Game Theory = Prisoner’s Dilemma = Zero-Sum

Game theory has won 7 Noble prizes for its contribution to society. I hope you are aware of Game theory but it is always a good idea to refresh memory. So, allow me to explain it in an easy way illustrating prisoner’s dilemma.  Game theory is basically a psychological phenomenon which prepares the opponent for/against the proponent’s moves. The probability of breakeven is 0.25% for two prisoners in consideration, and same probability is shared for evasion for both sides, but .75% probability to get caught. For most of the people this proves to be the real proof of trust, and many interesting TV programs are based on the notion of this phenomenon.

It wouldn’t be too late to discuss its implication in business world. We know oligopoly; competitive firms mostly are in association with prisoner dilemma. Cartels, pricing and market dominance from few larger organizations can be somehow being explained using game theory. Firms always try to anticipate competitors move, for pricing, launching products and other plenty of reasons. Sometimes companies delay their launch of the product or model anticipating no benefits, or sometime they launch at the same time for share profit, which might also result in gain/loss. It works on the phenomena of Zero-sum that what you lose is the gain for someone embodying evenness. There are many financial instruments working on game theory principle – swap, forward and options and they are also called Zero-sum instruments. In options long call – short call, long put – short put can be referred for Zero-sum.

Suppose company X offers to swap one of its shares for every two shares of company C. X’s stock is selling for $100 per share and Y’s stock was selling for $40 per share before the offer. Therefore, C’s shareholders should all accept the deal, and the value of Y’s stock should rise to $50. If C’s shares rise only to $48, it presents a merger arbitrage opportunity. Investors can buy two shares of company C for $96, short one share of company X to get $100. They can then swap their two C shares for one X share, use that to cover their short, and have $4 risk-less profit.

It is also used in negotiations and auctions. When a company is bankrupted, Game theory can be used to manage auctions, setting prices in the interest of both the parties for fair settlement. Game theory doesn’t give too many options, but provides a base for rational decision.

Why Will Urban Families Thrive In Future?

The family has also undergone changes. New family types have emerged and will continue to change over their life-cycle. These changes will be driven by increased opportunities and greater personal choice, created by greater economic independence. On the downside, the high-performance society is undermined by growing inequalities and social exclusion. However, with abundant resources, there is a feeling that much can be done to alleviate such inequalities, raising the standards of living for all (OECD, 2013).
I have been writing on inequalities in the previous blog posts, the desire and common goal of being economic independent, Families might take a step further in considering the level of job they are collectively doing. Let’s consider families being considered for IT/Automobiles/or any project instead of companies for various reasons, the most significant be cost. Project needs many formalities which help to keep a track of whats happening and considered necessary to accomplish it. Though the formalities are necessary, and abiding project management theory make it expensive. I wouldn’t direct this topic to project management rather would like to propose an idea which could be seen in future if we continue to move at the same pace. Nowadays companies bid for the project, and mostly the most reliable/branded/consistent or whatever at cheaper rate wins. They consider charging (budget) from many perspectives forming a constellation of processes which might not be an obligation but just to double-check. When we reach to certain level considering these double-check becomes unnecessary obligations, which can be avoided easily. I am objecting on monitoring and operational task which is still continuing with organizations just to fill up the gap and bring continuity in the notion of work. Honestly if you ask people at office, let it be any office, how many hours they actually work in a day? The honest answer will honestly guide you to reconsider those constellation processes in operations. Although I have just considered operations as an example, but I’ve started with project. These two are two different things by definition but strongly coupled.
But beyond the steady trends, we should also be alert to new, potentially disruptive factors.By way of illustration, Information and Communication Technologies (ICT) and especially the Internet are now firmly embedded in everyday life. However, these are fast-moving technologies, and recent innovations in social networking give an idea of their power to revolutionise social interaction, particularly among young people but also among other generations. It remains to be seen how these
technologies will play out in the future in shaping people’s involvement in education, work and, more generally, society (OECD, 2013).
With rapidly rising computer literacy rates and the proliferation of cheap high-speed fixed or wireless Internet access expected over the next two decades, governments and employers need to further exploit the potential for telework and tele-education as a vehicle for improving a range of key objectives: from improving labour market access for single parents and providing a better skill-base
for young job-seekers, to achieving a better balance between work and family life (OECD, 2013). Considering the pace of technology and education level of the children, since we have seen cloud boom, now Big data is at peak, I guess soon there will be families undertaking projects directly instead of companies. I mean if you significantly make the authentication more authentic and reliable by bringing a sophisticated way of authentication there won’t be anything hindering families to handle project among family members at home forming their own company. I have once posted on my wall when I was on Facebook that in future we might find homemade “mobile” phones. With common goal, more interaction and understanding among family members project can be handled in a different way.

More about Urban Families in 2030 – http://www.oecd.org/sti/futures/49093502.pdf

Will You Allow Others Know That Your Wife is Pregnant Even Before She Tells You?

