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March 16, 2006
Wilt Chamberlain and Pokemon
Robert Nozick, a recently passed philosopher who provided secular, philosophical justification for libertarian justice, had a famous gedankenexperiment about income inequality.
Consider a world where everyone has equal initial income but unequal distributions of talent. Such is the proposed just distribution by Rawls, someone with whom he strongly disagreed. In such a world, there arises a Wilt Chamberlain, an amazing basketball player who towers literally and figuratively above the other players.
Wilt Chamberlain will only play if each person coming to see the game pays him twenty-five cents. This is above and separate from the ticket price. Over a season, a million fans pay him a quarter. Now Chamberlain now has about $250,000 more than any of his fans do. Since the initial distribution is just, and the final distribution happen with a series of voluntary transactions, this new distribution must also be just.
But what if Wilt Chamberlain wasn't a lot better than other basketball players, just enough better that everyone knew it and were still willing to pay him a lot extra to play. In a society where this is widespread this is equivalent to saying that there are sharply increasing returns to ability. This is sometimes called a winner take all society.
In the real world this is a difficult hypothesis to test. Precise measurements of true talent, performance, and initial endowments of wealth would be required. A more controlled situation is required. Consider the value of Pokemon trading cards. You can learn to play online, but each card has certain easily observable endowments of talents. Some cards are powerful (some in general others in specific situations) and others are not. Some are rare and others not. All this is known. A perfect strategy might not exist, but there is wide agreement on the in-game value of cards. Although the cards are randomly distributed in packs, there is a liquid secondary trading market. I saw over 21,000 auctions on Ebay when I checked. Examination of price verses performance found that the highest quality cards have a higher resale value than their quality would predict.
The authors of the paper don't explore all the reasons for this. My hypothesis is relates to the distribution of prizes in tournaments. I couldn't find any recent prize comparisons, but I assume it is like that of other game competitions. The winner is whoever wins that the end of a series of 1 on 1 games. Second place is the loser of the last match, and so on. You only need to be marginally better than your opponents to win, but the prizes fall off steeply. The winner may be 1% better, but he gets 100% or more value in prizes. Because of this log-normal prize distribution, the expected play advantage from from the best cards need only be small to justify a massive difference in prices.
Posted by OneEyedMan at March 16, 2006 9:32 AM
Comments
I bet your idea of prizes is correct (although maybe understates... as also social benefits to winning vs a good performance relatize to spending...).
Posted by: -M- ![[TypeKey Profile Page]](http://www.belligerati.net/nav-commenters.gif)
at March 16, 2006 5:36 PM
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