Thursday, November 17, 2005

Insecurity!!

I start with a hypothesis.
H0: Insecure people strive more.
H1: Secure people are lazier.

Take the example our cricket team. Instances of a batsman on the verge of losing his place in the side hitting a century are not too uncommon. So much so, that the strategy of the team think tank is to have competition among players for each slot by improving the bench strength. In effect, insecurity of players increases efficiency of the team.

In economics also the most preferred market structure is perfect competition. This is essentially reducing each player to a position that he has no impact on the market. Again, we are trading off security of participants with efficiency of the system.

In effect we can conclude that the efficiency of system is high when each constituent is insecure. Contrast this with the utility theory which suggests that every individual strives to maximise his utility. This trade off between individual utility and system efficiency is interesting.

A rich man’s son is less likely to be the most hardworking kid in the class. This in some way answers the success of middle class in education as they see it as their one chance to raise their standard of living. This is a direct interplay of incentives and efforts.

Similarly, a person who has faith in himself, is confident about his future would not be extremely worried about working his @$$ out. He achieves higher utility by pursuing his hobbies, or just doing nothing. On the other hand, an insecure person stands to gain more (w.r.t. his utility) by working harder to secure his place in the world. Okay, there is some scope here for his risk averseness (i.e. his ability to risk his career/life) to play a part here.

This can also throw some light on why some hackers are hackers? Why people write viruses? A plausible explanation can be that to these geniuses successes of the world don’t throw up enough challenge. In search of this challenge (utility to them), they become outliers. To make them work, we need to devise incentives to align their utility with our goals.