Attendees at the Milken Institute Global Conference this past week were privileged on Tuesday to hear from three Nobel Laureates—Gary Becker, Roger Myerson, and Myron Scholes—over a fascinating lunchtime discussion.
At some point, Michael Milken, who was playing the role of moderator, brought up the topic of K-12 education. Becker in particular made some interesting points, including some pontificating on how vouchers would improve our schools.
Regardless of your viewpoint on that, it’s an interesting thought experiment to consider reasons why vouchers and many other reforms have not pervaded and transformed public education, and why we have instead only been “tinkering toward utopia.”
One explanation could have come from Becker’s right in Myerson, an expert in game theory. Game theory helps us to predict what others’ corresponding actions will be if we take a certain action. We can use it to predict whether certain paths of reform are likely to be successful or instead to meet with such fierce resistance that they stand little to no chance of succeeding.
Game theory accounts for the power of entrants to beat incumbents through a disruptive strategy—where they use asymmetric motivation to their advantage. By offering a product or service that does not make sense for the incumbent to offer, the entrant creates a situation where the incumbent’s motivation is not to do what the entrant is motivated to do; rather the incumbent is motivated to flee “up market” and cede more and more ground to the disruptive entrant.
This helps to understand why vouchers and charters themselves are not disruptive and have not swept in to transform U.S. education. We write about this in the current issue of the School Choice Advocate in our article, “The Transformative Properties of School Choice.” By attacking players in the established public-school system head on, vouchers and charters do not create asymmetric motivation, as many established players are highly motivated to fight them (although these attempted reforms may pressure the system to improve itself and help pave the way for true disruptions, even if they themselves don’t ultimately win the day).
A few lessons from economics could have helped predict that.
– Michael B. Horn
