Wow, yeah, I swear to God I'm with it. I don't see nobody in my lane It's quite go get it like me thoughts after my first training session at Tiger Muay Thai a half an hour ago I have not stopped sweating I Okay, one word one word If someone came up to me shoved a microphone in my face Had a camera on me and said look one word to describe that that session Humble'd okay Humble'd I can play rugby. I can play soccer. I can play hockey. I can even play basketball but martial arts is something Completely different. It's an entirely, you know different beast and today was my first session Wow, I Was absolutely fucked We had a couple of rounds of sparring which I actually said no to because it was my first day I did everything else but that was probably about a 10-minute section whoo So today all up. I'm not sure why I've got glasses on inside, but bear with me Yoga weights Muay Thai and now it's time to have a shower and go get something to eat some absolutely fucked You know humbled Happy excited. I was absolutely I was a nervous wreck before it.  Honestly, it's to drop my body fat Go from 95 96 kilos down to about 90 or even under and you know just be lean be Be a lean machine as they say so Let me let me just Try and rattle off what what we actually did it was about a 20-minute warm-up Um Stretching running all sorts of different cardio things then we did some technique for probably about 20 20 or 30 minutes just One two three four five six then knees kicks elbows spinning elbows things I've never done before and look I will say one thing after that. I'm thinking things like elbows things like knees I don't know if they're my cup of tea to be fair Punching kicking. I mean if I was gonna spar someone if I was gonna actually jump in the ring and have a fight To have elbows and knees coming at me. I don't know if I'd be keen on that, you know what I mean? So anyways, we did the technique then we went into pairs and did some some work Like I was talking about before I got humbled You know, all we did was watch like the the instructors would show us what to do We'd jump jump in up here and and go back and forth and do it but the instructors only showed us for like 30 seconds, so Sometimes they'd finish showing us what we have to do and I'd be like, bro I need you to show me again and you know, I didn't want to tell anyone that so I just went into it tried my best I tried my best look I tried my best.   This is about it's about getting myself back out there I probably talked to about three or four different people very briefly You know, which is something I haven't done a lot of because My youtube channel and my job in Alice Springs is basically forced me into Being a recluse of sorts. You know what I mean?  You can jog it. You can run it. You can do whatever you want and that starts at 7 30 in the morning So I'm gonna go down there at 7 50 bar for the taxi takes us to the bottom and then everyone goes up the top um, I'm not sure if we get a taxi back down or not, but Regardless that's going to be tough It's going to be a great start to the morning And that's at 7 30 So Wow, holy shit guys. I want to say one thing I want to say one thing I I was the most sweaty person in that class by about Five or ten times honestly when we're in a line.   Do I have a lot of water in my system? That needs to get flushed out right now So, you know We can only get better from here. It's day number one I I Said I had no expectations. But really, you know being a sportsman.  I did yoga first did some weights which I probably didn't need to do and And then we went into the moitai session. So look That's it. No, that's the update day number one I'm pumped I will say that next Next time I do a moitai session. I'm not going to go as hard as I did at the start When we're just doing technique stuff and we're just doing a warm-up I'm not going to go as hard as I did because I know that it's a two hour session And the real, you know meat and potatoes of the session is probably in the last hour of it So I'm going to work my way, you know work my way up get a sweat up Probably not as hopefully not as much as last time imagine if by the end of this I went through a session and I was hardly sweating now. That would be a transformation for the ages, wouldn't it?    We can actually take footage down there I think they were starting to tell people no you can't take footage because tourists were just coming in They weren't even training there And they were you know coming in with their cameras and just standing there You know taking videos of people. I thought it was because they didn't want footage of people sparring to get out But I think it's because tourists came in they weren't even training there. They didn't pay anything And they were just you know taking videos of people So I feel like I probably can take the camera down. Although. Yeah, actually, you know, I would have loved to have this in the corner taping myself Doing pad work. That's definitely the most fun. So after we did the the The pair work we went off had a bag um I think they probably had about 15 different bags and about 15 different trainers so Of the 30 people 15 people went to the bag first probably did three or four rounds on the bag and then Switched over and and did some pad work with the trainer. So One thing that the trainer told me is relax Keep your feet You know probably shoulder width apart not as wide as what I was probably doing But hey man, I'm trying to wrap my brain about what I learned. It's day number one man. This is it I'm here in thailand What I will say is that here It's completely and utterly over-raised In martial arts. There's no place for it So I'll tell you what tomorrow. We're going to get a buzz cut A skin fade to a number two and that's going to be a good feeling nice and clean Maybe I won't maybe I'll pussy out who knows but anyways guys, that's that I'll see you tomorrow


I'd like to thank the many sponsors and supporters of this symposium beginning with the S.J. Quinney Department of Economics, the Lee E. and Hertha Tidalbaum Trust, which generously underwrites the Utah State Bar Intellectual Property Section and Antitrust Section, and the Institute of Financial Support for the Utah Project on Antitrust in Consumer Protection Law. Alright, so let me tell you a little bit about Lena. Lena attended Yale Law School, and while a third year law student, she wrote her famous and influential article, Amazon's Antitrust Paradox. Then after graduating from law school, she worked as the legal director at the Open Markets Institute, and during that period she continued to write a large number of influential antitrust papers. She then joined the faculty of my alma mater, Columbia Law School. In 2019, she was appointed counsel to the House Judiciary Committee's subcommittee on antitrust, and in 2021, President Biden appointed her as the chair of the Federal Trade Commission. So quite a trajectory for a young scholar. I'd like to welcome our keynote speaker, Lena Kahn, the chair of the Federal Trade Commission. So we have some questions for you, Lena, but before I start, I just wanted to say that you were here in Utah in 2019, and that was before your appointment to the FTC. At that time, you made a lot of fans here, and we're still fans. And so welcome back, Madam Chair. So our first question is about Section 5 of the FTC Act. And on our first panel, Bob Land and our chief federal judge here, Robert Shelby, are going to discuss whether courts have strayed too far from the actual text of Section 2 of the Sherman Act. In a recent paper, Antitrust Antitextualism, Dan Crane argues that this is also the case for Section 5 of the FTC Act. In 2021, the commission voted to resend the previous restrictions it had placed on itself with regard to Section 5. So where are we now with Section 5 of the FTC Act? Well, first of all, good morning, everybody. It's so great to be able to join you all, albeit virtually and remotely. I regret that I'm not able to join in person. I had a terrific time visiting Salt Lake City at the conference you all hosted a few years ago, and once again, you've managed to gather such a fantastic group of scholars and thinkers. You know, I think it's easy to forget, but the all the work that it took to get to this moment that we're in, I think reflects just so many years of hard work and fantastic scholarship and efforts by many of the people that you have gathered. So I really admire what you all are looking to do. So on Section 5, the big picture is we are working to bring Section 5 back in line with our statutory text and legislative history and precedent. For those who aren't familiar, Section 5 really is the heart of the FTC Act, the law that created the Federal Trade Commission, and it prohibits unfair methods of competition. These were the words that Congress used, unfair methods of competition, which is distinct from the language that was used in the Sherman Act. And the legislative history and context also show that it was actually lawmakers view that the Sherman Act was too limited and that the rule of reason standard that courts had introduced there was too vague and too open-ended. And this is really what drove Congress to pass the FTC Act to create a new administrative body with a related but distinct legal mandate. And as you alluded to, you know, over the last couple of decades in particular, there's been a retreat from really exercising this unique legal authority. And so for the better part of the last year, we've had a team in place carefully reviewing all Section 5 case law. So all instances in which the FTC pled a standalone Section 5 violation. We really want to ensure that any articulation of Section 5 that we offer conforms strictly to both the underlying text and the governing law, the laws that's still on the books. So the policy statement is in the works and I'm really hopeful that we'll be able to share it and publish it in the coming weeks. Okay, but independent of congressional intent, do you think it's good policy for the FTC to have such broad discretion, even independent of the Sherman Act and the Clayton Act? Yes, I mean, you know, these policy determinations ultimately are ones for Congress to decide and I don't see it as my role or the FTC's role to second guess that. You know, in practice, I think there are at least two ways in which having a legal authority that's broader than the four corners of the Sherman Act can be extremely useful. So one is instances where the Sherman Act is not covering business practices that are pretty clearly violating the spirit of what the Sherman Act is intended to prohibit. So the classic example is what are known as