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Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC...

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Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB: WWW.PATRICKMCNUTT.COM DECODING STRATEGY (2014) MCGRAW HILL
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Page 1: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

Patterns & PredictionsPlaying to win v playing not to lose

PATRICK MCNUTT, FRSAFOLLOW ON @TUNCNUNC

WEB: WWW.PATRICKMCNUTT.COMDECODING STRATEGY (2014) MCGRAW HILL

Page 2: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

CREATING PATTERNS & DISCOVERING PATTERNS

• Information embedded in observed behaviour

• Information filtering and Individual memory is ‘outsourced’ stored in a computer or tablet

• Social life is stored in portable gadgets

• Behaviour is a ‘vibrational pattern’ in time and space

• What is your best friend’s mobile telephone number?

• We have become our ‘digital self’

• Find the pattern EXAMPLE: Daily Routine.

Page 3: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.
Page 4: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

OBSERVED: KEEPING TO THIS PATTERN …..MONDAY, TUESDAY, WEDNESDAY, THURSDAY

ON FRIDAY ………….?WEEK1, WEEK 2, WEEK 3

…….WEEK 4 ……………………………… ?

Page 5: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

WHY FOCUS ON PATTERNS?....• We live in an information age so filtering information from the patterns

• Understanding the pattern: is there order? Is there chaos?

• Discovering a pattern from a sequence of moves [everyday actions, everyday decisions].

• Observational learning: moves = signals = information.

• We live in a connected world: Less Independence v More interdependence

• Like the Oracle in The Matrix : ‘we cannot see beyond the choices we do not understand’

• EXAMPLE: Hegazy-McNutt Non-Linear Thinking

Page 6: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

Hegazy-McNutt ‘Non-linear thinking’ image…time continuum

Page 7: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

LEARNING VIA EXPERIENCE & BELIEF

In context’: meaning that in time you are observing a trade-off between departing from self-interest behaviour v empathetic behaviour & reasoning.

Like Samurai in a maku or the Roman castrum the players in a game are enveloped by the game dimension.

Cascade effect: meaning that at a point in time, observations and signals influence your belief system.

(i) ‘broken windows’ = signals disorder

(ii) queues for restaurant = belief system.

Page 8: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

RULES OF OBSERVED PLAY

We learn how to play the game using information rather than evolution (playing curve or learning curve].

Defection, dishonesty and cheating are the norm.

Co-operation [even with highest cardinal payoff] is not the norm..why?.......

• Dominant strategy to betray in a PD game

• Regret is irrational in a game

• Fooling (emperor moth) behaviour

• Dark strategy and belief system

Playing ‘in context’; EXAMPLE: theatre tickets

Page 9: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

DECISION A:You enter the theatre but you have lost your $10 ticket. Would you pay $10 for a new ticket?TOTAL COST $20

DECISION B:You enter a theatre to buy a ticket. But you have lost a $10 bill. Would you continue to buy a $10 ticket?TOTAL COST $20

LOSS AVERSION ‘IN CONTEXT’

Page 10: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

IN E

XPERIM

ENTAL G

AMES

IT IS

NO IN

A A

ND YES IN

BPE

OPLE

DISLIK

E LO

SING M

ORE TH

AN THEY

LIKE

GAININ

G

Page 11: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

Poker, Chess, Soccer, Business Decisions, Everyday life - ANY INTERACTION IS A GAME SITUATION

Playing a game without information

Playing a game with ‘good’ signals & a player’s type

What is the optimal move, given X?

How does the value of the signal vary with X under different actions?

Playing to win v Playing not to lose

Short term gain [compete] v long term benefit [co-operate]

Today’s decision depends on the one we shall make tomorrow. EXAMPLE Where to host the BBQ?

Page 12: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

SUN RAIN

HOUSE Regrets

OKAY & YES

Disappointment

GARDEN Preference Disaster

AVOID & NO

Page 13: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

GEMS AND T/3: OBSERVE SEQUENCE OF MOVES

1. Moves observed by rivals as a pattern, revealing your ‘type’ as a player…reveals insight into the company’s or organisation’s strategy

2. Can I trust you? Private information is not observable, only actions are.

EXAMPLE: US$ V RMB/Yuan

Economic & Financial Signals between US Fed (Bernanke [Yellen v Kohn or Yellen v Summers]) and China’s PBC (re-appointment of Mr Zhou)

EXAMPLE: Sony v Microsoft

Price Signals on entry of MS into video consoles/game.

Page 14: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

SIGNAL GAME US$ V RMB/YUAN

  Weak $ Strong $

Weak RMB NOFor ASLEEP: unable to export.

NoUS Congress: costing US jobs

Strong RMB YESSignals from PBC: when the period is right.

NONo QE: risk-off would impact.

Page 15: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

26 Oct 0015 Nov 01

14 May 02

15 May 02

13 May 03

14 May 03

29 Mar 04

1 Nov 05

30 Oct 05

PS2 launched at $299

Microsoft Xbox launched at $299

PS2 at $199.99

Xbox at $149

22 million Xbox shipped

TIMELINE – Pre 2006

Xbox at $199

PS2 at $179.99

Xbox at $179

PS2 at $149.99

11 May 04

100 million PS2 shipped

Xbox 360 launched at $399

22 Nov 05

Xbox at $179

6 Feb 06

20 April 06

PS2 at $129.99

27 April 06

Revised production schedule for Xbox 360 to 5- 5.5 million units by 30th June 2006

8 May 06

Announcement PS3 production schedule to ship 6 million units by 31 Mar 07 at $499

Page 16: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

LEARNING IS A ‘STRANGE LOOP’

Schelling move is to cooperate early in a sequence of moves and defect or cheat late.

Co-operation secures a win-win outcome

Turing Test: adapted for humans as homo ludens: ‘if a player convinces observers he might be rational, then it is fair to describe the player as rational’

People learn from (i) observing the decision of others, (ii) observing the behaviour of others and (iii) from private information + (i) and (ii).

Cascading towards a cartel…I think-you think-I think loop

Page 17: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

High Price

Player A

Low Price

Player A

High Price

Player B

Cartel, cooperation

B’s loss

Low Price

Player B

A’s loss Competition

Page 18: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.
Page 19: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

YOU M

AY B

E DECEIV

ED IF

YOU T

RUST TO

O MUCH, B

UT

YOU W

ILL LI

VE IN T

ORMENT

IF YO

U DO N

OT TR

UST

ENOUGH

FRANK C

RANE

Page 20: Patterns & Predictions Playing to win v playing not to lose PATRICK MCNUTT, FRSA FOLLOW ON @TUNCNUNC WEB:  DECODING.

Thank you for listening………

MARK TWAIN

‘IF YOU TELL THE TRUTH YOU DON’T HAVE TO REMEMBER ANYTHING’


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