tag:blogger.com,1999:blog-3585028625507474093.post2960466512656546768..comments2023-10-17T15:56:22.827+01:00Comments on Velvet Glove, Iron Fist: Game theory and cigarettesChristopher Snowdonhttp://www.blogger.com/profile/15963753745009712865noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3585028625507474093.post-75286086420807743522009-12-17T10:16:01.299+00:002009-12-17T10:16:01.299+00:00Excellent post, saved me the trouble of writing it...Excellent post, saved me the trouble of writing it.<br /><br />Funnily enough, a few years ago, spirits manufacturers declared a similar truce, saying that they would no longer advertise on TV, they appear to have abandoned that recently, as there are loads of adverts for spirits on TV again.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-36812077793551269022009-12-17T01:26:03.174+00:002009-12-17T01:26:03.174+00:00Here's the link. WS
http://video.google.com/v...Here's the link. WS<br /><br />http://video.google.com/videoplay?docid=6413987104216231786&ei=SIcpS6XeNqCVlAei5a3WBQ&q=the+blind+watchmaker&hl=en&client=firefox-a#docid=-3494530275568693212Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-13648953034931003432009-12-17T01:24:51.378+00:002009-12-17T01:24:51.378+00:00I'm not able to watch the episode of QI here i...I'm not able to watch the episode of QI here in the US. However, there is a good example of game theory and the Nash Equilibrium in Richard Dawkins' documentary "Nice Guys Finish First" at 10:30 at the link below.WSAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-1608510099966934922009-12-16T21:49:44.632+00:002009-12-16T21:49:44.632+00:00Christopher,
The assessment that the cigarette co...Christopher,<br /><br />The assessment that the cigarette companies benefited from a ban on expensive broadcast advertising is compelling. They also seem to have benefited from warning labels (as you have noted) and probably even the MSA. Of course, any of these might have been good for public health too, so the only people who are really bothered are probably those more interested in hurting the industry than in helping people.<br /><br />A more specific reference for the game theory phenomenon you cite is to the game called the Prisoners' Dilemma, which there is an extensive literature about. The Nash equilibrium of that game is the one you describe, where both players are worse off than they would be if they could collude/cooperate. <br /><br />Also, the game theory of the cold war is best attributed to Thomas Schelling and the inventor of modern game theory was John von Neumann. <br /><br />As for the hope that some had that reducing advertising would reduce sales, I think the best explanation is the fallacy of composition that Krugman blogged about just today (http://krugman.blogs.nytimes.com/2009/12/16/would-cutting-the-minimum-wage-raise-employment/?8ty&emc=ty): It is definitely true that if one company stops advertising it will lose sales. What is not necessarily true is that if all companies stop advertising that they will lose sales in total.<br /><br />--Carl V PhillipsCarl V Phillipshttps://www.blogger.com/profile/01919902852457771666noreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-70904373752179390982009-12-16T17:22:00.643+00:002009-12-16T17:22:00.643+00:00A Nintendo or a Wii offers an easily identifiable ...A Nintendo or a Wii offers an easily identifiable benefit; having fun playing games. Food advertising would undoubtedly be an exclusive matter of getting people to switch between particular brands of food. Food advertising obviously doesn't make people take up eating.<br /><br />The situation is obviously somewhat different when it comes to smoking. Non-smokers are not particularly interested in tobacco products at all, and probably pay little attention to the advertising. The reasons that non-smokers become smokers seems to have little to do with advertising. Rather, people are more likely to try smoking because people they know smoke, and there's a social benefit because smokers commune over smoking. Non-smokers are largely left out of that, and it doesn't escape their notice that they've chosen not to partake in smoking while smokers seem to enjoy the experience quite a bit.<br /><br />So, it seems to me that people who take up smoking are likely to smoke the brand that is most readily available to them via other smokers. This is also likely to be the brand most heavily advertised in a particular area. After they've started smoking, smokers will sometimes switch brands in response to advertising.