invitations to collude where technically there is no agreement that has been formed and so you can't directly reach it under the Sherman Act. But at the end of the day, you still have a firm seeking to collude. The second context is that I think section five and specifically the text of section five really nicely illustrates that Congress recognize that there is a distinction between fair and unfair methods of competition. And this language really reflects that view that not all methods of competition are fair game and the Congress created the FTC to engage in the exercise of distinguishing between fair and unfair. And the Supreme Court has, you know, time and time again ratified this broader mandate. And so, you know, when we're engaging in this exercise, we're really doing it with with those things in mind in particular. Yeah, okay, so one more follow up on on section five. I wanted to ask you this upfront. As the FTC broadens its goals, is it going to have the resources that it needs in order to be successful? So it's no secret that the FTC is resources have not kept up. Currently, the FTC's total headcount is around 1200. And that's around two thirds of what it was back in the early 1980s. Meanwhile, you know, the size of the economy has grown I think around eight fold. So we're definitely under resourced and that forces a lot of very difficult questions around what we're able to prioritize and what we're not able to address. This becomes a particular strain during years where we have booms in merger filings. So the last year in particular, we saw a 70% increase in the number of merger filings. It was just an off the charts here. And I think in those instances in particular, we're really having to divert resources to make sure that we're not permitting unlawful deals, but we're, you know, not able to catch everything. This in particular, I think is also why the type of whole of government approach to competition policy that the administration has prioritized is so critical because the DOJ and the FTC are no doubt on the lines of the thing and administering the antitrust laws. But there are also a whole set of other agencies including sector specific regulators that also have competition tools and have the opportunity, especially when they're conferring certain types of government benefits or engaging in other types of more routine engagement with industry. They have the opportunity to be attaching certain types of conditions that can also be promoting competition. So this was an insight that was much more readily acknowledged through the mid century where things like government procurement were very actively and deliberately structured in a way to promote competition. And I think some of the work that we've seen from agencies over the last year are really seeking to revive that spirit and approach. Okay, let's let's switch gears a little bit. Let me ask you a completely different question. In March of this year, you received a letter from a bipartisan group of Congress members, including Utah Republican Congressman Burgess Owens from the fourth district here in Utah. And the letter asked the FTC to enforce the Robinson Patman Act. And as you know, the Robinson Patman Act prohibits large retailers or buyers from receiving lower prices than their competitors. The letter argued that small business provides unique benefits to the country. And it pointed out that the FTC has not brought a Robinson Patman case since 2000. So the question is, what can you tell us about the thinking at the FTC about the Robinson Patman Act and its enforcement? Yeah, it's a great question. So as you noted, the Robinson Patman Act is another law in the books that hasn't seen a whole lot of enforcement in recent decades. It bans in particular practices like secret discounts and secret rebates that might only be available to large and powerful firms. It bans certain types of economic discrimination. When Congress passed the law, it really went out of its way to note that the goal here was to prohibit certain forms of economic discrimination. So while it permitted things like quantity discounts, it bans certain types of advantages that could only be one through raw bargaining power or muscle. And for decades, Robinson Patman was actually a real mainstay of FTC enforcement. So through the 60s, Robinson Patman cases comprised a pretty sizable share of the FTC's docket that, of course, has looked very different over the last couple of decades. And so we're taking a fresh look at Robinson Patman. You know, I really worry about instances in which enforcers just decide that they don't agree with the values or the policies underlying laws that Congress has passed and so walk away from enforcement entirely. So we're having to build up institutional muscle to determine how we might be able to move forward in this area. Earlier this year, we issued a policy statement, in particular, noting that Section 2C of the Robinson Patman Act prohibits commercial bribery. And some of the practices that we've heard about in the pharmaceutical context, including these rebates between pharmacy benefit managers and drug manufacturers, could in some instances risk running afoul of that commercial bribery prohibition. So to get participants to notice that, you know, we're looking very closely at the Robinson Patman Act and as we're investigating and reviewing conduct, Robinson Patman is absolutely going to be fair game. My colleague, Commissioner Alvaro Bedoya, a few weeks ago gave a speech noting in particular the importance of the Robinson Patman Act and the fairness values that it enshrined. In that speech goes deep into the legislative history and, you know, notes his strong support for enforcement. So highly recommend folks give that a read as well to get a sense of some of the thinking underway at the agency right now. Okay, I know that the FDC has brought a 2C case, but will they consider bringing 2A cases? My impression is that it's pretty rampant that since there's not been very much enforcement of the Robinson Patman Act, that sellers of products, the salespeople, don't really take, you know, they don't take into account.  They don't take into account whether they're violating 2A or not. That's just my impression. Yeah, we're looking at the statute as a whole. And last December, we actually also initiated a 6B study and two supply change disruptions. And as we were putting that study together, we actually heard a lot from businesses in particular about 2A types allegations and the ways that those types of practices may have actually worsened and exacerbated the effects of supply chain disruptions. So that's something on our radar as well. And would the FDC consider putting out guidelines for how to do a cost study? Because, you know, it's only price differences that aren't justified by efficiencies that are a violation. And to show whether there are efficiency justifications, you have to do a cost study. But there's no real guidelines for how to do that. Yeah, that's an interesting idea. And look, I'm under no illusions that, you know, Robinson Patman is a perfect statute. I think it's, you know, incumbent on us as enforcers to identify for lawmakers if there are particular areas where clarity could be needed, or for ourselves to be identifying for the market and for the public, you know, how we would be pursuing the analysis here. So I think that's an interesting suggestion. Okay, switching gears again. Our third panel is about labor here at the conference. And recently the FTC issued a policy statement on enforcement related to gig work. Can you talk a little bit about the FTC's efforts to protect gig workers? Might we see a challenge, for example, of a vertical restraint by a gig platform aimed at preventing multi-helming by workers? And so, for example, you know, what if there's a rule that prevents ride-sharing or ride-hailing workers from working both at Lyft and Uber? Just as an example. At the same time, I mean. Yeah, and I know many people at the conference have done a whole set of really important work on the gig platform economy in particular that, you know, we're definitely learning from and drawing from. So I would say this is an area in particular that has really benefited from our looking to break down some of the silos at the agency between our competition work and our consumer protection work. Because I think the gig context is one where you see how certain types of consumer, what might be considered traditional consumer protection violations can be used to attain market power and then market power in turn can be used to engage in certain types of consumer protection violations as it relates to workers. So we have a cross-agency working group in place that's specifically focused on gig companies and trying to identify how might we pursue a more systematic enforcement strategy here. We recently issued a policy statement that identified three priority areas in particular. So one is false or deceptive earnings claims. So we've heard allegations that some of these companies have made claims about how much, say, drivers could be earning through their platforms that are not always entirely accurate. Those types of deceptive claims can be pretty, you know, bread and butter violations of some of the consumer protection violations. We've also heard about certain types of constraints imposed on workers, including through contractual terms and certain types of restrictions on mobility that can implicate both the competition authorities as well as our consumer protection authorities. And then we're looking at unfair methods of competition more generally, including allegations of wage fixing, but other types of unlawful business practices that may be transpiring. So we're taking a broad look and again, I think this is an area that's really benefited from a more interdisciplinary or cross-agency approach. I want to ask you a few questions about mergers. So and I want to start with a case that was brought by the FTC here in Utah. The case was to prevent HTA, which owns St. Mark's Hospital, which is a short drive from here from the law school from purchasing Steward Health. And HTA owns St. Mark's and Steward Health owns Salt Lake Regional, which is just a short walk down the hill. So the two hospitals are fairly close geographically. The case was brought before Judge Tina Campbell here in Utah, but it settled. I think the deal was just abandoned right before the hearing. And typically in the past, what's happened with hospital deals here in Utah is that they would go through, but there'd be spinoffs. The competitive overlaps would be spun off. Is the FTC becoming more skeptical of merger remedies