about this in a course titled Dynamics of Complex Networks and Systems taught by Mark Spong, a robotics control theorist active in dynamical systems research. Ever since learning about Braess' Paradox in that course, I have noticed examples of it in the highways of DFW. The simplest case to spot is where an off-ramp feeds directly to the next on-ramp, creating a "shortcut" for drivers who exit and re-enter the highway.
I've tried to make the case that by closing "key" exits on the highway, we could reduce congestion. But who would be responsible for making that likely unpopular decision?
Yeah. Good road planning in the future should avoid situations where a driver can save 5 minutes by delaying 10 others for 1 minute. Adding new roads can certainly create such situations where they weren't before. You need serious effort to figure it out though, because adding a new road can have lots of other effects as well.
I can't find the original article I read years ago but it showed a large round barrier to be the most effective, and more than one barrier for larger numbers of people
That's where variable toll expressways are a great idea. If you add a faster way and equip it with variable tolls, the paradox shouldn't appear. The new way will not be congested (if the toll has no upper limit) and drivers taking the traditional way will experience less congestion.
The Braess paradox applies to all networks, including the Internet, the financial system, FaceBook, etc.
It seems crazy, but interconnecting more nodes to improve efficiency (as measured by travel time, costs, etc.) can paradoxically make the whole network less efficient!
Is this a function of turbulence? When I think about 'perfect' traffic, I think about a pipe with water flowing through it without eddies. Branch and merge a pipe along its length and you'd introduce all sorts of ripples and turbulence.
Someone who is perhaps better versed in machine learning:
Is there some sort of intuition here that would connect this paradox to the effectiveness of dropout in deep neural networks, or am I drawing connections where there aren't any?
[+] [-] tunesmith|9 years ago|reply
I don't think it's appreciated enough that some forms of regulation actually do make things better for everyone, and that acting only in one's own self-interest can lead to results that are provably worse for your own self-interest.
[+] [-] edanm|9 years ago|reply
As someone who is libertarian-ish, I find that a funny thing to say which doesn't jive with reality. Western countries usually have huge governments with huge amounts of regulation, and the default assumption of almost everyone around me seems to be that regulation is the way to deal with almost anything we don't like.
So saying that it's not appreciated that some regulation makes things better for everyone sounds to me like saying "it's not appreciated enough that clothes make us warm".
(Unless, of course, you're referring only to specific circles, e.g. libertarian economists).
[+] [-] WildUtah|9 years ago|reply
Best example is that property rights are such a form of regulation. When it comes to fisheries, wildlife, open public lands, air pollution, and intellectual 'property,' the optimal regulation gets much more complicated.
[+] [-] stale2002|9 years ago|reply
This paradox would be like if adding more fish to a pond, caused there to be less fish in the pond.
[+] [-] peller|9 years ago|reply
For instance, regulations are mostly only effective if they're enforceable. With fishing taking place largely in international waters, and as I understand it, enforcement falling upon the coast-guard-equivalent of whichever country's flag the boat is flying, enforcement would be very difficult.
As far as implementing better regulations, any single nation implementing the good regulations would effectively be putting their own industry at an economic disadvantage (and by extension, their citizens who must pay for the more limited supply) compared to the more lax nations.
We see this with the global climate change debate too; basically every single nation needs to agree at the same time for global progress to be made.
Edit: clarified the first sentence.
[+] [-] philh|9 years ago|reply
To be precise: everyone acting in their own self interest can be worse for everyone's self-interest, than everyone not doing that. For an individual, acting in your own self-interest is still good for your self-interest, tautologically.
Fundamentally, the problem is that people can take resources for themselves, in a way that damages the total resource pool. Each fish you take is one that can't make more fish. Every car on a road slows down all the other cars.
[+] [-] whack|9 years ago|reply
It's been well proven in economics that externalities, if unregulated, will produce sub-optimal outcomes. That the way to restore optimal outcomes is to impose a tax that's proportional to the negative externality imposed on others. In an ideal high-tech world, this can be achieved by having differential prices that each driver has to pay, to use each road/highway. In a low tech world, narrowing/closing a road is akin to imposing a tax on certain routes, which explains why it can counter-intuitively help us get to a more optimal outcome.
[+] [-] alimw|9 years ago|reply
[+] [-] Chris2048|9 years ago|reply
[+] [-] beobab|9 years ago|reply
[+] [-] karmacoda|9 years ago|reply
[+] [-] laszlokorte|9 years ago|reply
[+] [-] mulmen|9 years ago|reply
[+] [-] WhitneyLand|9 years ago|reply
Does this just mean people are making bad decisions based on incomplete information?
For example, would this still be a problem if everyone was using Google Maps routing which changes routes based on congestion patterns?
[+] [-] argonaut|9 years ago|reply
[+] [-] trvlngsalesmn|9 years ago|reply
I've tried to make the case that by closing "key" exits on the highway, we could reduce congestion. But who would be responsible for making that likely unpopular decision?
[+] [-] obstinate|9 years ago|reply
[+] [-] cousin_it|9 years ago|reply
[+] [-] wowSelfDriving|9 years ago|reply
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[+] [-] basicplus2|9 years ago|reply
http://www.gkstill.com/CV/PhD/Chapter3.html
Scroll down to 3.5.3 Flow through a door.
I can't find the original article I read years ago but it showed a large round barrier to be the most effective, and more than one barrier for larger numbers of people
[+] [-] cr0sh|9 years ago|reply
[+] [-] dx034|9 years ago|reply
[+] [-] cs702|9 years ago|reply
It seems crazy, but interconnecting more nodes to improve efficiency (as measured by travel time, costs, etc.) can paradoxically make the whole network less efficient!
[+] [-] em3rgent0rdr|9 years ago|reply
[+] [-] beefman|9 years ago|reply
1 https://en.wikipedia.org/wiki/Price_of_anarchy
2 http://theory.stanford.edu/~tim/papers/routing.pdf
[+] [-] drewhk|9 years ago|reply
[+] [-] Pfhreak|9 years ago|reply
[+] [-] ufo|9 years ago|reply
https://en.wikipedia.org/wiki/Braess%27_paradox#Example
[+] [-] zardeh|9 years ago|reply
Is there some sort of intuition here that would connect this paradox to the effectiveness of dropout in deep neural networks, or am I drawing connections where there aren't any?
[+] [-] argonaut|9 years ago|reply
[+] [-] dksidana|9 years ago|reply
[+] [-] xyzzy4|9 years ago|reply
[+] [-] jayajay|9 years ago|reply
[+] [-] runeks|9 years ago|reply
- Antoine de Saint-Exupery
[+] [-] TempleOS|9 years ago|reply
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