Discipline. That’s the stuff you learn in the army. There is apparently a true story about a visiting major who went for a meal in the officer’s club, and asked the chef, “What’s good here, soldier?” The chef snapped to attention and said, “Discipline, Sir!”
But then over time, gold companies got to realise that if they all pulled as much gold as they could out of the ground, the price of gold would decline, nullifying the advantage. Amazing! The trick was to somehow convince everyone else to stop producing so much gold, while at the same time, producing more yourself.But there is a contradiction here too. What gold producers are selling is essentially pessimism.
What the prisoner’s dilemma shows us is that loyalty to your partner is irrational, and the reason is simple: people tend to gravitate toward certainty. The consequences of betrayal could be serious, but they are certain, whereas trusting your partner is uncertain even if the consequences could be the lightest on offer.You get the drift: it would pay gold companies to cooperate and not produce more gold than the world wants. But historically, they never did that.
But then a really incredible thing happened: gold producers became irrational, in prisoner’s-dilemma terms, and started cooperating. Or perhaps they weren’t actually cooperating so much as they became very conscious of the consequences of overproduction. Whatever. They found discipline. The result is that gold production since 2015 has more or less flattened at 3,100 metric tons a year. In fact, production last year, and in 2015 was exactly that.
Interesting article. Just love the conundrum of the prisoners dilemma. The psychology of it is fascinating. I do have a theory about gold but there's nothing to be gained by sharing it. People's beliefs about gold boil down to love it or hate it and nothing in between.
Singapore Singapore Latest News, Singapore Singapore Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: News24 - 🏆 4. / 80 Read more »