Wednesday, November 10, 2004

Thet Rationality of Irrational Rationality

I was sick in bed most of last week, so I didn’t get to comment on something Dave said (typed?) ‘in class’. Dave said,

“Why do people keep buying Windows machines when they could have Macs [another wink to the student in the back]? Why do people do any of the things they do? I believe we gave up the assumption that people make rational choices a very long time ago.”

I completely agree that people do not make rational choices all of the time, though I still would argue that people think they are making rational choices almost all of the time (though that is a topic for another day).

Dave’s statement made me realize that completely rational choices of a group of individuals, can lead to irrational choices of another group. Take, for example, the Mac/PC/Linux situation. I have read a bit about operating systems, and it seems to me that the best operating system is Linux, followed by Mac, and then Windows. The Linux system is arguably the best because if it doesn’t do what you want it to do, you simply re-write the code. It seems that Apple computers are always on the cutting edge, and Microsoft seems to be a step or two behind them, and have had some problems with system crashes and security.

So since I know this, am I being irrational because I use a Window’s based operating system? Isn’t the rational choice for me a Linux? Or at least a Mac? I would argue no, and here is why.

What is rational for one person is not necessarily rational for the next person. I mentioned that Linux is the better choice because you can go in and change the code to suit your needs. This is a serious benefit. However, if you don’t know how to change the code, then that benefit of Linux suddenly doesn’t mean anything. In fact it may be a liability if you think you know what you are doing, when in fact you don’t. It’s better that you don’t go in and play around with the code, lest you reformat the hard drive by mistake.

Another example is money. If money is no object, and I want the best computer, then it could be argued that buying a PC is irrational. If I don’t know much about writing code, a Mac would be the way to go. But if money is an object, or I want to buy a computer to play the latest games (like this guy?) then the PC is now the rational choice for me.

The interesting thing to me, going back to the beginning now, is that if most people are buying a computer based on what they feel is a rational choice (and may well be a rational choice for them), then suddenly that technology becomes the ‘norm’. Not because it is the best, but because it is or appears to be, the most rational choice. And even if you realize that the Mac is the better computer, now that Windows is the 'norm', and you love computer games, and game developers develop for the PC, because the PC is the 'norm', suddenly the rational choice is what first appeared to be the irrational choice.

Maybe a better example is the whole Betamax/VHS thing back in the 80s. Beta tapes were in many ways the better technology, so if you wanted the best movie watching experience, the rational choice was Beta. But as more and more people bought VHS, and less and less movies were being released on Beta, there came a point when if you want the best movie watching experience, you now had to choose VHS. The irrational choice became a rational choice because of the way other people acted.

1 comment:

David said...

Sorry to hear you weren't well! The extent to which people act rationally may or may not have an effect on our ability to apply game theory to the analysis of informal online groups.