these days? Yeah, so it's a great question and there's a lot there. I'll say as a general matter, I think the FTC's approach to hospital mergers has been hailed as a model of success, in part because the agency went from losing a lot of its challenges to hospital mergers to kind of going back, doing a series of studies, and really being able to make the case to the courts that these mergers had led to unlawful effects. And so I think we have just over the scheme, across the scheme of things, really seen tremendous progress. That said, I do think that for us as enforcers, one question that also has to be top of mind is one of deterrence. So how do we deter unlawful deals in the first place? And especially if we're still seeing hospitals proposed mergers that are basically three to two or sometimes even two to one. I think that really compels us to think about how we can be more effective here. And so we're looking at some of this work afresh and one of the components includes thinking about our approach to merger remedies. In a whole set of industries, including in certain instances in our hospital work, what we've done is basically identified where there might be overlaps and ask the companies to divest those, which is, you know, the agency approach has been to say that's sufficient to preserve competition. I think we've seen a lot of research and scholarship, including from some folks in the room there, that really questions that on a whole bunch of dimensions. And so thinking about whether overlaps are really a sufficient dimension of competition for us to be focusing on and what dimensions of competition might not actually be captured. Even if you're just getting the firms to divest the overlaps is a big question for us. We've also seen time and time again that divestitures can also be rife with risk. There have been unfortunately too many instances where divestitures that the agency have signed off on have actually, you know, either involved delay after delay, or in some instances, failed entirely. And so we really need to be very, very mindful about those risks and what types of factors in particular create those risks, be it questions around the buyer and making sure that the buyer is being more closely scrutinized, or even just thinking about, you know, what is the size of the asset package that would need to be divested.  And, you know, I think it would be arrogant for us to think that we have the expertise to really be able to see that sort of thing through with confidence. And at the end of the day, the risk is always borne by the public, effectively, if these divestitures fail, it's the public that suffers. And I think that's something that we need to be weighing much more heavily as well. So we're looking afresh at our at the FTC's approach to remedies, including these instances where we've signed off on divestitures. I think over the last decade, we've seen a healthy swing of the pendulum from a recognition that behavioral remedies can often be ineffective and difficult to administer. And I think we also need to be thinking about structural remedies through that same prism and be identifying instances in which we think that those have really failed to preserve competition. I think in the health care context, you know, the stakes are particularly dire, given that we can see the emergence of health care deserts and rural communities, you know, high prices, staffing shortages. I mean, this is really life and death stuff. And so this is a context in which we are particularly sensitive to these concerns. Well, besides hospital mergers, what other areas of health care do you think antitrust needs to play some role? I mean, I think the list is quite long. Give me the top two. Yeah, the list is quite long. I mean, as a commission, as an agency, we've noted that drug prices is a big area of concern generally. There are a lot of actors involved in determining how drug prices are set. Pharmacy benefit managers are some of those as well as drug manufacturers. We're also looking closely at the role of private equity and in particular areas where we've seen PE rollups in the health care context. We've seen some troubling research suggesting that we've seen serious quality degradation that has resulted from PE rollups in the health care space, including things like increased mortality rates at nursing homes. So again, the stakes here are high, and it's something we're looking at closely. And I know the FTC and DRJ are in the process of revising the horizontal merger guidelines, and I don't want you to give away any secrets. But can you tell us anything about how the revision process generally is going to try to take into account the difficulties raised by mergers involving digital platforms? Yeah, the revision of the merger guidelines is really a signature project for both of our agencies, and we're now almost a year into it. And our teams have been, again, taking a very close look at the underlying case law and identifying how we can better bring these guidelines into conformity with the underlying case law, but also make sure that we're learning from commercial realities and making sure that we're not seeing a big gap between how our guidelines are conceiving of how market power is attained through mergers and what we're seeing in the real economy. Digital platforms, of course, have emerged as such a key intermediary, artery of commerce, and so the stakes with those in particular are high. I think we've seen how at the turn of the century, there was an assumption that digital markets in particular are fast moving, and so we should really err on the side of being hands-off, because any instances in which firms would acquire market power would be quickly dissolved through new entry. I think we've now seen that not only did those assumptions not hold, but in fact digital markets may be characterized by certain features that actually caution earlier action or greater action, particularly early to prevent markets from tipping and from incumbents from locking in their market power in ways that can make competition much more difficult. So I think we've been going through a process of revisiting those assumptions and determining how things like network externalities and network effects should be considered in the analysis. I'd also say more generally, I think there's an interesting way in which we see some of these platforms make serial acquisitions or acquisitions in unrelated markets, and that's an area of analysis that I think really requires greater thinking and for the agencies to be engaging in that exercise. Back in the 70s and 80s, there was a robust discussion about what were then known as conglomerate mergers, and the FTC in particular was very much involved in thinking about how should the merger laws apply in the context of conglomerates. What happened was that we then ended up seeing divestitures and the breakup of these conglomerates, and that discussion about how to be thinking about when incumbents are entering unrelated markets hasn't really occurred in the same way. Unlike in the industrial age where you would see certain types of diseconomies of scale hit such that there would be more obvious limits to when a particular firm might be entering into an infinite number of markets. I think the dynamics in digital markets are different so that those diseconomies don't hit in the same way or just hit much later, that really compel us to think afresh about how to be approaching instances where you have dominant platforms that are engaging in all sorts of lines of business, including through mergers and acquisitions. So it's something that's top of mind for us. But just following up on what you said about serial acquisition, suppose they're horizontal but they're really small in nature, and then they happen one after another like a drip drip drip sort of situation. And then at some point there's a tip and there's dominance on some aspect of a platform or the whole platform. How do you handle situations like that? Yeah, I mean I think at the very first stage you need to be knowing that these transactions are happening. So the FTC actually did a study looking at acquisitions by five big technology platforms and found that there had been over 800 of these acquisitions. In particular, many of them had not been reported to us because they didn't meet the HSR threshold. So I think there are questions around how do we make sure that the mergers that we are being notified of actually include some of those potentially smaller deals. We've also seen certain types of avoidance devices that have been pursued with an eye of sidestepping HSR. So I think there's an opportunity to be tightening up there. I think more generally the role of data in these markets and the way that that can also enable tipping is something that we need to be more sophisticated about. And as you might know, the FTC over the summer actually filed a lawsuit seeking to block Facebook now meta's acquisition of within in the virtual reality space. So that's an area that it's now publicly known we've been looking at. I do think that more generally these moments of potential technological transition can be really important because they're oftentimes the biggest opportunity that new entrants have to come in and dislodge incumbents. We know, you know, all the way back going to Microsoft that those moments of transition are when the incumbent can feel most threatened. And so then, you know, engage in potential unlawful acquisitions or other types of unlawful conduct to maintain the monopoly, even during the period of technological transition. So in as much as right now we are seeing that period of technological transition, you know, be it in the context of the cloud or voice assistance or virtual reality. These new technological contexts and the potential emergence of these new platforms. I think we have to be especially vigilant across the board. But particularly in the merger context to A lot of these mergers are vertical and the FTC has been active recently and vertical and challenging vertical mergers. For example, the Nivea arm litigation and the Lockheed Aerojet deal. What was the FTC learn from those experiences. Yeah, those were both lawsuits that we filed late one late last year, both also led to abandonment so we didn't actually even end up going to trial. I think those were very significant for our agency. As you know, there had been a assumption that that vertical mergers in general are likely to confer significant efficiencies and so we should again air on the side of under enforcement there. I think we've seen a whole set of instances in which either those efficiencies haven't