The Price Is Right Behind You

One function that some companies serve that I think is underacknowledged is creating Schelling points. Schelling points, or focal points, are an idea from game theory where one of a set of choices stands out enough that an individual person can be confident that other people might pick it too, without having communicated with each other, if there’s some benefit to having made the same choice. From Wikipedia:

Consider a simple example: two people unable to communicate with each other are each shown a panel of four squares and asked to select one; if and only if they both select the same one, they will each receive a prize. Three of the squares are blue and one is red. Assuming they each know nothing about the other player, but that they each do want to win the prize, then they will, reasonably, both choose the red square. Of course, the red square is not in a sense a better square; they could win by both choosing any square. And it is only the “right” square to select if a player can be sure that the other player has selected it; but by hypothesis neither can. However, it is the most salient and notable square, so—lacking any other one—most people will choose it, and this will in fact (often) work.

It can be tricky to create a focal point in real life because it’s not quite the same thing as making something that appeals to people—it’s making something that people think will be selected by other people, or possibly even something that people think that other people will think will be selected by other people, and so on. This is arguably how most advertising works: the goal is less to convince you (personally) that you’re buying something good, and more to convince you that other people will understand what you’re buying to be good, or to at least understand what message you’re trying to send with it. When this is successful, your personal opinion of of the company stops being relevant for the purposes of susceptibility. From the linked post, which I recommend reading:

For each of these products, an ad campaign seeds everyone with a basic image or message. Then it simply steps back and waits — not for its emotional message to take root and grow within your brain, but rather for your social instincts to take over, and for you to decide to use the product (or not) based on whether you’re comfortable with the kind of cultural signals its brand image allows you to send.

It’s the same idea as common knowledge—even if you know a product is good, and everyone else knows it’s good, there’s an additional benefit if everyone knows that it’s good and everyone knows that everyone knows it’s good: you can invest in the product without explicitly coordinating with other people.

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I first encountered the Prisoner’s Dilemma in a middle school seminar, where it was presented as a morality problem. Do you potentially doom your unknown partner in order to improve your own odds? After seeing it presented with a similar framing soon afterward in Knights of the Old Republic, and as a case of social dynamics in Roger Highfield’s The Science of Harry Potter, I figured it was just a moral dilemma in the sense of questions like “do you let yourself die to save someone else?” and didn’t think of it much afterward.

The next time I encountered the Prisoner’s Dilemma was many years later, in an essay about how the Prisoner’s Dilemma should decidedly not be viewed as a moral issue in the traditional sense. You’re supposed to think of your partner either as someone entirely morally irrelevant, or assume that any bad karma points that you would get for defecting are reflected in the payout. Viewed this way, the problem is still at least as interesting.

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