The Minority Rule

Complex Systems, Taleb

In the book, Skin In The Game, Nassim Nicholas Taleb presents an interesting topic that he calls the minority rule. It appears counter-intuitive on the first look, but when thinking about it deeply, you see it everywhere. The minority rule says that in a group of people if there is a stubborn minority, then their preferences will dominate over the preferences of the flexible majority. This sounds absurd because we know that in a democratic system, it is the majority that dominates. The beauty of minority rule is, it creates an optical illusion. From the outside, it appears that its the majority that dominates the group but in fact, it is the opposite.

This becomes clear when we look at an example from the book. In a flight, the minority of passengers has peanut allergies, but airlines hardly ever serve peanut snacks. If an alien were to appear from mars and meet this group of people. The alien might deduce that not eating peanuts is the preference of the majority of the passengers on the flight.

How the rule plays out? According to the author, you need these four factors:

  1. An asymmetric division.
  2. One side needs to be stubborn.
  3. Uniform distribution of people.
  4. A low cost of changing personal preference.

What is asymmetry? Someone allergic to peanuts will not eat anything that touches peanuts, but a person without the allergy can eat peanuts. A vegan person will not eat meat, but someone who eats meat can eat vegan food. A law abiding citizen will not engage in criminal activity, but a criminal will be happily engaged in lawful acts. In a team of software engineers, an experienced programmer who follows a style guide will not write code at odds with the style guide, but a newbie who doesn't know the conventions yet will be happy to comply.

For a minority to dominate, we need a stubborn minority and a flexible majority. In case of allergies, the person has no choice but to be stubborn. In the matter of dietary preference, the minority can choose to be stubborn if they want to dominate the group. An experienced developer will not merge the pull request if it violets the style guide to make the codebase consistent and also help the newbie programmer to learn the conventions in the ecosystem.

Taleb points out that minority rule will not play out if the minority is secluded in a corner. They need to be uniformly distributed in the group.

"the geography of the terrain, that is, the spatial structure, matters a bit; it makes a big difference whether the intransigents are in their own district or are mixed with the rest of the population. If the people following the minority rule lived in Ghettos, with their separate small economy, then the minority rule would not apply. But, when a population has an even spatial distribution, say the ratio of such a minority in a neighborhood is the same as that in the village, that in the village is the same as in the county, that in the county is the same as that in state, and that in the sate is the same as nationwide, then the (flexible) majority will have to submit to the minority rule."

The cost of changing preference matters too. The author has an example of Kosher drinks. To his surprise, he finds out the almost all drinks available in the markets of New England are Kosher.

"… the cost structure matters quite a bit. It happens in our first example that making lemonade compliant with Kosher laws doesn't change the price by much, not enough to justify inventories. But if the manufacturing of Kosher lemonade cost substantially more, then the rule will be weakened in some nonlinear proportion to the difference in costs. If it cost ten times as much to make Kosher food, then the minority rule will not apply, except perhaps in some very rich neighborhoods."

The most interesting point is the renormalisation of preferences in the group. Let's take an example of a workplace. One person who works here is strictly vegan. Sometimes he goes out for lunch with his colleagues. Whenever they go out, he convinces (or out-stubborn) everyone to go to a vegan restaurant. Now imagine a city with many such offices. And every office has at least one stubborn vegan person. Looking at the sales of vegan restaurants in the city, one can conclude that the city has a high preference for vegan food. But Individually, most people in the city don't prefer a vegan diet.

Now that I know about this rule, I see it everywhere.

July 15, 2019 × Berlin