Winning the Hardware Software Game book Winning the Hardware-Software Game

Using Game Theory to Optimize the Pace of New Technology Adoption

Innovators of new technology systems requiring users to combine both hardware and software components often face delays in adoption of their new systems.  Users will not buy the hardware until enough software or content is available, while at the same time software providers will not provide content until enough users have adopted the new system.  This book examines the dynamics of this adoption process and provides methods for optimizing the pace of adoption of new technology systems.     Read more...

social/government

  • A Comparison of Private System and Public System Healthcare Dollars

    Being a data junkie and always wanting to see the numbers for myself, I decided to look at actual trends in US healthcare expenditures to see where the dollars are actually going. I went to the US Health and Human Services website and downloaded annual expenditures on healthcare from 1960 through 2007.

  • A Note on My Previous Net Neutrality Blog Post

    I recently published a blog entry on the Net Neutrality Game.  However, I just found out that there is a critical aspect of the net neutrality issue that I failed to understand, namely that involving deep packet inspection (DPI).  Using DPI methods, Internet providers have the capabilities of detecting not only the size of files passing through their lines, but also the content as well.  Clearly, there is a world of difference between managing flows of traffic based solely on file size, and managing flows of files based on the type and content of the files. 

  • Colleges and Students in a Pickle

    What Is the Purpose of Colleges and Universities?

    How Do the Cutbacks Affect Education Game Players?

     

    A recent article by the Associated Press, “College Cutbacks Make It Harder to Earn Degrees,” described the problems college students are confronted with in the face of drastic budget cuts at colleges and universities.

  • Crime and Punishment

    The Total Costs of Crime and Criminals

    Alternative Social Attitudes towards Crime

    A recent article in the NYT, “Missouri Tells Judges Cost of Sentences” by Monica Davey, states that when making their sentencing decisions, judges in Missouri are now provided with the cost to the state associated with alternative forms of punishment as a factor to consider:

  • Electric Vehicles and Social Welfare

    Terminology/Technical Information

    Players in the Electric Vehicle Game

    Current Stages of Adoption of Electric Vehicles

    Advantages and Disadvantages of Electric Vehicles

    Energy Inputs and Emissions Costs of Electric Vehicles

    Should the Construction of Electric Charging Stations be Subsidized by the Public?

     

     

    A recent article in the WSJ, “U.S. Utilities Push the Electric Car” by Cassandra Sweet, notes that electric companies nationwide are seeking to charge electricity consumers extra fees to fund construction of electric vehicle charging stations by the electric companies. The rationale is that having more charging stations available will speed adoption of electric vehicles by consumers, thereby leading to fewer pollutant emissions, and thus higher air quality for everyone.

    Should all electricity consumers be required to pay the construction costs of electric vehicle charging stations?

    The answer to this question requires understanding the underlying distribution of the private and social costs and benefits associated with manufacture and use of conventional versus electric vehicles.

  • Energy Taxes vs. Cap and Trade

    Why Does Energy Usage Compel Government Intervention?

    Optimizing Government Intervention

    Examples of Energy Taxes and Regulations

    Conclusions: Carbon Tax (Cap & Trade) vs. Command and Control Regulations

     

    A recent article in the NYT, “Saving Energy, and Its Cost” by David Leonhardt, advocates for the use of a carbon tax, rather than command-and-control regulations, as a means of reducing carbon emissions.

  • How Do We Defend Against Rogue Drones?

    I’ve been reading a lot about drones, and the more I read, the more I’m convinced they’re going to cause a lot of problems, for everyone – citizens, businesses, and government alike.

     

    Here’s some background information that lays out some relevant issues.

     

    •  Drones are available to anyone.

    Drones are cheap to buy, and they can be built from off-the-shelf parts (see, for example “Building a Drone vs Buying One – Which is Best?”). So while the government could theoretically “require” people to register drones, there’s no way to enforce that requirement.

     

    •  It is difficult to identify drone owners and thus their intent.

