So… I went to the market today - I can hear you gasping already (something along the lines of “OMG CHEWXY GOES TO THE MARKET?”). And it was crowded. That’s all about markets and crowds. So there.

What, you expected more? Oh well… To go to the market, I have to take a ferry and then a bus. About 3 months ago, the city council has added a new bus service that goes directly from the ferry to the market. Before this, there was only a bus that stops a few blocks away from the market. And you had to walk (yes, walk, you car driving buggers) to the market.

I do frequent the market (though not in past couple of weeks, as I’ve been quite busy), and I’ve noticed something. When the city council first introduced the direct bus, nobody (except my housemates and I) seemed to know about it. As the weeks go by, more and more people know about the direct bus service, and more people used it. People still used the old bus service (which went to the city), but more are using the new service anyways.

This is, in its own, some form of a free market at work. Assume for the moment that both bus services are provided by different companies. The one that goes to the city is one that charges higher than the other. Think about it this way- walking several blocks to the city cost more time (and time is money).

So obviously, the rational consumer would chose the bus service that costs less. Of course, there will be some who can afford to spend more time walking and would be indifferent to the costs. Nonetheless, it is interesting to know that the network effect is at play (not odd, considering the bus service is a service). The very fact that an entire service direct to the market was created shows that critical mass has already been achieved.

As someone interested in markets, obviously a very curious point to note would be the equilibrium point. Assuming that supply is constant, demand shifts because of changes in price. Now that there is a new, less costly (i.e. in terms of time) service, how would the curve shift? Maybe one day I’ll find the time to work it out (read: I’m too lazy to compile supply and demand schedules).

Now, as I said earlier, the market this morning was bleeding crowded. Now please do note the differences in the pictures below:

If you have not noticed the differences, here it is: In the first picture, everyone (me included) was walking on their right, while in the second picture, everyone was walking on their left.

While at first, it doesn’t seem anything remarkable, consider this: they’re on different stretch of the same place, and week in week out, its the same thing happening.

The way the market is organized - in a single lane with stalls on both sides - means that it would potentially be very messy (I’m walking on this side, and the stuff I want is on the other side). But more often than not, the way people walk in the market is very very organized. I guess what this is what James Surowiecki called Wisdom of the Crowds - a self organizing system that is devoid of any top-down planning.

But surely you’d notice that in the two pictures above, people walk in opposite directions - which seems to imply that what I said in the paragraph above is null and void. But that is exactly the point. There are points in the market where its simply too messy and crowded to walk. Those are the cross-points, where the two streams cross each other. One moment you’re walking on the right, and after the big mess, you find every one walking on the left. Such points are where the food stalls are. Somehow food stalls induce people to cross streams and change their walking sides.

Other than the cross points (I blame you, delicious crepe store!), the crowds seem to be rather self-organized - which is an interesting thing. If you look at it from a GT point of view, the Nash Equilibrium is that both parties on the same side (if you take mixed strategies into account there is something wrong with you). It seems that at some point, there is some sort of a built-in Nash Equilibrium calculator in all of us, innate and hidden. Points to ponder upon.

And for the record, I am on the fence on wisdom of the crowds. It works very well when it is ungamed. The thing is, people love to game services/systems that uses wisdom of the crowds - you know, stock market speculation, HubDub cheats, Digg (I wouldn’t call Digg a system that utilizes wisdom of the crowd) gaming, StumbleUpon (this is closer to WoC) gaming… etc. IMO, there are only two ways to fix this currently: Outlaw gaming (like how stock markets outlaw speculation, or Digg’s new (easily broken) algorithm), or you outgame the gamers. There is one other method that may actually be tested though. More on that soon.

Hmm.. I seem to be rambling a lot. And from the looks of it, I don’t even seem focused enough to write on a single topic. Gah. Back to studying macroeconomics!! DIE! RBC! DIE! *stabs notes.

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