Thursday, October 14, 2010
On reaction to events
I noticed that the number of my linked-in contacts has grown again to a nice number 888, my wife said that if I'll hit 999 she'll join linked-in and be my 1000 connection, so have some way to go.
Anyway - one interesting insight from my recent visit in the USA is the way to react to event, or why proactive behavior needs to be smart. I was driving in a road and there has been a sign notifying: traffic jam in a certain bridge, it is advised to use alternative roads, there was still around 30 minutes to drive to that bridge, and a couple of alternative roads.
My own calculation was that most of the traffic heading to that direction will use alternative roads, and that there is enough time for the traffic jam to be cleared, assuming that there will be very little additional traffic, this of course was a gamble, but since I was not in a hurry to catch a flight, I decided to take this gamble, ignored the advice and drove straight to the bridge with the traffic jam, and surprise...surprise... the bridge was totally clear without any delay, indeed the traffic jam was cleared and there has been very little traffic heading in that direction. Of course, if many other drivers would have taken the same strategy it would not have worked (like the prisoner's dilemma in game theory). The lesson it that notifying about event may not yield the best result, maybe alternative road became jammed. In this case the global optimization was to direct certain percentage of the traffic to each alternative route and leave certain percentage directed to the original route. If we are looking from the point of view of individual driver who does not care about the others, this driver still needs to take into account the other's reaction in order to determine strategy. I guess that these kind of considerations are also getting into trading decisions.