3 ms·
Many of these junky mass-market products are currently stuck in a Nash Equilibrium[a]: Each manufacturer is unable improve the product's quality without increa
by cs702 3y ago
Many of these junky mass-market products are currently stuck in a Nash Equilibrium[a]:
Each manufacturer is unable improve the product's quality without increasing its retail price, but increasing the price would make the product more expensive than competing products made by other manufacturers, who are in the same situation. No manufacturer can improve quality without raising prices and losing market share.
Their position is analogous to that of prisoners in the Prisoners' Dilemma[b]: Their best choice is the least-worst option for everyone.
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[a] https://en.wikipedia.org/wiki/Nash_equilibrium https://en.wikipedia.org/wiki/Nash_equilibrium
[b] https://en.wikipedia.org/wiki/Prisoner's_dilemma https://en.wikipedia.org/wiki/Prisoner's_dilemma
- efields 3y agoThanks for this. I didn’t know there was a name for it. We’ve probably accelerated the effects that lead to the equilibrium in many product categories. It takes a big mover like an Apple to take the risk to move the needle now, but so many consumer products lack an Apple in that space.
- cs702 3y ago> It takes a big mover like an Apple... or an ambitious entrepreneur with sufficient financial backing willing to take big risks.
- truculent 3y agoWhat’s the implication for moving the equilibrium point? State action? Collective action?
- cs702 3y agoDepends on the market and the product. The best way, in my view, is through product innovation by ambitious entrepreneurs who come up with a better solution. Instead of trying to making the equivalent of a faster horse carriage at cheaper cost, they figure out how to make the equivalent of an automobile, rendering horse carriages obsolete.
- truculent 3y agoThis is a bit if a sidestep - how do you increase the rate of product innovation?