materialized. If they have they've been passed up they have not been passed on. The whole set of harms that can also emerge be at some of the traditional ones like foreclosure or the sharing of sensitive information, or just more generally certain types of conflicts of interest that can emerge. So I think there's been a ton of empirical research and evidence that shows that we really need to be scrutinizing these vertical deals much more closely as well. I think this also really touches on the issue of remedies as well that you know we need to be particularly in the vertical context be extremely wary of behavioral and even with structural be you know skeptical and make sure we're being mindful about when these will or won't work. This is another area where we've been taking a very close look at the underlying case law to make sure that the case law that is still on the books is actually the case law that we're using. I think there have been instances in which certain renditions of the merger guidelines have offered an articulation of how we will scrutinize deals that hasn't actually made full use of the laws that's actually on the books, including in the vertical context. So, again as we revise the merger guidelines, making sure that the guidelines are fully conforming to the underlying law is going to be a key priority. So you mean you're going to take seriously the Supreme Court precedent on vertical mergers that's never been overturned, but is just ignored. Yeah, as a general matter is enforcers. We don't think it's our position to just ignore the case law on the books so our teams have been taking a very close look at that. Alright, so here's a more difficult question for you about conglomerate mergers since you raised that issue. Would the FTC consider a challenge to a large conglomerate merger, say for example, I'm just making this up Walmart and Apple. So situation where the competitive overlaps are pretty small, but the resulting size of the post merger entity is enormous. So what would be your thinking in a situation like that? Without weighing in on any specific deal or hypothetical deal, the law says that deals that may substantially lessen competition are illegal. And I think it's up to us to be thinking carefully about what are the potential dimensions of competition and how do we make sure that we're not just being one-dimensional and thinking about that and not just looking at things like horizontal overlaps or even traditional vertical relationships. Again, especially in the digital economy, the way that firms are inter relating to each other becomes much more complex than just horizontal or vertical. So we need to be thinking about all of those dimensions as well as the role of data and how that can also factor into how markets can tip or lead to adverse competitive effects. Can you tell us anything about the FTC's recent rulemaking regarding commercial surveillance and data security? I guess my question would be what problem or problems specifically is the FTC trying to fix with the new rule? So let me start there. So this is a rulemaking proceeding that we launched in August, looking at what we term commercial surveillance and lax data security practices. This is a rulemaking that's proceeding under our MAGMOS authority, which requires us to start by issuing an advanced notice to propose rulemaking. So we've issued a whole bunch of questions to really start building a record. Those questions touch on a whole set of practices. I think the reality is that the digital economy has been allowed to evolve in a way where many firms have these behavioral ad-based business models that are basically incentivized to endlessly vacuum up user data. And that can create incentives that can be seriously at odds with user privacy, with user security. So one thing that we're thinking about is this concept of conditional access. So when are firms really conditioning access to their products or services on users agreeing to be endlessly surveilled? There are other types of practices that the ANPR also looks at, including the role of automated decision-making technologies, algorithmic bias, and ways that these practices in particular can affect particular communities, including children's and teens. So at this stage we're looking quite broadly. But the goal is really to be thinking about business incentives and how do we make sure that users' privacy and security is protected and whether certain types of business incentives may be misaligned with that. I think this is another area where we realize that timely intervention can be critical, including on the enforcement side, to ensure that certain types of business models or technologies or business practices don't get so widely adopted and entrenched. And so especially as we see technologies relating to biometrics and facial recognition, that's another area where we're looking closely. So I think it's going to be a major project for us this rulemaking. We're also, as part of some of our data security work, thinking hard about substantive limits. So a lot of the privacy and data security frameworks over the past have been focused on this idea of notice and consent in particular, where firms are making adequate disclosures about their data practices and obtaining at least nominal consent that can be sufficient. Again, I think we've seen time and time again, especially as these technologies have become so critical for navigating daily life that that type of notice and consent framework can, in some instances, be quite inadequate. So we're keeping all of those things in mind as we pursue this rulemaking. Okay, independent of the rulemaking, do you see any potential antitrust actions that could help achieve greater privacy on the internet? I think that's difficult because the more people that are competing, the more people that are surveilling, it seems like it increases the surveillance, not decreases, but do you see a role for antitrust? I mean, I think this goes back to the very first question that you asked about on Fair Methods of Competition, right? Because I think it's that type of exercise that is really identifying what are the dimensions on which firms are or are not permitted to compete.  Or do we want to be having companies compete on dimensions of privacy that are actually better serving consumers or workers? So I think this is the kind of the relationship between competition and privacy is a really interesting question. In the FTC's conduct lawsuit against Facebook, which was filed before I arrived at the agency, one of the allegations involves claiming that Facebook's practices to maintain its monopoly ended up degrading privacy. And there was a moment at which potential practices that were more privacy sensitive by Google actually also ended up influencing Facebook's conduct. So there was a pretty clear relationship just within the complaint between, you know, less competition and less privacy and instances where there was competition actually incentivizing Facebook to promote greater privacy. That was something that when the revised complaint ended up surviving the motion to dismiss earlier this year, Judge Bosberg actually acknowledged that privacy degradation can be a cognizable harm in antitrust, which was an important step forward. But this is an area that I think continues to require more thinking. The UK has actually been a leader in this space where their competition authority, competition markets authority and their ICO, their privacy enforcer have been developing a very deep relationship to be able to identify what are the instances in which privacy, in which competition may be promoting privacy and what are the instances in which it can undermine privacy. I think we've also seen recently some troubling allegations that some pro-privacy policies that firms have been announcing may also have a anti-competitive underbelly. And so I think that's another area where we need to be scrutinizing closely to make sure that firms are not just laying out one set of policies for third parties around data collection, but a different set of policies for themselves in ways that may nominally promote and protect privacy but also undermine competition. So that's something that's top of mind for us as well. Recently you gave a talk at the Fordham Antitrust Conference and you talked about an interest in stronger structural presumptions for mergers. And I'm wondering if you're getting any support from antitrust economists on this front from thinking about the 2017 paper by John Cuoka, who shows that just using concentration and change in concentration alone, you get a pretty good predictor of post-merger price changes. Are there other economists that are starting to become supportive on this issue? Because we've been extremely fortunate to actually have John Cuoka at the agency last year. He came on board as chief economist in my office and it's been really fantastic to have the benefit of his thinking and his scholarship, both as we pursue a revision of the merger guidelines but also as we take a fresh look at our approach to remedies. We're certainly looking to learn from and follow empirical evidence and in as much as there has been work showing that the structural presumption is important and actually the shift away from that has been quite harmful to merger enforcement. That's something that we're learning from. We over the last year have been collecting public comments as part of our revision to the merger guidelines. We're really grateful to receive comments from a really broad set of people, including scholars, including economists. One thing that we really tried to prioritize this time around as we pursued the revision of the merger guidelines was ensuring that we're actually hearing from a broad community. We're not just hearing from a narrow insular band in DC and the defense bar. We really made an effort to do listening sessions with people who've been affected by mergers and can speak very directly to their effects. We had one looking at the effects of mergers in agriculture, another one looking at the effects of mergers in healthcare. We wanted to make sure that we're really building out a well-rounded record that we're drawing from that's fully informing our guidelines and making sure that they're reflecting the day-to-day effects and commercial realities of these deals. Well, Lena, I'm out of questions. Thank you very much for speaking at our conference. I can just imagine how horrendous your schedule is compared to those of us with faculty positions. We were honored to have you today. Thank you very much. Thanks so much for having me and hope to see many of you in person soon. Thank you.


