Category: Games

Those new Filipino service sector jobs

In the Philippines, one popular blockchain-based game is even providing pathways out of poverty and helping spread the word about novel technology. Created by Sky Mavis, a Vietnamese startup, Axie Infinity is a decentralized application (dapp) on the Ethereum blockchain where players breed, raise, battle and trade adorable digital critters called Axies.

Ijon Inton, an Axie player from Cabanatuan City, which is about 68 miles north of Manila in the province of Nueva Ecija, first learned about it in February of this year when his friend stumbled across an explainer video on YouTube. Intrigued by the “Play to Earn” element of the game, he decided to give it a go.

“At first I just want to try its legitimacy, and after a week of playing I was amazed with my first income,” said Inton, who is currently earning around 10,000 PHP ($206) per week from playing the game around the clock.

Inton soon invited his family to play, too, and after a few weeks, he also started telling his neighbors. A crypto trader since 2016, Inton helped his friends set up a Coins.ph account so they could buy their first ETH and get started. Now, there are more than 100 people in his local community playing to earn on Axie, including a 66-year-old grandmother.

Here is the full story, via Nicanor Angle.  How would you have responded to these sentences a decade ago?:

“We definitely want to get people who are outside of Ethereum, outside of the dapp space, outside of NFTs, into Axie,” Jiho said. He has observed other Axie play-to-earn community clusters in Indonesia and Venezuela, but thinks this might be the first evidence of a multi-generational household of dApp users.

What lies next in store for us?

Ola Malm on the future and industrial organization of chess

It was great to see your “Thursday assorted links” link regarding chess. It has been fascinating to follow the recent online boom to which the game has been subject and to think about what it may mean for the organization, and business, of chess over time.

I speculate, of course, but – as to what the future holds – I believe at least one possible path for the sport runs as follows:

1. The three major chess-focused online platforms (chess.com, lichess, and chess24) reduces to one through a self-reinforcing cycle of greater revenue concentration, the attainment by one party of progressive technical superiority, and the increasing convergence of the chess-playing public on a single provider.

2. The market leader signs exclusivity agreements (governing non-FIDE play) with a significant portion of top players and becomes the de-facto organizer of most commercially significant tournaments. In contrast to (1), this could conceivably happen quite quickly, as it involves only a limited set of individuals.

3. The centralization of elite-level play on a single platform enables that platform’s Elo rating to emerge as the chess world’s most important manifestation of achievement, thus furthering the leading provider’s competitive position (and affording it, through subscription fees, the financial means of accelerating (1) and of maintaining (2)).

4. FIDE’s tight grip on the sport is somewhat loosened, and the organization reverts to being something more akin to what it used to be and was originally intended to be – a (gentler) gentlemen’s club (in the English, rather than the American-English, sense of the term) focused on advancing the sport of chess.

Step (2) is, to a certain extent, already underway in the form of Nakamura’s link with chess.com and Carlsen’s ownership interest in Play Magnus (which owns chess24 and hosts the Champions Chess Tour). Attempting to negotiate individual agreements with single players would very likely turn out no easier than herding cats (and a rather resourceful and independent sort of cat, at that); rather, I believe whichever party may seek to implement a form of player exclusivity would find it easier to, on a unilateral basis, simply issue rating-based cash compensation (in exchange for promises of exclusivity) to the top-10-ranked (or top-50-ranked – the precise number is of course unimportant) Grandmasters. To rate players, the provider could adopt the current FIDE ranking as its starting position, but thereafter “fork” it (much like an open-source piece of code is forked) and base future rankings (for payment purposes) exclusively on play on its own platform (to enable (3)).

