The Nash Equilibrium of Silicon Valley

A "Nash equilibrium" solution is one where, when both parties have considered all available moves, minimizes damage to themselves under the assumption the other player is a selfish dickhead. In a capitalist environment like America's, with no social controls or other factors besides ruthless logic, this is the default behavior. And it should be, if games are strictly competitive and humans are built like computers.

A "Pareto optimal" solution is one which, given all the possibilities of action, produces the best outcome for both parties (with some negotiable surplus).

The Prisoner's Dilemma demonstrates that a Nash equilibrium solution is not always Pareto optimal. The "confess-confess" solution is the Nash equilibrium. You will always be better off screwing the other person over, whether they are honest or dishonest. The "deny-deny" solution is Pareto optimal. If both parties can somehow trust each other, they will both be better off selecting this solution.

When someone like Elon Musk comes along, someone who is clearly is working very hard toward Pareto optimal outcomes (watch or read about his personal history), we simply cannot fathom that his actions can't be explained outside a traditional Nash-equilibrium, dog-eat-dog model of capitalism.

Of course, this applies way beyond Tesla. I believe the current skepticism around Silicon Valley's "Make The World a Better Place" mentality is deeply rooted in historical anxiety about institutional capitalism. I don't think this anxiety is misplaced. Rather, I think that technology, specifically the World Wide Web presents a "way out" of this dilemma. It will take time, but ultimately, the Web's power is that it can mimic the "accountability" aspect of local transactions, but on a global scale.

From Chris Johnson, whose blog I just stumbled across for the first time.

The unfortunate part of the Game of Thrones between the tech titans in Silicon Valley (Amazon, Apple, Google, Facebook, Twitter) is that the industry as a whole has tended towards Nash Equilibriums. 

In general, healthy competition is good for consumers, and I'm of that camp, especially when there is one dominant entity. In many areas, though, we have companies devoting precious resources to building out a near clone of another's company's services just for defensive purposes. It's not just an issue with patents. Is it critical that we have yet another streaming music service? Another mapping app for mobile devices? Is it good for consumers when services for one company are kept off another company's hardware/software ecosystem just for competitive reasons? So many of our best and brightest are building repeated work because of tribal (company) affiliation.