food4thought - Nash & The Sneakergame

With the sneakergame becoming ever so popular these last couple of years, we've seen a large surge in the number of resellers. Though resellers have always been in the game, we've seen a larger number of these individuals spring up who aren't necessarily sneakerheads. In most cases these individuals serve as sneaker brokers, picking up their stock at cost and quickly turning them for a profit.

It is human nature to try to maximize our personal gain/benefit when the opportunity presents itself. Thus we experience Nash's Equilibrium in the sneakergame. Nash's Equilibrium is defined as, "Nash equilibria are sets of strategies for players in a noncooperative game such that no single one of them would be better off switching strategies unless others did."

Let me explain this theory with a practical example:

When Nike announced that the Air Yeezy was slated to release in limited quantities over the world a large buzz/hype was created. Sneakerbrokers instead of purchasing with the intent to own the sneaker, purchased them with the intent to sell. Once the sneaker was sold out, all brokers increased the price of the sneaker with the intent of making a large substantial profit. Now you may ask how Nash's theory applies to this phenomenon. In a perfect world, "Broker A" and "Broker B" would acquire the Yeezy and sell it at face value. However, "Broker A" understands there is demand for the Yeezy and assumes that "Broker B" will sell the sneaker at face value and will charge a higher value to increase his overall benefit. "Broker B" also assumes the same thing and increases his price for the sneaker. Thus increasing the overall price of the sneaker for the end customer.

When there is a large presence of brokers in the game, the end customer always loses. One would assume that with more brokers the consumer would be better of butthis is not the case when brokers/resellers are only acting in their personal best interests.

Don't be surprised when you notice this phenomenon with the Cool Grey XI and Doernbecher III drops later this year. Atleast now you can put a name to it...