Some would no doubt scoff at such a development as unwelcome commercialization. And, yet, I think it would constitute a step, if not indisputably forward, certainly not backward, for chess. International sports tend to be organized in one of two ways: through one-nation-one-vote Swiss associations (such as soccer’s FIFA); or through commercial corporations (such Formula1’s Liberty Media). Time has undeniably imbued governing bodies in the former category with a certain cachet, but it has also made many of them inefficient and corrupt, as their governance systems – designed for a pre-WWI European world of volunteerism and gentlemanly conduct – have failed to adapt to, and to ward off, an extent of contemporary cynicism. If the Guardian is to be believed, FIDE has not been entirely spared: https://www.theguardian.com/sport/2016/jun/03/chess-rights-multimillionaire-model-agency-owner-david-kaplanhttps://www.theguardian.com/sport/2016/jun/03/chess-fide-president-offshore-firms-rights-kirsan-ilyumzhinov. I think most sports, including chess, would be no worse managed – in the sense of attracting both a broad player base as well as a vibrant elite tier – were they to convalesce around corporate organizations rather than Swiss associations.

I am pleased to report that Ola was an earlier Emergent Ventures recipient.

My days as a teenage chess teacher

I’ve already blogged my earlier job working in the supermarket, so I thought I would add a few remarks on my very first job as chess teacher, which I did at ages 14-15.

I had three regular students, two adults (about 50 and late 20s) and one a younger chess prodigy himself, maybe 10 or 11, plus some other occasional students.  I would have had more students if they (or the parents) did not have to pick me up and drive me to the lesson site.  By the way, at that time no one thought it was strange that relative strangers would simply come and pick me up in their cars and take me away.

From this job, I learned a few things rather quickly:

1. At the time a 14-year-old paid chess teacher seemed odd.  But if you just did something, the world might accept it.  Make other people tell you no, don’t do that preemptively yourself.

2. Chess teaching isn’t mainly about chess.  A chess teacher has to have a certain mystique above all, while at the same time being approachable.  Even at 14 this is possible.  Your students are hiring you at least as much for your mystique as for the content of your lessons.

3. Not everyone taking chess lessons wanted to be a better chess player.  For some, taking the lesson was a substitute for hard work on chess, not a complement to it.  The lesson for them was a fun social experience, and it kept the game of chess salient in their minds.  They became “the kind of person who takes chess lessons.”  I understood this well at the time.  Some of the students wanted to show you their chess games, so that someone else would be sharing in their triumphs and tragedies.  That is an OK enough way to proceed with a chess lesson, but often the students were more interested in “showing” than in listening and learning and hearing the hard truths about their play.

4. Students are too interested in asking your opinion of particular openings.  At lower-tier amateur levels of chess, the opening just doesn’t matter that much, provided you don’t get into an untenable position too quickly.  Nonetheless openings are a fun thing to learn about, and discussing openings can give people the illusion of learning something important, if only because you can share opening moves with the top players and thereby affiliate with them.

5. What I really had to teach was methods for hard work to improve your game consistently over time.  That might include for instance annotating a game or position “blind,” and then comparing your work to the published analysis of a world-class player, a’ la Alexander Kotov’s Think Like a Grandmaster.  I did try to teach that, but the demand for this service was not always so high.

6. The younger chess prodigy I taught was quite bright and also likable.  But he had no real interest in improving his chess game.  Instead, hanging out with me was more fun for him than either doing homework or watching TV, and I suspect his parents understood that.  In any case, early on I was thinking keenly about talent and the determinants of ultimate success, and obsessiveness seemed quite important.  All of the really good chess players had it, and without it you couldn’t get far above expert level.

7. I don’t remember exactly how much I was paid, but it felt like a lot of money at the time.  But when I stopped playing chess, I also stopped giving chess lessons.  I felt I had learned — and earned — from it what I could.

