Watching QI last night, I was reminded of John Nash and game theory. Nash was the troubled mathematical genius portrayed by Russell Crowe in the film A Beautiful Mind. He didn't invent game theory per se, but he did invent an off-shoot of it - the Nash equilibrium - which, to put it simply, is where both players in a game are aware of the other player's ability and motives, and therefore play in a predictable way to maximise their own advantage.
In game theory, neither player will do better by changing their strategy - even if both would do better by collaborating - and, therefore, neither player will change their strategy even if it means losing out if the other player plays the same way.
In popular culture, game theory can be seen in TV shows such as Goldenballs (or its earlier incarnation Shafted), where players can choose to take or share the winnings. If both players share, they share. If they both choose to take, neither gets anything. If one takes and the other shares, the taker gets it all.
The Cold War is the classic example of game theory in action, which brings me to Adam Curtis's fascinating documentary The Trap: What Happened to Our Dreams of Freedom. In it, Curtis describes a game Nash invented called Fuck You Buddy, which could only be won if the player betrayed his partner. The whole documentary is on Youtube. This is the most relevant part...
Nash believed that humans were inherently suspicious of each other, hardly surprising since he was a paranoid schizophrenic. His was a gloomy and pessimistic view of the world, but it did not apply to the mass of humanity. In reality, we are more likely to collaborate than Nash thought. We do not always act in naked self-interest.
So what's this got to do with tobacco? Well, as Stephen Fry pointed out on QI, game theory can be applied to advertising. If one company is advertising, all the rest must do the same. But if no companies advertise, they can save money. And in the case of tobacco advertising, the state intervened to remove the competition. In effect, the state forced the tobacco companies to collaborate.
As Fry said, it should have been predictable who the real winners would be:
If neither of them advertised, they could keep the money and the market would remain the same. So what it resulted in is the bizarre situation where they banned tobacco advertising, and it was to the benefit of the tobacco firms because they were suddenly saved money which they were otherwise wasting.
It is almost heretical to say this, but the purpose of tobacco advertising is to make people switch brands (or to stick with the brand they are already smoking). Anti-smoking groups have long disputed this, saying that tobacco advertising exists to make people start smoking, but they have never produced any credible evidence to show that this is the case.
It is likely that the anti-smoking groups are wrong. The US has a lower smoking rate than the UK, for example, despite cigarette advertising (in print) being legal in the former but not the latter. Cigarette sales also happened to go up in both countries after cigarette commercials were banned on TV.
In truth, cigarette advertising does little more than give different brands a chance to compete. As I said in Velvet Glove, Iron Fist, the biggest winner from the clamp-down on cigarette advertising in the 1970s was Philip Morris, because they happened to be top dog at a time when competing brands were prevented from gaining market share. It is no coincidence that Marlboro has been the world's top-selling brand since the early 1970s. Other brands simply cannot compete on anything other than price (eg. Lambert & Butler).
There are cigarette companies that would love to see tobacco advertising reintroduced, but not the big ones. As so often happens, the anti-smoking groups have inadvertently done Big Tobacco's work for them.