    In this sense, drones are similar to cyberattacks. In “Marching off to cyberwar,” The Economist indicates that

    A cyberattack on a power station or an emergency-services call centre could be an act of war or of terrorism, depending on who carries it out and what their motives are.

  • How Do You Encourage People to Take Due Care When They Can Cause Large Social Costs?

    Last week I was in Las Vegas with my boyfriend for one of his annual business conferences.  When it comes to travelling, I’m one of those extremely neurotic types who has to allow plenty of time for any and all “what if” situations, with the result that I usually end up at the airport the day before my flight (well, maybe that’s a bit of an exaggeration).  My boyfriend is just the opposite.  When he left the hotel for the airport (we were travelling separately), he said he allowed “plenty of time.”  However, there was a car accident on the way, which delayed his arrival.  He ended up at the checkout counter 43 minutes before his flight was scheduled to take off.  Unfortunately, if you check a bag at Las Vegas airport they require you to arrive at least 45 minutes before departure.  His bag was too large to carry on, so he was forced to wait until the next flight.

    One could argue that it was his own fault for not leaving “enough” time to get to the airport.  On the other hand, this caused me to consider, yet again, all the costs (externalities) that some people’s actions impose on others.  To whit, the very next day I read about the scientist who prompted an evacuation of Miami International Airport for carrying what screeners believed was a pipe bomb, which is another perfect example of one person imposing costs on many other people.

  • Laws to Dispute, But Not Enough to Litigate

    A recent article in the NYT, “On Tyson’s Face, It’s Art. On Film, a Legal Issue” by Noam Cohen, discusses the uncertainty that exists regarding the interpretation of many Federal laws, copyright laws in this case, especially when the jurisdiction of the laws creep into unchartered territory:

  • Managing the Global Commons, with a Focus on Outer Space, Part 1

    This analysis, Managing the Global Commons, with an Emphasis on Outer Space, has three parts:

    * Part 1: Description of the Commons

    * Part 2: Methods of Management

    * Part 3: The Case of Outer Space

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    Part 1: Description of The Commons

     

    Definition of The Commons

    Wikipedia defines the commons as

    …[T]he cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable earth. These resources are held in common, not owned privately.

    And it defines global commons as (emphasis mine)

    …[I]nternational, supranational, and global resource domains in which common-pool resources are found. Global commons include the earth's shared natural resources, such as the deep oceans, the atmosphere, outer space and the Northern and Southern polar regions, the Antarctic in particular. Cyberspace may also meet the definition of a global commons.

  • Managing the Global Commons, with a Focus on Outer Space, Part 2

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    In Part 1: Description of the Commons, I provided a definition of the commons, together with graphical depictions of commons situations. I also defined the concept of Common Heritage of Mankind.

    Now that we have a clear definition of the types of situations we're dealing with, we can move on to trying to figure out how to manage them.

     

    Part 2: Methods of Managing the Commons

    The commons represent situations of market failure, due to the presence of negative externalities. Left to their own devices, free markets associated with use of the global commons will generally result in situations of overuse, relative to the socially efficient level. Historically, economists have proposed various forms of public intervention into the free markets to better manage the commons, including the imposition of taxes or quotas or the designation of property rights.

  • Managing the Global Commons, with a Focus on Outer Space, Part 3A

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    The Case of Outer Space

    Now that we have all the boring basics out of the way, we can move onto the good part — the analysis of Space: the Final Frontier!

    This section starts off with an overview of the size and distribution of man’s activities in outer space. It then uses the analyses presented in the previous section (Methods of Managing the Commons) to propose some principles for the management of human activities undertaken in outer space generally.

    The next blog entry will discuss the specific cases of the management of (i) space traffic and (ii) orbital debris.

     

    Distribution and Size of Space Activity

    A few statistics as to the size and distribution of activities in space are presented here, courtesy of The Tauri Group, “2014 State of the Satellite Industry Report.”