Betting and Bonding with the Kids

Jeff Kaufman has some good parenting tips:

A few weeks ago Anna (4y) wanted to play with some packing material. It looked very messy to me, I didn’t expect she would clean it up, and I didn’t want to fight with her about cleaning it up. I considered saying no, but after thinking about how things like this are handled in the real world I had an idea. If you want to do a hazardous activity, and we think you might go bankrupt and not clean up, we make you post a bond. This money is held in escrow to fund the cleanup if you disappear. I explained how this worked, and she went and got a dollar:

When she was done playing, she cleaned it up without complaint and got her dollar back. If she hadn’t cleaned it up, I would have, and kept the dollar.

Some situations are more complicated, and call for bets. I wanted to go to a park, but Lily (6y) didn’t want to go to that park because the last time we had been there there’d been lots of bees. I remembered that had been a summer with unusually many bees, and it no longer being that summer or, in fact, summer at all, I was not worried. Since I was so confident, I offered my $1 to her $0.10 that we would not run into bees at the park. This seemed fair to her, and when there were no bees she was happy to pay up.

Over time, they’ve learned that my being willing to bet, especially at large odds, is pretty informative, and often all I need to do is offer. Lily was having a rough morning, crying by herself about a project not working out. I suggested some things that might be fun to do together, and she rejected them angrily. I told her that often when people are feeling that way, going outside can help a lot, and when she didn’t seem to believe me I offered to bet. Once she heard the 10:1 odds I was offering her I think she just started expecting that I was right, and she decided we should go ride bikes. (She didn’t actually cheer up when we got outside: she cheered up as soon as she made this decision.)

I do think there is some risk with this approach that the child will have a bad time just to get the money, or say they are having a bad time and they are actually not, but this isn’t something we’ve run into. Another risk, if we were to wager large amounts, would be that the child would end up less happy than if I hadn’t interacted with them at all. I handle this by making sure not to offer a bet I think they would regret losing, and while this is not a courtesy I expect people to make later in life, I think it’s appropriate at their ages.

I also recommend the board game Wits and Wagers. In the game you make bets based on questions like “In what year was the computer game Pong released? or “How many ridges are on the outside of a dime.” It’s a clever and fun game because it teaches you not only to estimate and bet accordingly but also to adjust your bets based on seeing how other people bet. Thus, it often happens that a player will less background knowledge can win, precisely because they are less confident and so pay more attention to the information available in other people’s bets. Aumann would approve.

Hat tip: Julia Galef.

*Queen’s Gambit* (no real spoilers in this post)

I’ve now seen a few episodes, and I have a few comments on the chess:

1. No player, including Magnus Carlsen, can become that good that quickly, without a lot of learning and losing along the way.

2. They show the players moving too fast, though for dramatic reasons this is easy enough to understand.

3. The Sicilian was indeed very popular in 1963, but not quite that popular.

4. It captures the feel of earlier U.S. chess tournaments very well, noting that my own participation came later but things didn’t change much.

5. At the time the Rossolimo was in fact an unusual response to the Sicilian, though it is not now.  The show got this right (the protagonist claims she was very surprised by 3.Bb5) — don’t be fooled by the subsequent evolution of the game.

Dramatically, I would say it is “decent and watchable,” and the clothes and hotel scenes are good.  The characterization of the mother does not feel entirely consistent.  There is an underlying autism theme, mostly handled well, though mainstream reviewers seem to be thrown off the scent by the woman’s charm and good looks.  I will let you know if I have further observations.

The non-linearity of Covid-19 response

My colleague Bryan Caplan has some comments on the topic, here is also Robin Hanson here and here.  I think both are trying to fit the Covid battle too much into a framework of equating marginal benefit and marginal cost.  While that MB = MC condition is true tautologically for my views as well, I see it as a less useful framing given the non-linearities involved.  It is only a modest oversimplification to assert that either we are beating back Covid or it is beating back us, and we can’t just choose a point along a smooth curve.  You end up on one side of the distribution or another, if you are losing you are not really in control.

Here is a manipulative partisan tweet, but it still gets at a true point:

Since America is not a small, isolated island we don’t have the Kiwi option, but you can nonetheless see the two “winning” and “losing” options embedded in that comparison.

