Community poker and the emergence of coordination
By: Oliver Beige
Tags: Economy, Poker, Decentralization, Organization, Game Theory

Community poker and the emergence of coordination

Little game I played last week: community poker ♠️♥️♣️♦️. It’s like poker, but players can trade or pool their cards. Depending on how well the players know each other, we can get through all stages of exchange: informal (gift exchange), formal (bargaining & trade), hierarchical. Oliver Beige Nov 15, 2019·3 min read

It’s a 3-minute game that makes the jump from “parlor game” (what everyone else thinks of when they hear “game theory”) to strategic interaction, and sets up a very fast emerging exchange economy with wide-ranging compete/cooperate/coordinate ramifications.

Photo by Jack Hamilton on Unsplash

The theoretically optimal solution is in most cases to put all cards on one table and to figure out the combination that scores the most points. This usually runs into a variety of practical, often very pedestrian problems.

1. In a group of ~12 players, there’s usually not a table handy that gives all players equal access to solve the problem collectively.

2. Collective deliberations are not usually a productive way to solve combinatorial problems (the “restive classroom dilemma”).

A feasible solution in this case is to give every player a virtual copy of the available deck, let them work out a combination in private, and compare scores at the 2½ minute mark.

That’s very hard to conceive, execute and monitor (countercheck the best proposals) in 3 minutes.

Instead, as you’re wont to do in pressure situations, the group falls back to basic training which usually means it coalesces into subgroups with limited exchange between them.

We are now in the world of Herb Simon’s martian economy.

Depending on group structure and room setup, subgroups can form by affinity or proximity. Affinity means better in-group cohesion but worse inter-group relations. Proximity typically the opposite.

Chances are there’s a holdout player with a very good hand who refuses to share.

With groups around 3–4 players, you’re at the size where the members can collectively figure out the best they can do with the cards they have, and realize shortcomings they might trade in for “in the open market”.

Bigger groups means ad-hoc hierarchies (thin blue lines) emerge.

Even in the singe-table case it’s not necessarily the optimal strategy to have everyone just solve the same problem in parallel. Combinatorial problems are branch-and-bound problems, so assign root branches to players and let them explore freely.

Add redundancies as warranted.

What’s definitely not optimal is “poker dude” (always a dude) taking over bc professed domain expertise, and everyone else sitting by and eventually checking their cellphone.

But that’s exactly what happens in firms-as-skill-hierarchies.

The simplest ruleset for the game (“like poker, but you can 1. trade cards, and 2. pool cards and split gains”) leaves open whether trading cards means just swapping as needed, or if we should establish an exchange mechanism for, say, a swap between ♦️J and ♠️7.

Straight swap is still mutual gift exchange, and the time is too short to set up a formal exchange aka market (and group size too small to need one), but frictions will emerge since ♦️J is “objectively” more valuable than ♠️7, but the team lacking ♦️J might be more desperate.

The same frictions can emerge over the “pool and split” rule and initial endowments. Why should a player with better cards accept an equal share of the gains?

At this point, the group might start questioning the wisdom of the rules per se.

Lots more to read into this, but in 10–15 minutes incl. setup and tallying of scores we have built a rudimentary exchange economy that can be used to explain:

Game theory and the shift from “Berlin” (parlor games) to “Princeton” (economic interaction) Fundamental IO in Simon’s martian economy and the emergence of firms as consequence of task division and information sharing/withholdin Schumpeter’s “new combinations” Why game theory fuels “Silicon Valley” and the platform economy Fundamental concepts of allocation, exchange, and fairness The scope of informal/formal/hierarchical exchange.

What you hopefully don’t have to explain:

7. The role of aggression and trespass.