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A Beautiful Mind Explains Our Industry
10/8/2013

John Forbes Nash, Jr.

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2 party system
10/8/2013 3:32:55 PM
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so USA has 2 party system...but other coutries do not...how do you explain that using Nash concept?

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Re: 2 party system
10/8/2013 3:54:56 PM
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@Krisi...but that would equate to VHS and Beta constantly battling for supremacy, with one sometimes on top, then the other.    No-one has yet satisfactorily explained how politicians work!

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Re: 2 party system
10/8/2013 4:17:46 PM
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except VHS won that battle, I'm confused!

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Re: 2 party system
10/8/2013 5:04:49 PM
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@Caleb - don't be confused.  In the mind of Joe Average, convenience and features (and, to some extent, bling) win against technical excellence every time.  Hence VHS instead of Beta, Windows instead of Linux, etc.......

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Re: 2 party system
10/8/2013 5:33:04 PM
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David and Caleb, "it's elementary." VHS won because in the very first offerings, it gave us 2 hours of recording time vs 1 hour for Beta. Since these VCRs were used for time shift recording, the decision was a no-brainer. (Plus VHS had several other advantages that people continue to forget, such as heads moving away from tape during rewind, and stereo audio capability from day 1. Both of which Beta eventually caught up with, years later.)

Good article. Indeed, game theory, when it's representated in math equations, looks very much like any other optimization technique. Whether the field is operations research or economics, it's kind of cool to see how all of this is the same. I had the same experience in a course called "systems analysis," offered by the EE department, in which mechanical systems were defined exactly the same way as electronic circuits. For passive components, dashpot = resistor, spring = inductor, mass = capacitor. So for example, resonance and oscillation are fundamentally the same, whether you're talking circuits or suspension systems. Very cool stuff.

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Re: 2 party system
10/8/2013 7:42:57 PM
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From what I remember from the university physics - mass is similar to inductance, and mechanical spring (stiffness) - to capacitance.  Two springs with equal stiffness, connected in series, will have twice lower stifness, like capacitors connected in series...

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Re: 2 party system
10/8/2013 8:06:58 PM
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I suppose this is a bit tomayto/tomaahto:

http://lpsa.swarthmore.edu/Analogs/ElectricalMechanicalAnalogs.html

I remember a quote in our physics book, on a similarly symmetrical discussion of Maxwell's equations. It said, "It's good for the soul." Hilarious, but true.

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Re: 2 party system
10/8/2013 9:51:23 PM
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exception: BlueRay won out over HD Dvd -- clearly a superior product

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Re: 2 party system
10/8/2013 10:17:04 PM
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krisi,

Good question! Let me take a stab at answering it. Let me re-ask it for the readers: "so USA has 2 party system...but other coutries do not...how do you explain that using Nash concept?"

Buchanan showed that Nash equilibriums exist in political systems.  If you recall, there may be 1, many, or no equilibriums in any given game.  I suspect that there may be many in a democracy, so a 2-party system is not the only equilibrium.  I've lived in France and Switzerland, all with multiple viable parties.  I don't know enough to judge if these were in equilibrium state or not (more or less parties becoming viable with time).  What signifies an equilibrium is that it is so hard to disrupt.  Indeed, the US, once it had evolved to its particular 2-party system, though it had many parties earlier, has pretty much "snapped to grid", even when major third party candidates have had good publiciity. We always go back to two.

I think the particular US rules are one reason why we are in 2-party equilibrium.  There are significant hurdles for a third party, and the nature of the voting is "winner-take-all" in geographical districts.  This is different from many European parliment systems where there is a proportional element nation-wide, albeit with a hurdle. I think this explains some of why the US 2-party system is so entrenched relatively to many European nations: if your party in the US will only get 15% of the vote, though it is your favorite over the other two, you still lose. So, to get someone in office, you have to vote for one of the two major parties. This hurdle stops a third party from emerging. However, if a given party in Europe gets 15% of the vote, it is likley to get representatation in parliment, and has the option of joining other parties in a coalition. This gives a different incentive to the voters to vote for their preferred party even if it isn't one of the two largest.

Bottom line: the rules of the game influence the types of equilibriums that exist.

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Re: 2 party system
10/9/2013 5:49:20 AM
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That's because polititions don't work, they make others work :-)

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