I think back to when I was 12 or 13, and asked to play the Avalon Hill board game Blitzkrieg.  Now, as the name might indicate, you win Blitzkrieg by being very aggressive.  My first real game was with a guy named Tim Rice, at the Westwood Chess Club, and he just crushed me, literally blitzing me off the board.  I had made the mistake of approaching Blitzkrieg like chess, setting up my forces for various future careful maneuvers.  I was back on my heels before I knew what had happened.

Due to its potential for exponential growth, Covid-19 is more like Blitzkrieg than it is like chess.  You are either winning or losing (badly), and you would prefer to be winning.  A good response is about trying to leap over into that winning space, and then staying there.  If you find that current prevention is failing a cost-benefit test, that doesn’t mean the answer is less prevention, which might fail a cost-benefit test all the more, due to the power of the non-local virus multiplication properties to shut down your economy and also take lives and instill fear.

You still need to come up with a way of beating Covid back.

The changing culture that is Norway?

After many years of decline in violent behavior among adolescents in several Western countries, recent official statistics indicate a possible trend change. So far, knowledge on how this change is related to co-occurring changes in leisure time activities is limited. Using two cross-sectional surveys from Oslo, Norway, this study found substantial increases in the prevalence of physical fighting from 2015 (N = 23,381; 51.6% girls) to 2018 (N = 25,287; 50.8% girls) in junior and senior high school. The rise in fighting was related to co-occurring changes in several leisure activities, including increasing time spent unsupervised by adults, rising digital media use, and rising cannabis use. The study emphasizes the importance of considering leisure time activities when addressing adolescent misbehavior.

In the aggregate data:

After a steady decline from 2007 to 2013 in police registered violent crime among adolescents under the age of 18 in Oslo, the capital of Norway, the number of violent crimes increased from 259 to 499 from 2013 to 2018, an increase
of 93% in five years.

Table 2 indicates that changes in “migration background” do not seem large enough to explain that evolution, even if that were the significant factor.  And from the survey data:

In junior high school, the prevalence rates for boys increased from 31.4% in 2015 to 38.1% in 2018 and from 8.9% to
13.1% for girls…

Here is the piece by Lars Roar Frøyland, Anders Bakken, and Tilmann von Soest, via the excellent Kevin Lewis.

Robert B. Wilson, Nobel Laureate

Here is his home page.  He has been at Stanford Business School since 1964, and born in Geneva, Nebraska.  Here is his personal website.  Here is his Wikipedia page.  He has a doctorate in business administration from Harvard, but actually no economics Ph.D. (bravo!)  Here is the Nobel designation.

Most of all Wilson is an economic theorist, doing much of his most influential work in or around the 1980s.  He is a little hard to google (no, he did not work with Philip Glass), but here are his best-cited papers.  To be clear, he won mainly for his work in auction theory and practice, covered by Alex here.  But here is some information about the rest of his highly illustrious career.

He and David Kreps wrote a very famous paper about deterrence.  Basically an incumbent wishes to develop a reputation for being tough with potential entrants, so as to keep them out of the market.  This was one of the most influential papers of the 1980s, and it also helped to revive some of the potential intellectual case for antitrust activism.  Here is Wilson’s survey article on strategic approaches to entry deterrence.

Wilson has a famous paper with Kreps, Milgrom, and Roberts.  They show how a multi-period prisoner’s dilemma might sustain cooperating rather than “Finking” if there is asymmetric information about types and behavior.  This paper increased estimates of the stability of tit-for-tat strategies, if only because with uncertainty you might end up in a highly rewarding loop of ongoing cooperation.  This combination of authors is referred to as the “Gang of Four,” given their common interests at the time and some common ties to Stanford.

