# How to catch a falling knife

Yale University Game theory professor, Ben Polak did a series of lectures that might help us understand where the Steem price may bottom out. One lecture in particular really reminds me of the current situation.

In that lecture students were asked to guess a number between 1 and 100. The trick is the number they each guessed needed to be as close as possible to two-thirds of the average number selected by everyone in the class.

On the face of it this may seem quite simple. You would assume that most people would select ‘50’ as their initial number so you would probably think that the number that is 2/3rd's of this number and the answer you should give would be 33 (50 x 0.6666).

The students in the lecture where actually a little bit smarter than this and assumed that most people in the classroom would select 33 as their answer (i.e. they used game theory to put themselves in the shoes of the other person). The average answer selected by the students was 22 (33 x 0.6666).

They played this game a few times and the thing that I found intriguing was that each time they played it the answer or guess that was 2/3rds of the average of the guesses trended down each time. It actually got right down to 4 after a few plays of the game. The reason is that each time the game was played the students realised that the answer would be lower so **on average** they lowered their expectations each time. Ultimately if this game continued to be played the eventual result would be an answer of 0.

**So how does this relate to Steem?**

In the absence of a circuit breaker the price will continue to trend downwards. The more people see the price dropping the greater the propensity there is to sell. Think of it like a run on the bank – you don’t want to leave it too late to withdraw your savings.

**What should be done?**

Companies face downward pressure on their share prices all the time. Sometimes it is driven by fundamentals, other times it is driven purely by sentiment. Executives of those companies need to reverse the sentiment quickly. That can be done through a variety of ways – signing a new partnership agreement, announcing a new product, releasing promising sales results etc.

It’s time for the whales behind Steem to announce something. At this point I think we would just settle for a new UI. Perhaps we could incorporate some of the features from https://squeek.io

Otherwise we will be left pondering the question…

So when is the best time to catch a knife?

....the answer being when it hits the floor.

iamwne (64)6 years agoI am all for the amendment of the interface. While the concept of Steemit is wonderful it certainly does not help people to promote their content very well. It is too reliant on two few benefactors.