The document discusses concepts from game theory and behavioral economics including: - Bad equilibrium, where no player has an incentive to change their strategy despite undesirable outcomes for all - Nash equilibrium, where the optimal strategy for each player depends on the other players' strategies - Pareto efficiency and inefficiency, relating to situations where someone can be made better off without making others worse off It also discusses cognitive biases and human irrationality that can lead to suboptimal decisions, as highlighted by the work of Kahneman and Tversky, and suggests strategies like increasing visibility, flow management, and embracing failure to change equilibrium to a better outcome.

1. Breaking Bad Equilibrium
John Willis
Twitter: botchagalupe
GitHub: botchagalupe

2. It’s a strategy that all the
players in the game can adopt
and converge on, but it won’t
produce a desirable outcome
for anyone.
Bad Equilibrium

3. • Economics
• Wealth
• Markets
• Work Life Balance
• Techical Debt
• Cooperation
• Risk
• Burnout
Equilibrium
Good Bad

4. Movie Fun

8. Game Theory Fun

10. A concept of game theory where the
optimal outcome of a game is one
where no player has an incentive to
deviate from his chosen strategy after
considering an opponent's choice.
Nash Equilibrium

13. Sarah
Steven
Split Steal
Split
Steal
100%50%
50%
100% 0%
0% 0%
0%
Nash
Equilibrium

14. Is a state of allocation of resources in
which it is impossible to make any one
individual better off without making at
least one individual worse off.
Pareto Efficiency

15. A situation is inefficient if someone
can be made better off even after
compensating those made worse off.
Pareto Inefficiency

20. Ibrahim
Nick
Split Steal
Split
Steal
100%50%
50%
100% 0%
0% 0%
0%

21. Nick
Ibrahim
Split Steal
Split
Steal
100%
0%
0%
0%

22. Why Michael Lewis?

23. Forty years ago, Israeli psychologists Daniel Kahneman
and Amos Tversky wrote a series of breathtakingly
original studies undoing our assumptions about the
decision-making process. Their papers showed the
ways in which the human mind erred, systematically,
when forced to make judgments in uncertain situations.
Their work created the field of behavioral economics,
revolutionized Big Data studies, advanced evidence-
based medicine, led to a new approach to government
regulation, and made much of Michael Lewis’s own
work possible. Kahneman and Tversky are more
responsible than anybody for the powerful trend to
mistrust human intuition and defer to algorithms.

24. • Human Irrationality
• Heuristics
• System 1 (fast)
• System 2 (slow)
• Availability Bias
• Regression to the Mean
• Overconfidence
• Illusion of Validity

27. • Undesirable Outcomes
• Pareto Inefficient
• Nash Equilibrium
• Human Irrationality
• Cognitive Bias
• Overconfidence
Bad Equilibrium
Good Bad

28. How to Change the
Game?

29. • Make work visible
• Manage WIP
• Manage Flow
• Create high trust
• Embrace failure
Devops Advanced
Good Better

30. Really Hard Stuff
Good Excellent
• Increase Headcount
• Increase Buffers
• Rethink SLA’s
• Psychological Saftey

31. You are either building a
learning organization…
or you will be losing to
someone who is…
Andrew Clay Shafer