A Model Of Coordination Risk
A Model Of Coordination Risk
Earlier, when looking at Dependency Risks, we looked at various resources (time, money, people, events etc) and showed how we could depend on them taking on risk. Here, let's consider the situation where there is competition for those dependencies: other agents want to use them in a different way.
Law Of Diminishing Returns
One argument for coordination could come from Diminishing Returns, which says that the earlier units of a resource (say, chocolate bars) give you more benefit than later ones.
We can see this in the chart above. Let's say A and B compete over a resource, of which there are 5 units available. For every extra A takes, B loses one. The X axis shows A's consumption of the resource. While the biggest benefit to A is in taking all of the resources, the greatest increase in benefit comes from the consumption of the first unit.
As you can see, by sharing, it's possible that the total benefit is greater than it can be for either individual. But sharing requires coordination. Further, the more competitors involved, the worse a winner-take-all outcome is for total benefit.
Just two things are needed for competition to occur:
- Multiple, Individual agents, trying to achieve Goals.
- Scarce Resources, which the agents want to use as Dependencies.
Coordination via Communication
The only way that the agents can move away from competition towards coordination is via Communication, and this is where their coordination problems begin.
Coordination Risk commonly occurs where people have different ideas about how to achieve a goal, and they have different ideas because they have different Internal Models. As we saw in the section on Communication Risk, we can only hope to synchronise Internal Models if there are high-bandwidth Channels available for communication.
You might think, therefore, that this is just another type of Communication Risk problem, and that's often a part of it, but even with synchronized Internal Models, coordination risk can occur. Imagine the example of people all trying to madly leave a burning building. They all have the same information (the building is on fire). If they coordinate, and leave in an orderly fashion, they might all get out. If they don't, and there's a scramble for the door, more people might die.
