Sunday, April 6, 2008

The Grass is Greener Game

This article, about group behavior in a stumbling stock market, seems relevant even to the question about why one might decide to leave an awesomely wicked cool city:

...One model that researchers have used to study contrarian behavior is called the minority game. The game is based on a now-classic problem posed in 1994 by the economist W. Brian Arthur set in a bar called El Farol. Everyone likes El Farol but also knows that the place is not much fun when it’s crowded. What, then, is the best strategy to maximize the fun. Avoid weekends? Try Thursdays and Sundays? Won’t everyone else be doing the same?

Experiments testing various versions of this game have shown that many players flip strategies in the middle of playing, apparently simply because they have set some private threshold for changing, like trying one strategy three times, “and if it doesn’t work, switch to the other one,” said Willemien Kets, a postdoctoral fellow at the Santa Fe Institute.

Dr. Kets contends that this switching strategy can be successful precisely because others decide to stick to a congested road. “You see this ‘grass is always greener’ kind of behavior emerging,” Dr. Kets said in an interview, “which suggests that a variety of contrarian strategies will evolve naturally in the course of any such game because there are people who are more conservative in their strategies.”

Once people start thinking in this way, they subconsciously recruit evidence that supports their view, and not only from other investors. Simply bumping into an acquaintance who shares a contrary opinion — at the gym or in line at the grocery store — can seem like an affirmation.

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