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Triumph Of Optimists Revisited By Yishen Kuik

Not sure if this has been explored on this list, but there are a great many parallels between trading and multi-player computer games. Since most on this list are older than I and unlikely to be playing computer games, I hope what I'm about to write is not too unfamiliar!

A game currently popular is "Day of Defeat", a WW2 based game where human players log into servers from all over to join either an Axis infantry squad or an Allies infantry squad. The squads then engage in urban warfare in a ruined European city. Everything that goes on in the game is determined by human beings against other human beings - you are not fighting some computer generated opponent like older computer games.

Parallels :

  1. Zero sum game. A player's kills (of opponents) and deaths are logged. This is a zero sum since one player's kills are another's deaths. Players that get killed too often soon realize they are in a game with superior players and will drop out to find an easier one. This usually results in a net positive kills for remaining players after some time, reflecting, literally, a survivorship bias.
  2. Personality determines style. A player has a choice of roles in the squad - rifleman, machine gunner, sniper, bazooka. No role is superior, and each player eventually plays a role their personality is best suited for. eg. those with great patience and want high risk-reward scores become snipers, those who seek action become riflemen and rush in groups, those who want to dominate become machine gunners, those who want to take out difficult positions become bazookas.
  3. Cooperation matters. A single player operating individually can be successful, but players who operate in groups (by communicating though an internet voice chat) are usually much more successful. They can relay to each other where the enemy sniper & gunner positions are to reduce their own death rate.
  4. Conceal your approach. Inexperienced players usually rush down the middle of roads or alleys. Experienced players usually hug the walls of streets, keeping crosshairs trained at each corner. This minimizes their exposure to the enemy and maximizes their kill rate since the corner is where you will first see the enemy appear.
  5. Human nature can be taken advantage of. Sometimes an experienced player will find a good spot to camp out and rack up kills. This is usually a high ledge, a low bush, or simply the area behind a door or next to the mouth of a tunnel. This takes advantage of certain human tendencies. When we walk forward, we do not look up, we do not look down and we do not look behind us. By standing behind a door when it opens and waiting for the enemy to rush through it, a player can shoot him neatly in the back when the door closes. This is a good risk reward spot, because it takes a while for the enemy to turn around and figure where you are, so even a bad shot has a good chance of killing the enemy.
  6. Knowledge matters. Dexterous players can score kills by accurate reflexes honed through practice. But players without great dexterity can also score kills by accumulated knowledge of tricks like 5) and a detailed knowledge of the terrain - where all the nooks & crannies are.
  7. Equipment matters. A player with a faster connection and more powerful computer has a slight edge.
  8. Information spreads. Once a player has scored a great many kills on the enemy by hiding out at a vantage spot, word gets around the enemy and they usually cooperate to take him out. This degrades the value of that spot as a good kill zone. An experienced player knows to rotate out of a good kill spot while the going is good before it becomes the next target for a bazooka or grenade.
  9. Scarcity has value. If everyone on your squad decides to be a sniper, then the number of kills available to snipers goes down drastically as the enemy learns after being killed a few times to avoid open areas and instead choose to go through alternate routes, like the sewers or alleyways. In such cases, you score more kills as a rifleman by meeting the enemy clustered in the sewers.
  10. Risk management. In a large game with many players, the kills come fast and furious and an inexperienced player finds it almost impossible to determine where the shots are coming from. Being killed seems like a random process due to bad luck. An experienced player knows that in such situations, it pays to be extra careful about being aware of where your exposes are - top, bottom, left, right, front, back. Because an enemy might pop up anywhere and deliver a bullet, you want to keep as many walls and ceilings around you as can so that you can limit the areas where a possible enemy might appear, and keep your crosshairs trained on those areas.

For those who have made it this far, the game is a rather amazing simulation of urban warfare, and a testament to the marvel of human achievement in technology - surely the chief ingredient behind the constant upward drift in equity valuations?