How do Chennai-ites quarrel over water?

Game theory and its implications is one subject that never fails to amaze me by both its simplicity and profoundness. The recent Nobel Prize in economics awarded to Robert Aumann, a mathematician based in Jerusalem and Thomas Schelling, an American economist for their work in game theory highlights the richness and diversity in this subject.

Game theory is a theory of choice, where decisions players make affect one another. Aumann’s contribution is that cooperation between players is possible if the game prolongs infinitely often, but players compete if the game goes for a finite period of time. How?

Coming from a water starved city like Chennai, let me quote a normal quarrel that happens between neighbors: the bore-well problem. Suppose our neighbor installed a bore-well and a booster pump, which sucks up water twice as fast as the normal pump. When both of us had normal pump, we got 10 liters of water each. Now that he has a booster pump and we don’t, he gets 15 liters and we get none. (Assuming 5 liters gets wasted when booster pump sucks water furiously).So we have no option but install bore-well ourselves, and now both of us end up getting 5 liters each. (5 liters wasted per pump)

In the long term, this is a suboptimal solution (5 vs. 10). So we enter into an agreement where either of us won’t switch booster pump unless the other person switches it on the previous day.

Thus, if the game goes on infinitely, the players cooperate. What if the game is for finite interval? Suppose our neighbor vacates his place next Sunday, he will switch on the last day, because he has no motivation to do otherwise. Anticipating this, I’ll switch the motor on Saturday, which he anticipates on Friday…and the entire thing unravels.

Schelling’s work is on the formal theory of deterrence and retaliation, where paradoxically, the player is better off by making his response uncertain. The Spanish general Cortez who colonized Mexico burnt his boats on arrival demoralizing his adversaries because they knew that his army could not retreat.

The works of Aumann and Schelling demonstrates the subject’s breadth and depth.

I love orkut!

Do I have to tell you what orkut is? It’s popular software for networking with friends. As I am a slow adapter to new technology, it took so long for me to appreciate it. Appreciate? I couldn’t have enough of it. Met some long forgotten school friends, and felt we were never away.

Profile? Naah, I don’t believe in writing about myself. After all I have a blog to do that. But one thing I like about orkut is the testimonial. People don’t just love, but crave to hear what others, particularly their friends think of them. You may not be Wordsworth, but do write a couple of lines about them, good and bad. They will really appreciate it.

Happy scrapping!

Big is beautiful

We live in an era of transnational, the likes of Wal-Mart, Exxon, Microsoft and Toyota, (mega institution is one which earns more than 10 billion dollars in revenues annually and has more than 100000 employees worldwide). In the last few years, the trans-nationals have managed to earn more revenue per worker than the smaller companies, and improve its profit margins dramatically. Companies like Microsoft and Exxon has managed to improve its profitability without any drastic increase in workforce, while companies like HSBC, GE, Toyota and IBM has managed to increase the profitability faster than the increase in workforce. There are 4 companies (Toyota, GE, Citigroup, and IBM) that employ more than 200000 people and earn 20000 dollars or more per employee (McKinsey studies). These companies have managed to overcome the complexity that comes along with size and grow faster their smaller peers. How?

The companies previously were leveraging their scale and scope to control supply chains and means of production. Ford, which took economies of scale to an extreme, at one point of time owned rubber plantations in Amazon for tires, rail wagons to transport them, tire, steel and assembly plants and planned eventually to sell and service Ford cars (though they never did). This proved a disaster.

Now companies are not just selling of their loss making units, but selling off their reasonably profitable ones as well, in preference to their high margin businesses. Citigroup sold off its cash cow Travelers insurance business to Met-life to concentrate on their core banking business. GE, which were traditionally manufacturing, gathered sufficient experience in financial services and now predominantly a services company. So is, IBM, which is moving away from manufacturing (at one point of time, it got a measly 1% ROI on its manufacturing business) to business consulting. It is rumored that in Japan, Toyota intends to market its manufacturing consultancy to non-car companies.

The more significant move was to find and tap the knowledge base of the people. Rockefeller found it difficult to find people who knew even basic accounting and awareness of most commonly used business terms. That is hardly the case today. Companies are trying to make sure they make the systems simple and management decisions consistent so that the ideas of employees aren’t lost in the bureaucratic maze.

The big is beautiful in India too, it’s the big Indian IT companies like Infosys and Wipro that are clocking faster growth in workforce and bottom-line than their smaller counterparts.

What do mega-institutions mean to India?  IT companies are thinking about relocating abroad due to skills crunch, even when there are 5.3 million unemployed grads at home. If Infosys has any chance of becoming an Accenture or IBM, the government must make sure that there are employable graduates in the country. Already, the services are raising their headcount faster than any other sector. It’s high time the supply steps in.

