Monday, August 16, 2021

Can predictions create their own reality?

The owner of a chain of toy shops has warned the Observer that demand for popular toys may outstrip supply this year. Thus parents who leave important purchases until shortly before Christmas may experience frustration and/or higher prices.

While there may be valid reasons why this year may be more difficult than usual, thus justifying the coverage that this warning has been granted in many other news channels, both in the UK and the USA, it is also worth noting that the sources quoted by the Observer (described as "seasoned figures in the toy industry") are not exactly disinterested observers, and clearly stand to benefit from the early purchasing behaviour that this warning is intended to stimulate.

The point I want to make here is that warnings of shortages can often result in the very shortages they are warning about, and this effect may not always be unintended.

But we have also seen the opposite effect. When "seasoned figures" announce that supply is robust and there is no danger of shortages, people often buy extra anyway, just in case the announcement is false. The paradox here is that under certain conditions two opposite statements may produce the same outcome. I mentioned this paradox in a talk I gave at a philosophy seminar over thirty years ago.

 


 

Louis Ashworth, Parents told to buy Christmas toys early to beat shortages (Telegraph 29 July 2021)

Michael Savage, Toys could be in short supply this Christmas, so get buying now, industry warns (Observer via Guardian website, 15 August 2021)

Joan Verdon, Shipping Container Crisis Could Derail Holiday Toy Sales (Forbes, 3 August 2021)

Richard Veryard, Speculation and Information: The Epistemology of Stock Market Fluctuations (Invited presentation, King's College London, 16 November 1988). Warning - the theory needs a complete overhaul, but the examples are interesting.

Related posts: Trolls are like ghosts (December 2020), On the performativity of data (August 2021)

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