I’m preparing an introductory course on game theory at the moment, and selecting readings for the week on communication and games of limited information. One of the key contributors to this literature is Joseph Farrell (no relation) who has done seminal work on how “cheap talk” (costless communication) may affect rational actors’ behaviour when it conveys useful information about an actor’s type. He also shows that “babbling equilibria” are always possible, in which actors’ communication conveys no information about their type whatsoever, and is consequently always ignored by others. This seems to be a rather abstruse argument with little real world relevance – but I reckon that one nice way to bring it home to my students is to point to how it helps explain DC taxi-cabs. In many (perhaps most) cities, cabs use their cab-sign to signal whether they are available or not. A lighted cab-sign indicates that the taxi-cab is free; an unlighted sign indicates that the cab is occupied. Washington DC, for some reason, is different. As far as I can tell, whether or not a cab’s sign is lighted bears no relationship to whether it is occupied. Thus, after some initial confusion, newcomers learn to ignore whether the cab has a lighted sign or not, instead squinting as best they can into the interior, to see whether they can spot any passengers. This is about as close to a babbling equilibrium as one may reasonably expect to find in the real world. How this came about in DC, and not in other American cities, is anyone’s guess.
{ 15 comments }
Guy 08.03.04 at 6:45 pm
Interesting. My gut instinct tells me that there must be lots of cases of uninformative signaling out there, but now that you mention it I can’t really think of any.
Guy 08.03.04 at 6:51 pm
What about the US Dept of Homeland Security’s color-coded alert system?
P O'Neill 08.03.04 at 7:52 pm
Comment #2 from Guy v. funny. But if one is to take seriously potential examples for Henry’s course, it needs to be clear what the strategic interaction is i.e. what makes it a game as opposed to just being a noisy signal without any feedback from the other party. Or put another way, in J. Farrell’s work, do both sides babble?
But anyway, those DC cabs — how about another quirk, which I think is special to DC, of honking at all unaccompanied females on the street, especially at night, on the assumption that they must be looking for a cab?
eszter 08.03.04 at 7:56 pm
Reminds me of this thread.
Chance the Gardener 08.03.04 at 8:11 pm
Pulled-From-Nether-Regions-Theory:
The lighted signs on cabs are connected with the meters. So, when the meter is on, the light is off, and vice versa. Which makes it into a fine indicator on whether a cab is occupied.
However, if it has not changed in the dozen or so years since I went to school in Washington, cabs use a zone scheme to determine fares. So your fare is resolved by how many geographical zones you cross to arrive at your destination. (I remember walking a few blocks to save myself cab fare by crossing the zone boundary on foot.) If I recall, cabs didn’t turn on their meters unless you were going out of the city, where it became a more customary fee-per-mile transaction.
Soooooo, there you go. When meters are connected to cab lights, the signal becaomes a meaningful one- but when the cabbie doesn’t use the meter, like in D.C. proper, the light never goes on.
benton 08.03.04 at 8:24 pm
I think Chance Gardener is right about the zone system. But what that does is place a strategic advantage in the driver’s hands. The zone system and DC geography couple to create price distortion such that means that many trips to the near suburbs aren’t a good payoff because there is little likelihood of a fare coming back. So cabbies are able to use the off duty sign to pick and choose among their fares. You get the “sorry, I’m off duty on my way to pick up my kid and if you were going to wherever [which really means the airport] I would have helped you….” This happens to me all the time. Come to think of it, I don’t know that the effect of the zone is that much different than whatever happens with meters and the near suburbs to create some kind of threshold. I suspect that this and the other more racially motivated [i.e. don’t want to go to Southeast or other “high crime” neighborhoods] picking and choosing is what the drivers really like. Its not babbling. Its strategic ambiguity
etc 08.03.04 at 8:27 pm
Cabs in DC don’t have meters at all, so their use/non-use doesn’t explain the inconsistent sign lighting. It really does appear to be utterly random, in my 5 years of observation, anyway. For a while I guessed that a dark sign meant ‘off duty’ (or going off duty after the current fare), but enough counterexamples suggest this has nothing to do with it.
And DC cabs honk not only at unaccompanied females, but just about anyone coming out of a building. And slow to a crawl, and stare at the pedestrian until eventually waved away.
Is this another babbling equilibrium, in which the pedestrians’ communication (stepping onto the sidewalk) conveys, in the eyes of cab drivers, no information about whether or not they want a cab?
Chris 08.03.04 at 10:21 pm
Just as an aside, in Chicago the cabs have a “Not for Hire” light that goes ON when they are, in fact, not for hire. The words are too small to read from far away, though, so it often confuses visitors who are used to lights that mean a cab is free.
jr 08.03.04 at 10:27 pm
Because DC taxis have no meters, the driver has to switch the light manually. Some do, some don’t bother. The taxis aren’t babbling; some are speaking coherently, others aren’t speaking at all. But from the prospective passenger’s point of view, there’s no way to tell the difference. Presumably even a low rate of non-speaking would make the information gained from the speaking taxis useless (if there’s a 5 percent chance that a taxi is available, you’re going to hail it, right?)
bull 08.03.04 at 11:36 pm
Another oddity of DC cabs is that they’re allowed to pick up another passenger even when they already have a passenger if the existing passenger won’t be taken more than X blocks out of his way (I don’t know what X is). So, lighted signs wouldn’t convey any information.
Off duty signs are useless. A cab driver can instantly go in or out of service depending on his whims.
Matt 08.04.04 at 1:16 pm
I’ve always thought that the multiple-passenger taxicab in DC was more of a local tradition than something that was actually legal. Kind of a ‘we’re all bureaucrats on our way to important meetings’ sort of thing.
bull 08.04.04 at 1:48 pm
Matt – it’s legal. See: http://dctaxi.dc.gov/dctaxi/cwp/view,a,1187,q,488575.asp
Henry 08.04.04 at 4:25 pm
Thanks all – it’s rather wonderful to be able to put out an odd fact that you’ve always wondered about, and receive an explanation within 24 hours.
Steve 08.05.04 at 10:12 pm
My gut instinct tells me that there must be lots of cases of uninformative signaling out there, but now that you mention it I can’t really think of any.
How about the street signs throughout Manhattan that say “No Horn Honking: $350 Fine”? Having lived in NYC for 17 years, I can state with certainty that the NYPD has no intention whatsoever of enforcing the law, and New York drivers have no intention of ever obeying it.
guy 08.08.04 at 7:13 pm
This may be totally obvious, and isn’t a “real world example”, but what about “The Boy Who Cried Wolf”?
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