Cheap workforce like China’s is not the recipe to superpower status, quality workforce is.

Evolution of CP

CP means class participation. You may think that it’s such a frivolous topic and the person must really be jobless to write on it. But it will amaze you that it’s one of the hottest topics in IIM.

If you have a question, you raise it, don’t you? It’s much more complicated than that. One, we have a system that rewards CP albeit a small cut in total (5%). Then you have a suspicious bunch of fellows who frown on anything more than acceptable level of CP (though the question of what is acceptable is as yet unresolved); To complicate matters further, a professor who mistakes CP as interest in his class and addresses the rest of the session to you, so there is loss of opportunity to do productive work, like snooze.

What do you do in this dynamic environment? This must be the evolution of CP.

Stage 1: Dumb/Passive CP: This is the lowest level. Here, you do a CP to clear your doubts. Unfortunately, yours truly is at this stage. ‘Sir, I don’t understand this’, ‘Could you repeat that?’ and so on. The advantage is that you don’t face jealous friends, if anything you get a lot of sympathy. Poor chap can’t get this one. Disadvantage, showing ignorance is nothing to be proud of.

Stage 2:  Frivolous CP: At least here, you recognize that you want the cut, but you make such frivolous comments which annoy classmates. Whatever question is posed, you give a lot of chaff.
Advantage: Most of the time the prof is confused. He neither accepts nor rejects what you said. Disadvantage: Face the wrath of your buddies.

Stage 3: Intuitive/perceptive CP: Here you try to predict what prof is about to say next, and ask the question ‘what about…’ whatever he was about to say. Now, prof is real impressed. But if you can predict his next line, so can others. They will sulk, if not annoyed.

Stage 4: Strategic CP: Here, you paraphrase what prof said or agree with him without making it too obvious. Eg. When communication prof said ‘Write clearly and precisely’ Tomer replied ‘Yes Sir, this is something everyone say but no one follows’. As such, you can’t call that a CP. You tend to ignore it. So there is no ill will among the buddies. But, at a psychological level, you reaffirm what professor said. He doesn’t reply, but forms a very positive view of Tomer. This is the highest level of CP which everyone should try and achieve.

Happy new year

Well, it’s been almost a fortnight since I wrote something. As if I do nothing more than stay in my room and vegetate. It’s almost true, but I did do something this Jan 1st.

A 21 year old going on a pilgrimage in south India on the new year eve instead of partying all night may sound too conservative, or price you pay for being born to a religious parents, or is it?

Temples aren’t just places of worship. They are a gentle remainder that we mortals, who revel in our technological achievements, couldn’t build things which last a century or a plane crash; Remainder that we mortals aren’t capable of thinking beyond our present, leave alone a millennium; that we still aren’t able to bring the best out of human potential that a Rajaraja chola could. Mere rewards couldn’t have produced these temples.

Some ‘experts’ say that the kings in south India amputated the architects after they constructed these temples, so that they couldn’t be replicated. It’s hard to believe that any of these masterpieces could have been constructed in a cruel ruler’s time. You can control a man’s hand, not his spirit.

We visited our small ancestral temple at thandanthottam near Tanjore, which finds a mention in Sundarar padigams (hymns) which dates the temple to atleast 8th century AD. The temple is now dilapidated and cries for attention, and only recently has some work started. Rich temples like tirupathi should donate funds to such temples, instead of going on building newer temples, which are basically cash cows for them.

We then visited Tanjore Brihadeeshwara temple or big temple as it's popularly known, is one of the architectural wonders of the world and Unesco’s world heritage site.

What is so special about this temple? The 10th century temple (shown in picture) is constructed in such a way that its shadow doesn’t fall on the ground, no matter what time of the day it is. Also, the cupola (dome) is carved out of a single stone weighing 82 tonnes moved along an inclined plane 6 kms long.

Nandi (the bull facing the temple in the picture is 12 feet high, 19.5 feet long and 18.25 feet wide and carved out of a 25 ton stone.) is the vehicle of Lord Shiva, and supposedly the head of the ghosts who worship him. All temples before this one had a small nandi. Legend has that Rajaraja chola wanted a temple and a nandi that is mighty, because no ghosts fear a puny nandi! So the temple rightfully came to be known as big temple.

So my pilgrimage is not essentially one of religious nature, but that of a curious visitor who has never become used to such marvels as to not gape in amazement. The pictures painted in the inner walls had long stood the test of time, but when I went there, there were scribbling on the pictures like X loves Y, Z came here on so-and-so date (!) by our mortal peers, who wanted to immortalize their whatever. May their souls rot in hell.

Happy new year.