His 1982 piece with David Kreps on “sequential equilibria” was oh so influential on game theory, here is the abstract:

We propose a new criterion for equilibria of extensive games, in the spirit of Selten’s perfectness criteria. This criterion requires that players’ strategies be sequentially rational: Every decision must be part of an optimal strategy for the remainder of the game. This entails specification of players’ beliefs concerning how the game has evolved for each information set, including information sets off the equilibrium path. The properties of sequential equilibria are developed; in particular, we study the topological structure of the set of sequential equilibria. The connections with Selten’s trembling-hand perfect equilibria are given.

Here is a more readable exposition of the idea.  This was part of a major effort to figure out how people actually would play in games, and which kinds of solution concepts economists should put into their models.  I don’t think the matter ever was settled, and arguably it has been superseded by behavioral and computational and evolutionary approaches, but Wilson was part of the peak period of applying pure theory to this problem and this might have been the most important theory piece in that whole tradition.

From Wikipedia:

Wilson’s paper “The Theory of the Syndicates,”JSTOR 1909607 which was published in Econometrica in 1968 influenced a whole generation of students from economics, finance, and accounting. The paper poses a fundamental question: Under what conditions does the expected utility representation describe the behavior of a group of individuals who choose lotteries and share risk in a Pareto-optimal way?

Link here, this was a contribution to social choice theory and fed into Oliver Hart’s later work on when shareholder unanimity for a corporation would hold.  It also connects to the later Milgrom work, some of it with Wilson, on when people will agree about the value of assets.

Here is Wilson’s book on non-linear pricing: “What do phone rates, frequent flyer programs, and railroad tariffs all have in common? They are all examples of nonlinear pricing. Pricing is nonlinear when it is not strictly proportional to the quantity purchased. The Electric Power Research Institute has commissioned Robert Wilson to review the various facets of nonlinear pricing.”  Yes, he is a business school guy.  Here is his survey article on electric power pricing, a whole separate direction of his research.

Here is his 1989 law review article about Pennzoil vs. Texaco, with Robert H. Mnookin.

Wilson also did a piece with Gul and Sonnenschein, laying out the different implications of various game-theoretic conjectures for the Coase conjecture, namely the claim that a durable goods monopolist will end up having to sell at competitive prices, due to the patience of consumers and their unwillingness to buy at higher prices.

Wilson was the dissertation advisor of Alvin E. Roth, Nobel Laureate, and here the two interview each other, recommended.  Excerpt:

Wilson: As an MBA student in 1960, I wrote a class report on how to bid in an auction that got a failing grade because it was not “managerial.”

And here is an Alvin Roth blog post on the prize and the intellectual lineage.

The bottom line?  If you are a theorist, Stockholm is telling you to build up some practical applications  — at the very least pull something out of your closet and sell it on eBay!  A lot of people thought Roberts and maybe Kreps would be in on this Prize, but they are not.  The selections themselves are clearly deserving and have been “in play” for many years in the Nobel discussions.  But again, we see the committee drawing clear and distinct lines.

Let’s see what they do next year!

The game theory of SCOTUS nominations

Despite the conventional wisdom that Trump would surely nominate a judge to secure a conservative majority that would ultimately overturn Roe v. Wade, getting that judge successfully confirmed would diminish Trump’s reelection prospects (by energizing the Democratic base to vote for leaders who would pack the court or ratify PR and DC as states). But Trump doesn’t care a whit about abortion, much less ideology. He only cares about his power and his reelection. His incentive, it seems to me, is to choose a weak nominee who will surely fail confirmation or a nominee whose confirmation will be deferred post-election. If the nomination is rejected, the Democrats will be seen as obstructionists and the Republican base will be energized. A deferred confirmation, in contrast, will act as a carrot that Trump can dangle in front of congressional Republicans, who will more strongly campaign for him. In either case, an unsuccessful confirmation will work in Trump’s favor, while a confirmed conservative will act against his reelection interests. Such a maneuver by the Trump campaign can, of course, only happen surreptitiously, because it would anger both Democratic and Republican leadership to be manipulated this way.

