Price of anarchy, a price worth paying

In game theory, the "price of anarchy" describes how individuals acting in their own self-interest within a larger system tend to reduce that larger system's efficiency. It is a ubiquitous phenomenon, one that almost all of us confront, in some form, on a regular basis.

For example, the centralized, top-down approach to traffic management in a city, which comprehends the entire system, identifies choke points, and makes changes to eliminate them. This is more efficient than simply letting individual drivers make their own choices on the road, with the assumption that these choices, in aggregate, will lead to an acceptable outcome. It makes better use of all the available information and reduces the cost of anarchy.

The world today is awash in data. In 2015, mankind produced as much information as was created in all previous years of human civilization. As the inter-net expands into new realms of physical space through the inter-net of things, the price of anarchy will become a crucial metric in our society, and the temptation to eliminate it with the power of big data analytics will grow stronger.