The entrance examination effect
November 5, 2013 1:02 PM   Subscribe

Help me name and document this social/economic phenomenon.

This is all about situations where "individual choices" lead to a "nobody wins" outcome. Case in point: In the UK, more and more parents pay for tutoring so their kids have an edge in the grammar schools entrance examination. Of course, if everybody does that, not only does nobody gain any advantage, put everybody is (in economic terms) worst off (the tutoring expense, which provided no gain). Everybody would (arguably) be better off without tutoring, but nobody dares go without, not knowing what the others will do (prisoner's dilemma). What is this phenomenon called? Does anybody have other examples of similar situations?

Also, I remember reading about a similar situation about entrance examinations to primary schools in an asian country, which led to a tutoring "arms race", but I can't remember where. Does anybody know?
posted by bluefrog to Work & Money (16 answers total) 7 users marked this as a favorite
Red Queen Hypothesis?

Though, frankly, "arms race" works pretty well too.
posted by Etrigan at 1:09 PM on November 5, 2013

Zero Sum Game?

Sort of related - Pyrrhic Victory?
posted by Lutoslawski at 1:15 PM on November 5, 2013

It seems kind of like a war of attrition except that it doesn't have unlimited duration.
posted by XMLicious at 1:25 PM on November 5, 2013

Take a look at the concept of tragedy of the commons. It might not map well to the context you have in mind (what's the resource here? University seats?) but I think it captures the gist of what you're getting at here.
posted by un petit cadeau at 1:27 PM on November 5, 2013 [2 favorites]

I think this qualifies as a multiplayer version of the Prisoner's Dilemma, as you mentioned. There's also the tragedy of the commons.

The similar examples I can think of are: a cartel like OPEC or De Beers that colludes to drive up prices of a commodity, that situation a little while ago where students all failed a test on purpose to break the curve, and a union going on strike. These are all often analyzed as cases of the Prisoner's Dilemma.
posted by vogon_poet at 1:28 PM on November 5, 2013

Yeah, I think both "red queen's race" and "positional good" are good key words to look for here.
posted by escabeche at 1:30 PM on November 5, 2013

You might be interested in Robert Frank's "The Darwin Economy", which includes discussion of this sort of thing.

I haven't read the book, but I did listen to an interesting podcast about it.
posted by HoraceH at 1:36 PM on November 5, 2013 [1 favorite]

Oh, there is a name for this exact thing, but I can't remember it exactly. The names I thought it might be, "False marginal benefit" or "false competitive advantage" turned out to be ungooglable. The example I used to hear all the time were of farmers gaining an advantage because of using hormones to increase the size of their cows and temporarily getting more money, but then when all farmers do it it decreases beef prices so their profit returns to where it was, but now the farmers are stuck using the hormones even though they are no better off for it.
posted by bswinburn at 1:50 PM on November 5, 2013

Race to the Top would be appropriate. You are making a slight error in that people are better off as a result of what is happening, in that the kids receive a better education. No relative advantage is created rise overall, but there is a general raising of standards. The term has been used in the literature concerning environmental legislation.
posted by biffa at 1:56 PM on November 5, 2013 [1 favorite]

Positional externality. From wikipedia - "Positional externalities refer to a special type of externality that depends on the relative rankings of actors in a situation. Because every actor is attempting to "one up" other actors, the consequences are unintended and economically inefficient."

Race to the Top would be appropriate. You are making a slight error in that people are better off as a result of what is happening, in that the kids receive a better education.

Except the tutoring tends to be about how to take a test, rather than about any academic skill or subject.
posted by Garm at 2:04 PM on November 5, 2013 [1 favorite]

A similar situation (which I learned from this book, which was written by a former colleague of mine) is the fact that people buy SUVs that sit high so that they can see over other cars -- though, of course, if everyone does that, you're no better off. An example of a similar situation in reverse is hockey players not wearing helmets (until they became mandatory) because they have slightly better visibility without them -- if the other guy isn't going to wear a helmet, you don't want to be wearing one either, despite the obvious safety issues.

I think you can refer to these collectively as "coordination problems."
posted by cider at 2:06 PM on November 5, 2013

The game theoretic terms for this are "crowding game" or "congestion game".
posted by Jpfed at 2:17 PM on November 5, 2013

This isn't a general term, but the Dragon Baby Boom is a similar scenario to what you are describing. Birth spike in 'lucky' year leads to fiercer competition for university entrance etc.
posted by Trivia Newton John at 4:03 PM on November 5, 2013

Fallacy of composition
posted by cupcake1337 at 5:29 PM on November 5, 2013

Basically, we are talking about negative network effects, right? (More people using a network leads to a negative effect of congestion. Like traffic.)

More specifically, I think your tutoring example would be a perfect illustration of a social trap. (In Game Theory, this is similar to the The El Farol Bar problem, too.)
posted by misha at 10:30 PM on November 5, 2013

Fred Hirsch, long-time editor of the Economist, wrote an entire book about this (Social Limits to Growth), and called it positional competition.

That book completely changed the way I view economies and economic hierarchies.

From the perspective offered by Hirsch, for example, I was able to see the post-Reagan desire of the very wealthy to become ever wealthier at the expense of everyone else and even at the expense of the aggregate wealth of society as a whole not as mere rapacity, but as a rational strategy to cope with rampant positional competition and keep it from getting worse.
posted by jamjam at 11:54 AM on November 6, 2013

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