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There are many challenges associated with Big data, I would like to highlight some of the major ones which always lie in the periphery of its core. The first one is technical challenge and it is considered to be the most important challenge because the current information technology can’t handle big data. It wouldn’t need any conformation if it does, and analysis would have been made really easy with choices in place.

What we should do with big data? Whether it should be segmented? How we should encourage people to be experimental?

Far bigger concern is privacy issues, and development about big data. Its shortcomings can be supported with many examples, imagine that others can know before it hit you that you are going to be father! How? Its might be because of your wife’s activity in the Mall or supermarkets, or due to her internet activities through cookies, or why she opted for pregnancy coupons?

Knowing the month of pregnancy can alert the retailers of your future moves? However they do not comply but help in anticipating situations. Later down the line Big data ethics comes into play stating you cannot do it. It become fussy if you can do for the women over 31 years of age and not for others (31 just an example). Anyways it won’t label it from avoiding you to capture those elements. How can you make regulations on what to store and what not to store?

Sometimes the stuffs get bounced. Multidimensional data creates traffic jam of the information, but people don’t stop storing for making revenues and aggregate. It raises a question, who buys the data? Congress can do, ministry of space can do. It can be used to increase customer value, one can measure how fast people are buying things. Big data in traffic control could lead to a better traffic regulations to add more safety. Analysis considering multidimensional data needs integration and equal support from heterogeneous teams. At last mostly we get something else which we never attempted for. However, it raises many authoritative questions that who will combine these information? How to not cross the lines, letting information technology run amok can lead to serious reputation damage. Keep privacy and legal issues in mind. Just because you have access to the data doesn’t mean you can exploit it all in the same way. Be especially wary of data crossing international borders in multi-national organizations.

Mistakes from Satoshi Nakamoto in Developing Bitcoin

largest-bitcoin-exchange-suspends-withdrawals.siSatoshi Nakamoto was undoubtedly intelligent when he designed virtual currency algorithm, Bitcoin. He understood the purpose of money very well and used its fundamentals to guide his idea of virtual currency trying to encapsulate ‘faith’ in it. However, some would argue as FT has come up with a loop-hole in his idea stating that it missed a crucial point of considering its value in long-term. FT Journalist Jean-Pierre Landau wrote –

“A good currency must hold its value over long periods. It must also be readily exchangeable for the goods and services that people actually want. Combining those two functions in a single instrument requires a delicate balance. If issuance is too tight, there is not enough money moving around to meet the payment needs of the economy. This can lead to deflation and recession. Yet if too much money is issued the result will be inflation, which erodes the currency’s value. This is the dilemma that “private money”, the creation of banks rather than government authorities, has never been able to solve. Nor have money regimes based on commodities, such as the gold standard. “

It is everywhere, this is a genuine reason, and this is the risk with every currency but there are some other flaws associated with it. It happened during World War II, and even prior to that. I have written about recession and its uncertainty in my previous blog posts 1 and 2, which are omnipresent. I appreciate Mr Landau that he tried to bring something which could be a reason for Bitcoin’s setback, and it has been agreed by economist, but again is uncertain.

In my previous blog post 3, I wrote “ECB (European Central Bank) was one of the first banks trying to understand its impact and suggested that central banks should control its popularity and operations.”

But now many countries are forming independent central bank to deal with this situation. It is evident that money demand fluctuates and is not constant over the period. It is highly important to make money available when the demand grows, and that is the reason these central banks should be independent to guard expansion of money supply. But it has some negative effect in the long-term. This will force aggressive investors to look for other countries to invest which would erode the currency of the country from where it has been invested, and as a result more and more speculation will come into picture to increase the limit. Also, it has ambivalent implication which is better to accept rather to argue.

Money supply expand at a constant rate, but Nakamoto had a different vision. Nakamoto chose different rule, the stocks of Bitcoin will grow at a reduced rate. Today, Bitcoin worth $12m and Nakamoto thought of ceasing it altogether when it reaches $21m. This is the control he suggested to bring in instead of having it done through independent centralized banks. But considering the money demands, it can be made possible to increase its issuance to the people. Putting a cap at $21m is not at all convincing. There is a flaw in considering Bitcoin due to two reasons, if Bitcoin supply increases by 0.6%/year over the next century. And if Bitcoin economy grows faster than 0.6%, the currency will scarce and prices for the goods will depreciate. If the supply of Bitcoin expands slower than the normal currency, and assuming other things remain constant, its value will appreciate progressively.

These are the possible reasons that its price is going too high, today it is $812. Sterlings and Dollars are widely used as medium of exchange and that is the reason they are valuable but Bitcoin is valuable for HOLDING it. It is ironically true that if the prices of Bitcoin kept on increasing then it wouldn’t take too long to be considered equivalent to commodity, and people will not sell it, realizing that its value will go higher and higher. This is not the property of currency.