Today, we will deploy the Mern project we developed in the previous video. For the people unfamiliar with the project, we developed a simple crewed application which is based on Mern and it looks just like this. There are a lot of options when it comes to free hosting and most of the platforms are incredibly generous. Here we have a few options for a web server built with Node.js and our client built with React. The free tiers are designed to help you get started and once your project grows, you can always upgrade. Note that some platforms do not allow commercial use on their free tier. In order to publish our project on render.com, you will need to have GitHub account and it's totally free. You can go to github.com and sign up from here using your email address. Follow the instructions and then you'll be good to go. I've already got an account, so I'm going to close this. And the second thing that I want to mention here is that I'm going to be using the GitHub desktop application just because it simplifies the process of creating repositories and pushing changes. It's just a nice development workflow. You can get the GitHub desktop for Windows, macOS. I'm pretty confident that it's also available for Linux as well. And that's it. I'm already logged in in my GitHub account and I'm here under repositories. If you wish to use the command line you can do, you can create a repository from here as well. But as I said, I'm going to be using the GitHub desktop application. So let's open the GitHub desktop application from here and we need to start by creating a new repository. An easy way would be to add an existing repository from your hard drive or I've already got my folder here with the client and server and we are going to start with the server first of all and I'm just going to drag the server folder inside here. This is going to notice that this is not a Git repository. Would you like to create a repository? And all we need to do is click here, give it a name. I'm going to call my project book dash server. Of course, give it a nice project name. Then if you wish to, you can give it a description. Initialize this repository with the readme file. And for the Git ignore, this is important. We need to select node and this is purely because we don't want to be uploading all the node files on GitHub. There are quite a lot of files and you don't need them. For the license, choose the one that suits you. I'm going to go with MIT license and then click create repository. That's it. We can close this. And now inside here on the left side, we have our first repository called server and we can actually change the name by publishing this repository. So I'm going to click publish repository. And from here, we can give it another name. So book dash server. Give it a description if you wish. And I'm going to keep my code private just to show you that you can have your repository private so nobody else can see it. I'm going to click publish repository. And this should take a second. Okay. Our project is published on GitHub. And if I go to my GitHub account here and if I refresh and if I look for book, you will see that we have book server updated now, which means that everything has gone well. Now let's jump to render.com. And if we click on prices super quickly, you will see that this is free for hobbies, students and indie hackers. And this is going to work just fine for us. So sign up for render.com. And once you're done, just go to your dashboard. From here, click on you and then select web service. Click on this. And this is going to ask us to connect a repository from GitHub. If you sign up with GitHub, otherwise you will need to connect your GitHub account from here. Just follow the instructions. And then because this is a private repository, it's not going to show up in here. And we need to configure our account by clicking configure account here. If we scroll down a little bit from here, we can select only the repositories that we want rendered to see. And I can select repository, look for book server and click on it. So this is going to be added to the list and I can save it. We're going to get redirected back here. And as you can see, now we have the book server project available and I can connect it. From here, we need to give or service a name. I'm going to give it a book server. Choose your region from here. I'm going to leave as default. The branch can be left as the default one. Runtime is fine. Yep, everything else is fine. The command node index is fine. We've already said that. From here, you can choose the free tier, scroll down and click create web service. All right, while this is creating, it's going to take a few seconds. We can go to the environment variables. This is where we can add or MongoDB connection. For example, with a click at environment variables, we have the key and the value. So if I go to my project and if I click on server here, we have all dot EMV file. We created in the previous tutorial and we essentially have MongoDB URI, which I can copy. We need to replicate this basically. Put it inside here. And for the value, we can just grab the MongoDB and the rest from here and paste the value in here and just save changes. And if you click on event, the important bit here is that you will be able to see whether your project failed. So as you can see, it says deployed failed for this number here. And I don't really know what this means, but if I click on deploy logs here, you will see, let's have a look super quickly. So the error is Mongo 7.3.4. The engine node is incompatible with this module. Expected version bigger than, bigger or equals than 14.20.1. So let's fix this. I'm going to open my server project and all we need is the package.json file here. And here, maybe just above the development dependencies, we need to add this code, which is going to tell render to run node with this 14.20.1. Save this, go back GitHub desktop and now publish the changes so I can do engine. For example, and then commit to main and then publish. And if you go back to render, this should automatically start deploying. So if I go to events one more time, you will see that automatically it started deploying because you notice that there is a new commit. And now all we need to do is wait a couple of seconds and see how it goes. But if you get an error, make sure that you see the deployed logs. And normally you can Google it and find the answer pretty quickly. All right, awesome. As you can see, deploy live for and the number here engine. And by the looks of it, if we get the green cloud, it means that our project is working. Here is all URL, which is given to us by render.com and this is going to be unique and it won't change. So if I click on this, hopefully we should be able to see all API working and we're getting hello, mate. And then it was API slash box press enter. You'll be able to see that we're getting the books and all API is working, which means that our first mission is complete. Okay, now that we have the server running, we can copy this URL and we can super quickly look into our React application. So here where we have client, let's open this in Visual Studio code super quickly, code dot, and I wanna show you a couple of things. The first thing that I wanna show you is that if you go to route and let's say books, for example, so we've been using or local development server, which is localhost of 80,000. But now we can use this one here. And of course, if you wish to, you can add a custom domain name as well, but let's keep it simple for now. I'm gonna copy this. Now the problem here that I'm having is that we have localhost on a couple of files. If we scroll down, we probably have a couple of times here as well and we're repeating ourselves and it's pretty hard to update. So what we can do is create another EMV file inside here, inside our client. And this is gonna be called dot EMV dot local. And inside here, since we're using VIT, we need to put VIT, like so underscore and then the name of our variable, which is gonna be server. You are URL and this is gonna be equals the URL. So for example, if you're developing locally, you can put this as your localhost. It's gonna be like this of 80,000. And that's it. Save this. And now I'm gonna show you how we can use this in our application. So we don't have to repeat ourselves. And let's say, let's start with box, for example. Inside here, if we put the base URL in single slanted quotes, like so. And if we use removal of this and if we use the dollar sign and curly brackets, we can bring the variable name, the VIT variable name from here by doing import dot meta dot EMV dot VIT underscore server URL. And that's it. Now we could potentially also create a server URL here. So const server URL purely because we cannot use this everywhere, the base URL because it has the slash API slash books. So I'm gonna grab this. So I'm gonna grab this and paste it in here. So now potentially I can grab this and replace pretty much everything that we need. For example, I can replace this here by replacing this part without the uploads, of course. So dollar sign, curly brackets and server URL. That's pretty much it. Save them. Let's go back to create book and do exactly the same. So I'm gonna copy this here, paste it around here and let's see what we need to replace. So we can definitely replace this one here. I can do it with single slanted quotes and just replace the website like so. Also, let's see whether we have it anywhere else. I think we're good to go here. So let's go to the next one. I'm gonna copy this one more time. Edit book. Save it here. And in fact, I can just put it inside here like so. That would also work. I should have done that maybe. And now I can go down. Change this to single slanted quotes. Swap this. So this was purely bad planning from my end but there are not too many. So we just need to replace a few. I'm gonna replace this and for the images here, we also need to replace this. And I think that's gonna be it single book. Okay, maybe we need to do that as well. So I'm gonna copy this here. Let's put in here. Change this. Save it. Change this. Save it. And that's it. So now everything is pretty much the same for application is gonna look for this EMV.local file and it's gonna go to localhost. So essentially when we publish a project now in side render, we can change this URL to on your server URL. Let's do that. Okay, from here, we need to create another repository for our client. So I'm gonna drag and drop this in here. And this is gonna say add local repository, create a repository, give it a name, book-client. Initialize this repository with readme. Get ignore needs to be node and license. I'm gonna go for MIT and click create repository. Close this. And now we should have our client repository in here as well. And we can push the repository. I'm gonna call it book-client. Keep the code private and publish repository. And we have our repository published. So we have our client on the server. To go back to render.com, click on dashboard. From here, we can click on new static site because React.js is a static website. And then from here, we need to configure all new repository so we can add it because it's a private repository. Scroll down, click on select repositories. Look for book-client, select them and save. Now we can create all new static site by selecting the book-client, connect them, give it the name, book-client. The branch is gonna be main. Everything else stays the same except the distribution folder. So every time we build our project, our project will be built in this distribution folder, which I can demonstrate. So let's click create static site. And I'm gonna demonstrate