Gameplay - Signal Distortion

gameplay
theory
#1

In short, signal distortion is about manipulating signals and data that are used by other market players. Sometimes, it can be very finesse, and sometimes blunt, and sometimes - fake news. Let’s look at a couple of examples:

  • Name change indicating exploration of a new business niche - when the company JA Energy changed its name to UBI Blockchain Internet, its value increased 20000%. Source: Bloomberg.
  • Fake job openings - as an attempt to mislead competition.
  • End year promotions (and other promotions) that increase the number of reported active users (which, however, bring no money). An excellent example of this is Google+, which counted as a user every Google user.
  • Hiding true margins to not show how attractive particular market is (I would put here Amazon and its cloud, and Ocado delivery). This one is particularly dangerous as an external analyst cannot analyse costs unless they know exactly what does it take to build a solution.
  • Massive marketing campaign to convince analysts that the future is more bright than it initially appears. Samsung.
  • On national level - a change of how f.e. budget deficit is calculated can hide or highlight existing country issues.

The Signal Distortion is particularly useful against weak signals. If you can use weakly connected measurements (such as particular key words in press articles) to get trend indicators, you can spoil them by issuing misleading data.

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#2

The examples suggest market or rhetorical manipulation is not cyclical - internally it’s a single pass through the OODA loop. Externally, it should be possible to determine the authenticity of weak signals in the context of broader aggregate data. For example, learning to recognise behavioural patterns and calculating the probability that creative destruction is occurring. In other words, attenuating signal distortion by pushing more information through the OODA loop and iterating faster?

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#3

Very good points!

Signal distortion is usually inexpensive to pull off, if you know what is your competition using.

Fighting with signal distortion is expensive, and at best requires two/three major passes to discover what is going on (surprising development/shock, long orientation, verification of what happened).

I am not sure if it is possible to manipulate signals in the long run, as each subsequent manipulation is more difficult to make (you have to discover what signal is being used).

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