Bitcoin to bring innovation and prove public policy benefits, Bitcoin re-opens in China

Contd…. previous post

Bitcoin worth just $150m last year, and speculations were that it will be used confoundedly by drug dealers and criminals to hide trade and resultant profits. And now it has reached $10bn, oh! God, there are politicians too in the list. It can be considered as personal risk when it comes to hide own money from being taxed because countries like China and India opposed it strongly as there is a huge degree of uncertainty that it might not last for long, and eventually start to collapse due to less faith in its complex uncertainty which can be result in another downfall in this current situation of economic crisis. And now due to its popularity, world’s regulators are confronting bigger issues to accept it, and there is no past to assist and understanding its impact is out of the book. Questioning here is lot easier than assessing its impact which has been left on the shoulders of the opposing and supporting bodies. The reason I have put opposing body first is because they question, and a most anticipated and convincing explanation is formed in response by the supporting body on assumption.

The reason behind the reversal in interest by China and India is because it failed empirically to support and forms a strong hypothesis to support its continuity in the long run. Adam Shapiro, director at Promontory Financial (consulting firm) says that its growth interest in Bitcoin has alerted governments to the risk that it could be used to elude more than just DEA.

Bitcoin does not use the conventional method of banking system but it functions across peer to peer network, and is capable of moving large amount of money across borders cheaply and most importantly anonymously.

In December 2013, china banned handling virtual currencies and suggested not to promote this but Beijing authorities said that individuals are free to purchase virtual currency but at their own risk.

Ken Lo, chief executive of ANX, a Hong Kong-based Bitcoin working on trading from inside China says: “Sometimes you have to read between the lines. If you’re doing something illegal, regulators will tell you right away.”

In the first week of Jan 2014, Taiwanese authorities stopped the planned installation of Bitcoin ATM, and directed that individuals should not use Bitcoin for transactions. South Korea also showed detest towards virtual money. However, Hong Kong couldn’t comment on this because it falls beyond their dominion.

ECB (European Central Bank) was one of the first banks trying to understand its impact and suggested that central banks should control its popularity and operations.

The Bank of England says “the current levels of economic activity and payments involving Bitcoin” are too light to have any impact on financial stability.

Mr Shapiro said it is the generosity of developed countries that they have given a chance to bring this innovation and prove public policy benefits.

Source: http://rt.com/business/bitcoin-china-btc-reopen-458/

Bitcoin re-opened in China encouraging yuan-to-bitcoin deposits claiming that everything investment is a risk and no central bank can avoid risk. Earlier in Dec People Bank of China stopped Bitcoin trading in china and warned them to close all trading by the end of Jan31, before Chinese New year.

Bobby Lee executive, BTC china opined that they can legally accept Bitcoin deposits in their corporate bank account and then transfer to customer accounts.

Shanghai-based BTC China stopped accepting deposits in Chinese yuan in December after the People’s Bank of China warned financial institutions not to sell or trade bitcoin. Government ministries told financial institutions dealing with bitcoin they must stop by January 31, the beginning of Chinese New Year holiday.

“We are definitely in compliance with the Dec. 5 memo, but the government and the government agencies can change the rules anytime in the future,” Mr. Lee told the WSJ by phone. “So we are going to take a wait-and-see approach.”

A top official at Estonia’s national bank said on Friday that bitcoin “is a problematic scheme” because no central banking authority can protect any risk.

“All risks are assumed by the user, who has no one to turn to for help,” said Mikhel Nommela, who heads up the national bank’s payment and settlement systems department.

The Russian Central Bank also discourages bitcoin use on the grounds it lacks government regulation, which therefore gives it “a high risk of devaluation”.

Please check – Mistakes From Satoshi Nakamoto in Developing Bitcoin.

Necessary Hindrance – Time Management

I don’t know why I am writing this, but I have been already anonymously engaged in many activities which I never intended to. The more I look over the past the more I regret about time which has passed. I believe most of the time we spend in a day is not explicitly planned, and we often get engaged in unnecessary talks and sometimes necessary hindrance supersedes the urgency. Time management is absolutely time-consuming itself. How can we manage time effectively by wasting time? There are many time management tips and tricks but trust me, they all are Bull Shit. We humans mostly work on the basis of adrenalin secreted and urgency created. Urgency is because of demand and need, and in some cases our wants guide us to manage time effectively. Above all it’s self urge and self-control which control and monitor our time management. It then helps in improving  time management through intuition. This is then collectively termed as practice and discipline, which are two major ingredients for time management. Discipline is selection of the activity and practice is persistently performing the task in relation to that activity.

Time management is not a new topic, and the books which are available in support to it are mostly to help with someone Else’s intuition which has been agreed by many people, and is probably the best thinkable alternative seen. It is highly subjective to debate on ‘necessary hindrance’ that comes into picture and ruin your unplanned day. Though the day is not planned and you might do anything of your interest unless an external urge jumps in your bucket which cannot be ignored. It does not give satisfaction always but could be rewarding if managed well. This is now becoming complex, how can you manage time with necessary hindrance which is not of your interest but is needed due to certain circumstances. That is the reason I think busy people take time to give you time. Unsurprisingly it would’ve been seen and analyzed in the past and the impact would have been realized that it is highly critical to filter necessary hindrances. Undoubtedly, it improves time management and it’s upon us to filter necessary hindrances.