this as well this is creating. So this is gonna take a couple of seconds. And if I go to the client here and if I open it in Visual Studio Code, sorry, if I open it in Terminal, let's say. And if I do npm run build, you will see that this is gonna create a distribution folder inside here. And this is our website fully built. We're gonna minimize this. And the other thing that we need to do is we need to go to environment variables here. And we need to mimic the EMV here, the EMV local. So this one here, let's grab the VIT server URL, add environment variable, paste it here. And let's paste the value when we work locally that can stay the way it is. But when we publish our project, we also, we wanna be using our server URL. So I'm gonna go back to the dashboard here on another tab. I'm gonna go to book server and copy the URL from here. Copy this. And paste the value inside here and save changes. If we go back to events, this should take a couple of seconds and hopefully we'll have the website running. Okay, it took a good minute. But as you can see, we're getting the green cloud in here, which means that we can now visit our website on this URL. And as you can see, all website is working if I go on books. You should be able to get the books. Everything else should be working. If I click on the filters, they should be working. And where do we add a book? Let's add a new book. So I'm gonna do test, test, five, test, test. Let's choose an image of the cat and submit. As you can see, data submitted successfully. If I go back to books, you should be able to see that we get the test here. And if I click on it, it comes up with all the data. And so on. That's pretty much it. And that's pretty much it. And the last thing that I wanted to talk to you about is that if you go back to render.com and if we click on settings, from here, you can deploy a custom domain name. If I find that, here we go. If you scroll down, you'll be able to see custom domain names. And you can just click on that custom domain name, add your domain name, and this will give you the DNS instructions. Unfortunately, I don't have a domain name that I can use. It's totally free. I believe that you can publish around 25 domain names for free. I found a super cheap domain name that I can buy and use for this tutorial. So I'm going to buy this super quickly. And then I'll show you how we can connect our domain name on render.com. Awesome. I've got the domain name. And now I'm going to log in to render and see whether we can connect it. Okay. I've got my domain name ready. And from here, I'm going to click DNS. Obviously, depending on what platform you use, it's going to look a little bit different, but the settings will be more or less the same. At the moment, I'm going to click on this. Click on settings. And then at the bottom, I believe we have custom domain name from here. Click. Add custom domain and let's type or domain name ready. That low and say from here, we can either add a name or alias record pointing to this. So I'm going to copy it. But as you can see, if your domain name is not here, you can just click on it and it will start. copy it but as you can see if your domain name does not support a name or alias you can just point an a record to this ip and to do this you can just click on a record and then do the settings right from here i'm going to remove those two records so we're starting blank and i'm going to copy this here and add it as alias we can leave this blank and then i'm gonna paste it here into the answer and add as you can see the record has been added in here and now let's have a look at the next step for www.low add cname record for www pointing to this okay we're gonna create a new record cname this can be www and then the answer will be the same as before and add we have both of the domain names here let's go back and verify okay from here my domain name has been verified which is great but i'm getting a certificate error i've googled this and it looks like i just need to wait a little bit and this error will fix itself so i'm not going to do anything else wait a little bit and then come back okay i didn't do anything but refresh the page and we are now a certificate pending so it is about just waiting a little bit and then hopefully the certificates will work okay this took a while i think i waited around four five minutes and now after a refresh you can see that we're getting certificate issued which means that our custom domain name is set as you can see right below let's open in the browser and it doesn't seem to be working yet so i might wait a little bit longer okay i waited a little bit longer and now if i refresh as you can see the website is now working which is great and now i can do the same for the back end let's go back to render.com dashboard and then go to book server from here scroll down click on settings and scroll down to the custom domain name settings from here i'm gonna add custom domain name and let's do server dot ruddy dot low and then save so i need to create a cname record for server pointing to this URL so i'm gonna copy this URL go back to my domain name register and then from here i'm gonna click on cname the host will be server and then the answer will be the URL that they gave me and i'm going to click add okay here we have all the records and now if i go back to render here and verify this it broke the page so i'm gonna refresh scroll down and here we are as you can see the server dot ruddy dot low is verified and i believe that this is going to take again a couple of minutes and it's just going to work while this is happening you can potentially copy this you can go to your react application here where you have environment and potentially you can have your fetch URL as this URL here of course with htdps and this will just look more professional and once they create the ssl for you it's all going to work and that's pretty much it i'm not going to wait for this one because i'm pretty confident that it's just going to work but it will take some time maybe five to ten minutes


Okay, so let's start with a short recap of game theory. So, as we have said, so the game is a model of a strategic interaction between individuals. And it is formalized by a set of strategies for each of the players, my way of functions. The main result is a national team in 1950. It says that every finite normal form game, at least one national equilibrium in mixed strategies. Okay, so. So, so, so for example, you can consider the battle of the sexes and find out what are the national equilibrium as we said, one has to look at what is the best response of each player. The strategies of the opponent and by finding a fixed point of the best response correspondence, one finds a national equilibrium. Okay, so there is another way in which we can think about finding find. National equilibrium, which is what is called the backward induction. So let me explain that for induction for this very simple case. So this is a game where player one first have to choose L or R. And player two, if player one choose L, the game finishes and this is the payoff. If player one plays R, then player two is player two turn, you can choose X or Y. And if you choose Y, then it's again the turn of player one. And player one can choose A or B. These are the terminal notes. Okay, so in backward induction you proceed from the end of the game and you move upward. Okay, so you, you start from the end of the node. And then you ask yourself, what is the best action of player one at this node. Here it would get three, here it would get zero, so the best action here would be A. And then you can go up and now you can consider what player two has to choose. So if he chooses X, he will get one. If he chooses Y, he can anticipate that one will choose A and so it will get zero. So the best action for player two is to choose X. And then you can go one step up and now player one knows that player two will choose X. So he has to choose between payoff and this payoff and since two is larger than one, he will choose this payoff. So this L would be his best action. Okay, so you see that indeed this is the Nash equilibrium of this game. You can also find this out by writing this game in normal form. In normal form, you should write a table where you have the payoff of the two players, depending on the possible strategies of the two players. So in this case player one has two choices, this one and this one. So he has four possible strategies. And when you write this game in this form and you see what are the best response of each player to the strategy of the opponent. And then you'll find that the fixed point of the best response is either this one or this one. So essentially it's coincides with this Nash. Okay, so now, if you think a little bit more about this construction. However, there is some subtlety. So for example, should player two, you mentioned that player two is at this point. And then at this point he has to choose between X and Y. Should he still believe that player one is rational because if he were rational, he would not get you, he would not find himself at this point. Okay, because the player one should have chosen L. So then, if he does not think that player one is rational, then he may think that when he will choose at this point, he may choose B instead of A. And so you see this doubt on the rationality of player one. And this is really an interesting feature and actually it could be exploited also by player one because you could say that if player one actually chooses R instead of L. There is still this doubt on his rationality. And with the idea that maybe player two will choose Y instead of X. So he could get three instead of two. Okay, so again, there are a lot of this type of complications. I'm not going into too much detail but just want to give you an idea of the type of complication that may arise. Now, there is another situation that another comment I want to make which is about what is called sub game perfection. So let's analyze this game. So this is a game where a player one first moves. Then, if he chooses R then he has to move again. And then player two has to move. But player two does not know what player one has chosen between A and B. So, and then you can solve this problem, this game by backward induction and find out that there is a unique Nash equilibrium, which is three and four is this one. Because this is the best response of player two, both in this case and in this case. And then the best response of player one in this case is B, etc, etc. And now you can represent this as a normal form game. And if you do that, then you end up with this table here. Okay. Now, if you look at this table again, you see that three and four is a Nash equilibrium because this is the best response. Why is the best response of two to strategy RV and RV is the best response of player one strategy why. But if you look at what are the other best response, then you'll find out that there is another Nash equilibrium, which is essentially two six and two six. So it corresponds to this point here. She's not a Nash equilibrium that according to backward induction. But when you write this game in terms of a normal form game, then what you realize is that there is actually this Nash equilibrium. So it's a different nature than this one. And it is a different nation because the same theory jargon is not a sub game perfect because they a game, a national game is a game perfect. If it is consistent with every sub game. Okay, so if you consider here only the sub game that stems from this site here. You see that essentially the only Nash equilibrium that is the same in all sub games is essentially