That is from Shiran Pasternak in my email.

The greatest gaming performance ever?

Or is chess a sport?

First Magnus Carlsen “privatizes” chess competition, naming the major tournament after himself, setting all of the rules, and becoming the residual claimant on the income stream.

He reshapes the entire format into a seven set, four months-long series of shorter tournaments, consisting of multiple games per day, 15 minutes per player per game, with increment.  It seems most chess fans find this new format far more exciting and watchable than the last two world championship matches, which have featured 22 slow draws and only two decisive games (with the title decided by rapid tiebreakers in each case — why not just head to the rapids?).

Magnus won all but one of the “sets” or mini-tournaments, along the way regularly dispatching the game’s top players at an astonishing pace, often tossing them aside like mere rag dolls.  Even the #2 and #3 rated players — Caruana and Ding Liren — stood little chance against his onslaught.  Carlsen kept on winning these mini-tournaments against fields of ten players, typically all at a world class level.

A Final Four then led to a 38-game, seven-day showdown between Carlsen and Hikaru Nakamura, not decided until the very last set of moves yesterday.  Note that at the more rapid pace Nakamura may well be a better player than Carlsen and is perhaps the only real challenge to him (at slower classical speeds Nakamura would be in the top twenty but is not at the very top of the rankings).

Nonetheless Carlsen prevailed.  Nakamura had the upper hand in terms of initiative, but in the final five-minute tie-breaking round, Carlsen needed to pull out 1.5 of the last 2 points, which indeed he did.  He drew by constructing an impregnable fortress against Nakamura’s Queen, and in the final “sudden death Armageddon” round a draw is equivalent to a victory for Black.

Along the way, at the same time, Magnus participated in Fantasy Football, competing against millions, at times holding the #1 slot and finishing #11 in what is a very competitive and demanding endeavor.

My Conversation with Annie Duke

Here is the transcript and audio, here is the opening summary:

Annie joined Tyler to explore how payoffs aren’t always monetary, the benefits and costs of probabilistic thinking, the “magical thinking” behind why people buy fire insurance but usually don’t get prenups, the psychology behind betting on shark migrations, how her most famous linguistics paper took on Steven Pinker, how public policy would change if only the top 500 poker players voted, why she wasn’t surprised to lose Celebrity Apprentice to Joan Rivers, whether Trump has a tell, the number one trait of top poker players, and more.

Here is one bit from Annie:

DUKE: So when I went on my first date with my husband, my brother and brother-in-law immediately decided to make a market, and it was whether we were going to get married. Now to be fair, my husband and I — before we went on our first date, we’d been friends. Both my brother and my brother-in-law knew my eventual husband, but this is when we’re going on our first date. They make a market. I think that my brother-in-law ended up bidding 23.

My brother then called me up, cracking up, that my brother-in-law had bid 23 when we hadn’t been on a first date yet. And I then started laughing at my brother, said, “Well, that means you had to bid 22. Why are you laughing at him? You somehow bid 22. It’s our first date.” Now, that’s because we’re all people who sort of think this way. And so this sort of becomes the fun of the friendship, but there are other people . . .

And this from Annie:

DUKE: My suspicion is that if only the top 500 poker players voted, people would be thinking a lot more about edge cases — where things could go wrong, for sure, because poker players just are obsessed with that. I think that there would be more long-termism as opposed to short-termism, again, because you have to be obsessed with that as a concept. I think that people would be thinking about “What are the unintended consequences? How does this look?”

Another thing that’s really important that poker players think about is, “If I put this policy in that looks like it’s awesome, how can someone come in and find the cracks in it so that it can turn into something bad?” I feel like the top 500 players would definitely be thinking in that way more.

You will have to read or hear the dialogue to take in my many good questions.

Solve for the equilibrium

What might be some alternate (if possibly slightly unfair) titles?  How about

“A Swede by Any Other Name” or “America > Sweden”?