  • Managing the Global Commons, with a Focus on Outer Space, Part 3B

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    The Problem of Space Traffic Management

     

    Description of the Problem

    As we saw in the previous section, Distribution and Size of Space Activity, satellite activity encompasses a large portion of space activity. The primary function of satellites (displayed in Figure 6) is the provision of communications and information services. The ongoing provision of such services by satellites requires the use of two forms of common pool resources in outer space: (i) slots in LEO or GEO in which to orbit and (ii) room in the radiofrequency spectrum in which to transmit and receive signals.

  • Patents vs. Prizes: Which Is Better for Inducing Innovation?

    The NYT recently published an article, “Netflix Competitors Learn the Power of Teamwork” by Steve Lohr, discussing the prize offered by Netflix for improving upon the algorithm it currently uses for recommending movies to Netflix customers and what came from the contest:

    A contest set up by Netflix, which offered a $1 million prize to anyone who could significantly improve its movie recommendation system, ended on Sunday with two teams in a virtual dead heat, and no winner to be declared until September.

    But the contest, which began in October 2006, has already produced an impressive legacy. It has shaped careers, spawned at least one start-up company and inspired research papers. It has also changed conventional wisdom about the best way to build the automated systems that increasingly help people make online choices about movies, books, clothing, restaurants, news and other goods and services…

    The biggest lesson learned, according to members of the two top teams, was the power of collaboration. It was not a single insight, algorithm or concept that allowed both teams to surpass the goal Netflix … set... Instead, they say, the formula for success was to bring together people with complementary skills and combine different methods of problem-solving.

  • Playing the Financial Aid Game

    Clash between Ideology and Reality

    The Financial Aid Game

    What's the Value of Attending College?

     

    A recent article in the NYT, “Placing the Blame as Students Are Buried in Debt” by Ron Lieber, presents the case of a woman who graduated from NYU with $100,000 in student loans, and who is having great difficulty paying the loans back.

  • Playing the Microbial Resistance Game, Part 1

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    Infectious diseases are the second leading cause of death worldwide. Since their discovery in the 1940s, antibiotics have been the primary treatment for infectious diseases. However, over time, many diseases have become resistant to the antibiotics that have been used to treat them, causing tens of billions of dollars in added treatment costs and millions of deaths globally.

    This analysis analyzes the factors (game) involved in (i) the supply and use of antibiotics to treat disease, and (ii) the eventual resistance of many of these diseases to the use of antibiotics.

  • Playing the Microbial Resistance Game, Part 2

    A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

     

    In Part 1 of this analysis, I provided a brief description of the Microbial Resistance Game, and I described the various pathways of microbial resistance to antibiotics.

    In this section I describe the players involved in the Antimicrobial Resistance Game (as illustrated in Figure 1), together with their incentives.

  • Playing the Net Neutrality Game, Part 1

    Definition of Net Neutrality

    The Heart of the Matter

    Overview of the Net Neutrality Game

    Outcome of the Game: Per-User vs. Per-Usage Internet Fees

     

    A recent court decision struck a blow against net neutrality.  One account of the decision appeared in the WSJ, “Court Backs Comcast Over FCC on 'Net Neutrality’” by Amy Schatz:

  • Playing the Net Neutrality Game, Part 2

    Brief Recap of Part 1

    Understanding Deep Packet Inspection

    Understanding Broadband Services

    Using DPI to Manage Internet Traffic

    Outcome of the Net Neutrality Game — Take 2

     

    Brief Recap of Part 1

    In Playing the Net Neutrality Game, Part 1, I presented a discussion of net neutrality that focused on the common carrier aspect of the issue.  That is, proponents of net neutrality argue that the Internet, is an essential component of the nation’s communication system, and as such

    Internet access providers should not discriminate with regard to what applications an individual can use, or the content an individual can upload, download, or interacted with over the network. Individuals acquiring services from Internet access providers should be able to use the applications and devices of their choice, and interact with the content of their choice anywhere on the Internet.

  • Role of Government - Part 2: Guidelines for Government Intervention

    By taking some lessons from current and past successful and unsuccessful aspects of government, we can establish some guidelines to help determine the role government should play in society that would be consistent with the previously stated goal in Part 1 of this commentary of finding the optimal mix of liberty, opportunity and government.