<br /><br />This would account, in part, for the prevalence of menthol brand use amongst blacks in America. The idea that a person's skin color makes it more likely that they'll like menthol seems implicitly racist to me, as does the call for menthol to be removed from cigarettes by anti-tobacco activists. I would speculate that menthol cigarettes more popular amongst blacks because of a past price preference. In other words, when the tobacco companies tried to market menthols, they were unpopular at large, but the promotional prices were attractive to people living in poorer areas. Then excess supply allowed for the lower prices to continue as the menthols were sold at markdown. Also, the Newport brand used to give away promotional items like T-shirts with the purchase of a carton of cigarettes. Since blacks make disproportionately lower incomes than whites, blacks would be the most likely to buy the cheapest cigarettes. In this case, menthols. And once menthol brands became the most readily available from existing smokers, they also became the first brands tried by new smokers.<br /><br />So, where would the tobacco companies then most heavily market menthol cigarettes? In poor and black areas of course. So, it would be hard to distinguish between the effect of advertising and the prevalence of brand use, and one would seem to cause the other when no such thing is really happening.<br /><br />Of course, I have no study to reference to prove this. There might be some internal tobacco company info on it somewhere. Nonetheless, doesn't this make a whole lot more sense than thinking people with darker skin have an unexplainable preference for menthol tastes? WS.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-40994182973313537612009-12-16T12:35:20.850+00:002009-12-16T12:35:20.850+00:00Interestingly, the vast levels of taxation on ciga...Interestingly, the vast levels of taxation on cigarettes means that competing on price is becoming increasingly difficult, thus cementing the market share of the main brands.Brian, follower of Deornothhttps://www.blogger.com/profile/11941277617617928470noreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-25329512358284690312009-12-15T15:47:42.600+00:002009-12-15T15:47:42.600+00:00Hmm.
Never been overly convinced on the 'but ...Hmm.<br /><br />Never been overly convinced on the <em>'but advertising is only to compete for a fixed market share, not to attract new customers'</em> argument. It implies the existence of an exclusive selective effect for advertising that is contrary to marketing theory and pretty implausible in effect.<br /><br />Nintendo don't go mad on the big pre-xmas media ad-rush to exclusively attempt to convert x-box and playstation owners to buy a wii. Of course they try to get Microsoft and Sony's customers <em>and also</em> to expand the market by creating new games console owners (ensuring of course that they enter the market by getting a Nintendo).<br /><br />Anybody who's had their kid moaning on endlessly about the next new thing they want because of a well-placed targetted TV ad in the middle of an afternoon kid's flick will tell you that.<br /><br />Also, a brief pubmed search turns up <a href="http://www.cochrane.org/reviews/en/ab003439.html" rel="nofollow">quite few studies</a> on cigarette advertising that are longitudinal in design - evidence that advertising encourages uptake?Unknownhttps://www.blogger.com/profile/16147710985488076023noreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-48305376962754782562009-12-15T13:08:51.491+00:002009-12-15T13:08:51.491+00:00Interesting piece. Yesterday I was reading Armchai...Interesting piece. Yesterday I was reading Armchair Economics by Steven Landsberg, which devotes a section to businesses favouring restrictions on their trading opportunities. Butchers in Chicago once supported a proposal to limit shop opening hours because they wanted more leisure time.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3585028625507474093.post-30474020968638254892009-12-15T11:12:51.031+00:002009-12-15T11:12:51.031+00:00And, as I point out here, exactly the same would h...And, as I point out <a href="http://curmudgeoncolumns.blogspot.com/2009/11/november-2009.html" rel="nofollow">here</a>, exactly the same would happen in the alcohol market if advertising were banned or severely restricted. The market share of the existing big brands would be set in stone, and the opportunities for new entrants choked off.Curmudgeonhttps://www.blogger.com/profile/02558747878308766840noreply@blogger.com