“Refuting Friedman-Savage, convexity all over”

“Their capitalist bosses made them turn out”

“They all supported lockdown in the poll”

What else?

VTEKL.

What should I ask Annie Duke?

I will be doing a Conversation with her.  Here is part of her Wikipedia page:

Anne LaBarr Duke (née Lederer; September 13, 1965) is an American professional poker player and author. She holds a World Series of Poker (WSOP) gold bracelet from 2004 and used to be the leading money winner among women in WSOP history (a title now held by Vanessa Selbst). Duke won the 2004 World Series of Poker Tournament of Champions and the National Heads-Up Poker Championship in 2010. She has written a number of instructional books for poker players, including Decide to Play Great Poker and The Middle Zone, and she published her autobiography, How I Raised, Folded, Bluffed, Flirted, Cursed, and Won Millions at the World Series of Poker, in 2005.

Duke co-founded the non-profit Ante Up for Africa with actor Don Cheadle in 2007 to benefit charities working in African nations, and has raised money for other charities and non-profits through playing in and hosting charitable poker tournaments. She has been involved in advocacy on a number of poker-related issues including advocating for the legality of online gambling and for players’ rights to control their own image.

She also has a new book coming out this fall, How to Decide: Simpler Tools for Making Better Choices.  So what should I ask her?

The new economics of chess

I just finished watching one of Chess24.com’s Magnus Carlsen-affiliated rapid on-line chess tournaments, when today (a day later?) I see that another tournament has started.  And with Magnus himself playing, as well as other world-class players.  Note that Magnus both plays in these tournaments as the #1 attraction, and he owns an equity share in them, albeit with other investors.

So I’ve been trying to model the production of chess services in my mind.

I start with the point that viewers care much more about live, fresh games than games from a week ago.  Many sports of course operate on this same basis.

The second point is that most chess players have a relatively low opportunity cost of time, Rogoff and Kasparov excepted, plus some chess players can substitute into poker for profit (and may have quit chess already).  In fact what they do in their spare time is to…play chess!  Often with each other, and often on-line.  So if you offer to pay them some amount for doing basically the same, they will sign up.  Especially during a pandemic when many of them are trapped under relatively severe quarantines.

It is also the case that a chess player can play many days in the year, perhaps not every day, but you really can play a lot without tearing your rotator cuff.

It then seems the equilibrium is a much higher supply of chess tournaments, especially since on-line play removes some of the previous barriers to entry, such as needing a venue and some physical infrastructure.

You might even end up with a kind of Malthusian equilibrium, where the supply keeps on expanding to meet a fairly low marginal cost.

But this is a “superstars” kind of competition, and so the returns will go to the scarce factor.  That scarce factor is Carlsen himself, who garners far more attention than any other player.  And as noted he is an equity holder in this venture and as a player he has been winning the #1 prize money.  Over time, you might expect the returns of some of the other players — maybe in the top ten but not so famous or glamorous — to approach the Malthusian level.  Perhaps much of the public doesn’t care if Magnus plays #9 or #16, who in any case are only a small number of rating points apart.

Notice how well Magnus Carlsen understands reputation and internet production.  He keeps on posting “Banter Blitz” videos on YouTube, which show him playing speed chess on-line and commenting on the games as they proceed.  He dramatically expanded the supply of chess tournaments, which he earns income from.  He already was “the scarce factor,” and he has dramatically expanded the supply of attention aimed his way.  He understands that successful internet production is frequent production.

On-line chess viewing is way up (NYT) with the pandemic, and also because of these efforts.

Do not underestimate Magnus Carlsen.  He has been #1 in classical chess, rapid, and blitz, all at the same time.  He is a huge YouTube star in chess.  He has won a tournament about chess trivia, and he has been #1 in fantasy football for the whole world (not an easy feat).

And now he is bringing an economic revolution to chess, with himself as the #1 labor and equity earner at the same time.