Monday, February 11, 2013

Imperfect Information

Ed Smith, the former cricketer now writer, has discussed the issue of player rotation policy in cricket on the website Smith has highlighted the debate that is raging in Australia over what the national selectors dub "informed player management". The word "informed" is crucial, as the main point Smith makes is that the rotation, especially of fast bowlers, is based on "imperfect information". Because the three formats of international cricket and the demands they make on players have co-existed for only a few years, there is no bank of data relating to players from previous eras on which selectors, coaches, physios and sports scientists can draw. The best anyone can come up with in support of rotation and of managing players' workloads, argues Smith, is "an informed judgement".

The article is interesting in its own right, but what struck me about it was that his subject serves as something of an analogy for politics and economics and indeed for how most if not all of us live our lives.

In Spain, as elsewhere in Europe, imperfect information dominates. The country's politics and economics are tied to two projects that have always been exercises in operating on the basis of imperfect information, namely European integration and the Euro. It is possible to argue, just, that models existed for both projects, but they were far from perfect. The two projects have been experiments, and it is in the nature of experiments that not every outcome can be predicted. Experiments have an inherent quality, that of uncertainty. And uncertainty has a nasty habit of producing the unexpected, though if there is one certainty for any system developed on the basis of imperfect information, then it is that the unexpected will occur.

Sadly, there is no such thing as perfect information. If there were, then decisions would be very much more simple and straightforward than they usually are. To take the Euro and the possibility of Spain exiting it, there are plenty of commentators who claim to know what the outcome would be. But how can they know for certain? Just as the Euro was the product of imperfect information, so an exit would be based on imperfect information. It hasn't happened before. No one can say with certainty what the outcome might be. Two imperfects do not make a perfect; they can just as easily be doubly imperfect.

The current political situation in Spain is a different matter insofar as it is possible to draw on previous information, but that information, commonly what happened in the 1930s, is far from perfect. The circumstances are different today, especially because of European integration. An informed judgement which predicts a similar descent into chaos as occurred eighty years ago is one that uses the perfect information available to us of that period, but it cannot be perfect as it neglects the imperfections provided by contemporary circumstances.

That there are uncertainties surrounding both Spain's economy and political situation is undeniable. And managing these uncertainties is an almost impossible task, given the uniqueness of the circumstances and the very imperfection of the information on which to base decisions. But this is what governments are charged with doing. Even if they themselves don't know, they should give an appearance of knowing and of offering leadership that can at least go some way to ameliorating the stress of uncertainty within society. The Spanish Government is failing to offer this. Instead, it finds itself in the eye of a perfect storm, one that merely adds to the uncertainty.

There is another type of imperfect information. That which is dispensed and which can itself cause greater uncertainty. Set against the economy and the political situation, rules on letting out accommodation and on driving licences for foreign residents are trivial in the extreme. Recently, information in articles, far from clarifying the situation, has only served to increase uncertainty. On both topics, talk to anyone else who is supposedly in the know and you will get a different interpretation.

Yet, here are issues which should be easily enough understood as there should be a clear and unequivocal set of rules. So why does confusion dominate? Is it that governmental officialdom willfully ensures that information is imperfect? Perhaps so. Perhaps, because this officialdom operates under conditions of imperfect information, it expects everyone else to. Hence, you arrive at a situation by which no one knows for sure about anything: governments, citizens, cricket selectors. Everyone tries instead to make an informed judgement, the only problem being that the information is less than perfect. 

Any comments to please.

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