before. Now, however, you see that this national equilibrium is more convenient for a player to help because it would get six instead of four. So the question is, maybe, player two should say to player one. Look, I'm going to play X, no matter what. Okay, no matter what you do, I'm going to play X. And then, if player one, first, what player two is saying, then what he should do is essentially to play LA or to play L. Okay, and then they will get into this. Okay, so the question is now. Do you think that player one should trust player two or not. Okay, so I hope the question is clear. Now, essentially what we can do is to go to this. I see yesterday, and you can add your your, your answer. Okay. Okay. So we have one answer up now. Two answers. Okay. Very good. 15 answers. Okay, so essentially, now we have almost 30 answers. So let's wait a little bit more. Okay, so we have 31 answers. And your what comes out of these answers is that essentially half of you think that player one should trust player two. Half of you think that it should not trust. However, say when player one actually trust players to does not trust player to threat, then essentially, he would play left. And so sorry, he will play right. And when when they are at this point, when this point, they are here. And this game has only one national equilibrium. So it is not credible that in this game, player two will play X. Okay, so this is not a credible threat by player. Okay, so thank you very much for talking to me. Okay, so what I want to So this idea of credible threats is is an important issue when you think about games that are repeated in time. Okay. Now, say when you have a game that is repeated in time imagine that you have players that play several times the same game then the situation becomes a little bit more complicated. Okay, because now really strategy become plans of action. So a strategy is a specification of what a player how the player would behave at any time depending on how he played before and how his opponent played before. Okay, so the space of strategy becomes really huge. Okay, it becomes very, very large. And also, while the payoffs now at each stage of the game, you have some payoffs which are given to agents. So the total payoff or the payoff that agent could see to maximize is essentially the sum of these payoffs. Now, usually one also introduces what is called a discount factor, this delta here. Delta is less or equal to one. With the idea that present payoffs are worth more than future payoffs. Okay. And why is this so? Well, one idea is that yes, if you have $1 today, then you can put it in the bank and it will become say more than $1 tomorrow. Okay, because of the interest rate. So that $1 tomorrow is worth less dollars today. Okay, the other way to interpret the discount factor is like a probability. Okay, so you can think that delta is the probability that the game will be played next time. Okay. And if the game is so that every time the game is repeated with a certain probability delta. And so that there is a probability that the game will end and then all the payoff will be zero from that point on. Okay. Okay, so let's see what happens if we consider a repeated prisoner's dilemma. Okay. So here is the table of the prisoner's dilemma. And as you can see here the strategy L dominates strategy R because essentially whatever player 2 plays strategy L always gives a higher payoff to player 1. Okay. Now you mentioned that this game this is the prisoner's dilemma is played one time, this is a second time, then actually the trigger is played three times. Okay. So there is a small window block in the upper right corner of the screen. So this is the mess. Is it okay now? No, we can still see the so so because otherwise I don't see your questions. Okay, so now is it okay? Is it okay now? No, we still see the you still see the what is this? What is this? Ah, this one. Is it okay now? Is it okay now? No, professor, there is a still a window a window in the right down right. Oh, this is really strange. The window title is build order. It is really no build effect. Okay, so so let me see okay, so let me try to show again and I hope it will not work fine. Is it okay now? Is it okay now? It's gone. Now it's gone. Yes, now it's okay. Very good. Okay. So let's go back to our repeated personas dilemma. Now this situation you can analyze it with backward induction. So imagine that you are at the last stage of this game. Then you know that the game will end and then the only possibility is to play the Nash equilibrium which is essentially to play L and L. But then if this is true for the last game then you go to the previous game and the previous game you know that in the next game you will play LL so you should play LL also in the previous game and you can go on like this and figure out that essentially the Nash equilibrium in this finally repeated game must be always the fact and the fact. Okay. So there is nothing really new. Okay. Now the things changes may change if you change a little bit the game. So now this is a game where I have added a new strategy you okay. And this strategy you such that now there are two Nash equilibria. So this is LL and you okay. And let's imagine that this game is placed twice. It's played at time T equal one T equal two. Okay. So if we have to play this game then well we can then of course two Nash equilibria we can essentially agree to play this Nash equilibria U and then we can get essentially a pay off of six. Imagine in this case delta is equal to one. A pay off of six. Okay. Very good. However we can also do better. Okay. Imagine the following strategy that are called strategy C. And the strategy C is that player playing the strategy will play R at the first stage. And then if the other person the other player also plays R then it will play U at the second stage. Okay. But if the other player does not play R then it will play L. Okay. So this is a strategy contains like a effect. Okay.   But if you don't I will play L. Okay.  So it suggests what the other player should do and if the other player does not play R there is a punishment because instead of U I will play L. Okay. So now if you think that if you are playing against this strategy you already know what will happen and so you can essentially summarize this two stage game into a single stage game because you know that if you play R then at the second stage we will play U. Okay. Which is the best thing. And so we will get four plus three which is equal to seven. Okay. If instead you play anything else at the first stage if you play say L or U then the opponent will play L at the second stage and it will be better for you to play L. Okay. So essentially the payoff if you don't play R at the first stage is what you would get by adding one to your payoff at the equal one. So you end up with this game and now if you look at this game you find that there is a new Nash equilibrium which is essentially seven seven. So essentially playing strategy C against strategy C is a Nash equilibrium that allows you to get a higher payoff than what you would get otherwise. Okay. By just playing the single stage Nash equilibrium. Okay. So this idea of credible threats is essentially what also allows you to find a similar Nash equilibrium for infinitely repeated games but let me ask first if there are questions on this or is there a few questions so is everything clear? Okay. It looks like that everything is clear. I don't see any questions. Okay. Very good. So let's go ahead. So now let us consider again this resource dilemma but now we are going to play it a number of times and essentially as I told you so the payoff is going to be the sum of all the payoffs and the strategy is going to be a sequence of a plan of actions. Okay. Now consider this trigger strategy here. Okay.  Okay.  Okay. So the idea is again the one of like a say a threat which is triggered by the deviation of the other player and this deviation of the other player triggers a punishment which is playing L forever. Okay. Now you can think about computing what is the utility function of an agent of player one if you place this trigger strategy against a trigger strategy. Okay. So if both players play a trigger strategy it means that they will always play R. Okay. Because no one deviates so they will continue playing R. Excuse me professor. Yeah. Is trigger strategy common knowledge? The strategy. Okay. Thank you. Yes. So the idea is that you can think that these two players will talk to each other and say player one will tell the player to look. I'm going to play this trigger strategy. And then the issue for player two is to is to understand whether what player one says is credible or not. Okay. So if the strategy if the plan that is a strategy is compatible with incentives of player one. Okay. Does not go against his own interests. And here you can see that it does not because essentially the punishment correspond to going back to a Nash equilibrium. And a Nash equilibrium is an equilibrium. Okay. So but you can think that so these strategies are and so the players discuss before playing this game about how to play it. And one of the two players says I'm going to play this trigger strategy. And the other player decides whether it should how we should best respond. Okay. Now, so if you if you compute the payoffs of player one if he plays the trigger strategy against the trigger strategy then you find that he gets a payoff of four divided by one minus delta not because especially he would get a payoff of four at any time. Okay. Now let's think about what is the payoff of player one if he plays R for T time steps but then he plays L at time T plus one and then well if he plays against the trigger strategy then he knows that player two is going to play L forever so then his best response would also be to play L forever. Okay. Then in this case his payoff is four for the first three periods then at time T you will get a payoff of five because he plays L and player two plays R and then after that we get the payoff of one because they're going to play this much. Now if you do the calculation then what you find is that the payoff of this strategy is equal to the payoff of player trigger strategy again trigger strategy plus delta to the T times one minus four delta divided by one minus delta. So this means that if delta is larger than one fourth then the payoff of this deviating from a trigger strategy at any time is going to give you the payoff which is smaller than the one of the trigger strategy. So essentially playing a trigger strategy against the trigger strategy is an ash equilibrium or a trigger strategy is the best response to our trigger strategy. Okay so you see the remarkable thing here is that because of this threat of this trigger strategy you are going to achieve when you repeat this game many times you are going to be able to achieve a payoff which is four four which is not an ash equilibrium of the single state game. Okay and this is one of one of the important inside of say repeated games that essentially when you repeat the same game the outcome can be very very different from the outcomes from the outcome of the single state game. Okay and also the other thing which is important that so you see that this trigger strategy is the best responsive for this delta is large enough. Okay now if you interpret this delta as the probability that the game will continue so this tells you that you expect this type of cooperation this type of agreements between agents to be possible when say in situations where which are stable when you expect to interact with other people with the same people many times. Okay and that being a very volatile environment where essentially you are not sure you will survive more or which essentially corresponds to a delta which is very small then essentially it is not possible to achieve this cooperation and you cannot okay and you are back to the outcome of the single state game. So other questions on this do players play the study at a certain time simultaneously so essentially so the idea here is that players decide their strategies before starting the game and then when they play the game they just unfold their strategies and so in this case for example this discussion here between the two players of course before the start playing okay and then also player one can do this calculation before starting the game and figure out that actually playing a trigger strategy again is the best is the best that we can do and then after that essentially they they play this game just as mandated by the study how can we think of trigger study no no no no in what sense primary level I don't understand your question no because here the strategy is already given so if we have a new game how can we think of as trigger strategy that is also an equity okay so this is in a situation where is a very idealized situation where the game is not going to change and it's common knowledge that these two players will play this game over and over again okay now if the game changes at a certain time then this is not discussed by this by this in this setting okay but maybe I've seen these what is important here is essentially this recognition that strategic interaction if it is limited to a short term then it can have very different outcomes then if it is if it extends over a longer longer and there is a video of a TED talk we'll see what are the implications of this or geopolitics and I think it's interesting so Colin says that it is very confusing he doesn't understand what is delta okay so delta is it's called the discount factor okay so delta is is the way in which future payoffs are weighted with respect to present payoffs okay so if you look at this formula you'll see that tomorrow's payoffs one dollar tomorrow is worth delta dollars today okay and you can interpret this as an interest rate okay because if you have one dollar tomorrow that is equivalent to less than one dollar today or you can interpret it in terms of probability that eventually you have tomorrow I mean there is a probability delta that player one dies and then one dollar tomorrow is worth in expected is worth delta dollars today okay because delta is the probability that you will still be aligned with this okay very good so but what I'm doing here is a very short say summary of very broad field so it's mostly meant to be like an enticement for you to interpret this subject so what if player one of these are and player two reach the standard place and then again both play and at the end of the game player two will have better results so shouldn't this be really a study before player two so so so you are saying okay so if they play this trigger strategy say player two plays this trigger strategy and player one at a certain point defects okay and you are right that this payoff will be larger than the payoff that player two will get against this strategy here but this is not the important thing I mean it's not whether player one gets more than player two doesn't really matter what it matters is what player one gets if he plays one strategy against what he gets if he plays another strategy okay and here so the comparison is between player one is the trigger strategy and player one when he plays a different strategy okay okay so now the other interesting observation is that you can think of other trigger strategy think for example to these other trigger studies player one tends to play a two look I'm going to play R at all times and I'm going to play L at even times and these as long as you play R and if you stop playing R I will play L forever okay from that time onward okay so it's exactly the same calculation and you can find out that if this delta the discount factor is sufficiently close to one then this is a national trigger so this is a national trigger in the sense that player two playing so if player two plays a trigger strategy then player one should play R or should always play R because otherwise if he deviates he will get a lower payoff okay so this is a kind of exploitation because if you go back to this table player one is saying I'm going to play R you have to play R all the time and I'm going to play R half of the time and L half of the time so half of the time you are going to get zero and I'm going to get four and but that's the deal okay and what you can find is that if you do the same calculation as here you can find that this is actually a national equilibrium so if player one plays this trigger strategy then player two should always play R okay and so you can find that actually there are many other trigger strategies on top you can think well I'll play R once every five rounds and otherwise I will play L and you always have to play R okay so this again is a trigger strategy that if delta is large enough it's close to one then okay and this is the content of this theorem which is called the folks theorem and which says essentially the following thing that if you take this payoff table for the present dilemma in this case and you put essentially here the payoff of player one and the payoff of player two and then these four points then you have four points in this graph so the point one one which is the national equilibrium the point zero five which is this one point five zero and the point four four okay and then you can go over this polygon and you can take this from this national equilibrium you can go over this line and essentially identify this shaded region gamma so the folks theorem tells you essentially that for any point in this shaded region you can find a trigger study such that you can achieve this expected payoff an expected payoff that are exactly defined with these points here okay and this trigger study will be national equilibrium if delta is sufficiently close to one okay so now you see that well this was the national equilibrium that we derived simple trigger study and so if you see all the points to this side for response to points where essentially player one exploits player two exposition is possible because there is always the threat to play the national equilibrium which would give a lower payoff to both the players okay this is called folks theorem and tells you that essentially repeated games are really really complicated because the space of strategy is really huge it's very very loud and so in this space of strategy is the number of national equilibrium becomes say a dense so you have an infinite number of possible national equilibrium and it's called folks theorem because essentially well it has been proven by Friedman in 71 but it was essentially known to be true my game theorist well before 71 so many people understood that this was the case okay so excuse me professor please yes exactly for this for this graph how do you find the light green lines that you traced are they parallel to the axes are they parallel to the axes yes okay thank you perfect so these are these are the this gamma is a set of points in this polygon where the payoffs of both players are at least as large as those of the national equilibrium of this national equilibrium okay okay okay okay make sense thank you very good other questions okay so if not so let me finish by mentioning what happens so this is the case of repeated games where agents have complete information about the game they know who they are playing with they know what are the rules they imagine that instead you have a situation where you don't know exactly the payoffs or you don't know exactly who are you playing with okay this is the subject of repeated games of incomplete information and this is a fascinating subject and so let me give an example so imagine that there is a game between two people and every day they have a cake and this cake has a cherry in the middle and player one has to split this cake into two and player two has to choose which side to pick so player one does not know how much player two likes the cherry so but he may imagine that player two likes the cherry so what he may want to do is to cut the cake in such a way that the part which has the cherry is a little bit smaller okay and essentially with the idea that essentially when say the part of the cake which contains the cherry is small enough that player two is indifferent between having a larger part of the cake or having the cake the part with the cherry then then so he can make the part with the cherry this small okay now however they are playing this game every time and the issue is whether the player two picks the smaller part of the cake with the cherry so he is revealing information to player one of how much he likes the cherry and what is the consequence of this the consequence of this is that tomorrow the part of the the part of the cake with the cherry will be smaller will you get the point and so the more player two reveals information on his true preferences the more player one can exploit this to get a better payoff okay and so this is essentially the type of situations that repeat the game complete information it's a theory that has been developed by game theorists in the Cold War because essentially there was exactly this type of situations so the US and the Soviet Union were essentially discussing about treaties on nuclear armament each of them didn't know exactly what was the arsenal of the other side and of course when you write a treaty you also reveal information that you don't like to repeat okay so it was a group of game theorists that were engaged by the US government to study what is the optimal way to play this game okay and there is a very very nice one of these guys was Robert Oman and if you go on the website there is a there's a lecture of Robert Oman that explains one say a little part of this of this of this field of game theory of the game solving and it is really fascinating, I really recommend it to all of you to have a look so with this I think I am especially done if you have questions I am so I would have a question regarding the folks theorem you showed us the shaded region and okay but so I thought is there maybe some sort of let's say a line maybe connecting the Nash equilibrium with the optimum point the 4-4 the sort of property of this region for which we could kind of agree that there is exploitation but it's a sort of a friendly exploitation I don't know if that makes sense I mean yes you can so like you're not at the Nash equilibrium which is the safest possible point outcome but you're not really at the 4-4 a coordinate where everyone is maximally kind of earning but maybe there's some line or some point there some trajectory where we can kind of say okay well we're mutually exploiting each other and kind of making a compromise I'm just taking like stabs in the dark and yeah so my my discussion of exploitation was say very simple and naive was essentially saying that if you have a threat if someone tells you I mean this trigger strategy where you say I'm going to create once every week with you and otherwise I'm going to exploit you and you have to cooperate so this looks like essentially exploitation right but of course psychologists and game theorists and they have discussed all these issues in much more detail so I'm going to give you a sense of say the interesting things that happen when you model strategic interaction in a repeated way okay so other questions so if not then we take a break and we'll see you in the next lecture