Components, Ammuniton, Firearms and Game Theory

[Orcon]

Hey folks, now that we are in a post election world and the dust has begun to settle I thought this would be a good time to talk about the roller coaster that has been the firearms related market for the past 8 years and how we might be able to avoid the same clap-trap the next time it comes around. Please keep in mind that I am not down-playing the dangers of a reckless government nor those of a lawless despot, this analysis is merely...well, analytical.

As most folks have noticed the firearms industry went absolutely bonkers, nuts, jumped the shark in 2008. The fear was real. ZOMG TEHR GUNNA TAKE MAH GUUUUNNNNNZZZZZ!!!1 The huge market spike was not, despite what some will tell you, due to the gubmint mass buying arms and ammunition. Some of the market shifts can be attributed to new reloaders or shooters but most of it was directly influenced by the people who already have guns and already reload. The majority of the scarcity was a fantastic real world scenario of "the tragedy of the commons" an en masse form of the "Prisoners Dilemma".

Though I am loathe to quote wikipedia, it has the most succinct definition. The tragedy of the commons works thus:

"The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting that resource through their collective action." https://en.wikipedia.org/wiki/Tragedy_of_the_commons
​

From a game theory perspective, the game is divided into more or less two strategies. You can take only what you need and rely on others do the same (Nash equilibrium/optimal strategy) or you can exploit the system and take as much as you can for yourself (dominant strategy) ensuring that no matter what others do at least you got yours. If the supply line was infinite the dominant strategy would work every time and would necessarily be Nash.http://economics.fundamentalfinance.com/game-theory/nash-equilibrium.php

"No snowflake in an avalanche ever feels responsible." Stanislaw Jerzy Lec​

The shortage problem arises from too many people using the dominant strategy of buying as much as they can (e.g. buying as many .22 LR bricks as the credit card allows) regardless of what the supply train can afford. This leads into a recursion loop that only exacerbates the problem. Following the .22LR theme, people who aren't even "gun people" tend to at least own a firearm chambered in .22 LR. So imagine their surprise when they go to buy a box of rounds only to find them unobtainable.The guy at the gun counter tells them that they better buy them where ever they find them because the gubmint's takin' it all. Crap! Better buy a couple of bricks when I see them!!
The recursion loop is a fancy term for the herd mentality, like a stampede. Every cow is running but few really know what they're running from, only that all the others are running so they better keep up. This was the stampede that trampled our supply.

The optimal strategy would have been to:

a.) already have the necessary arms/components on hand and supplement them accordingly without hoarding.
b.) make a measured but stead growth of accumulation of goods also without hoarding

I got into the reloading game in 2015 (would have started sooner but the market was nuts), I bought 4 firearms since 2008(that I would have bought regardless of the President) and managed to do just fine without paying through the nose for any of it. I didn't panic buy, I waited for market forces to normalize and I still managed to shoot as much as I cared to from 2008 to present.

This is a plea to reason, a call to refuse to participate in the stampede. I ask all of you to consider the pros and cons of the dominant strategy vs the optimal strategy when it comes to how, when and why we buy our firearms and firearms-related goods.

 

[hdwhit]

Orcon wrote:
This is a plea to reason, a call to refuse to participate in the stampede.

Thank you.

Well written, easy to understand and a sound plea for reason. Count me in.

 

[susieqz]

appeals to reason never work.
sheep are sheep.

 

[FROGO207]

Well I have subscribed to the theory that is "buy two and shoot one" with regards to ammo and reloading supplies for many many years. It did not hurt my pocketbook OR other firearms owners as I did it over a long time. This action will tend to insulate you from total unobtanium or at the least reduce your dependency upon the supply chain when it dries up. One thing that I DID do was while watching the stuff dry up at the big box stores noticed the 40 S&W ammo was the last to go. Before that time I did not think that the 40S&W was worth investing in as I had 9MM and 45 ACP firearms so did not need an in between caliber. I purchased a couple 40S&W pistols,reloading dies and a couple bullet molds as they became available to round out my caliber platform just because.
I agree sometimes we can be our own worst enemy.

 

[RX-79G]

appeals to reason never work.
sheep are sheep.

If anti-gun people are sheep, and pro-gun hoarders are sheep, that really doesn't leave a lot of non-sheep.

 

[Orcon]

Well I have subscribed to the theory that is "buy two and shoot one" with regards to ammo and reloading supplies for many many years. It did not hurt my pocketbook OR other firearms owners as I did it over a long time. This action will tend to insulate you from total unobtanium or at the least reduce your dependency upon the supply chain when it dries up. One thing that I DID do was while watching the stuff dry up at the big box stores noticed the 40 S&W ammo was the last to go. Before that time I did not think that the 40S&W was worth investing in as I had 9MM and 45 ACP firearms so did not need an in between caliber. I purchased a couple 40S&W pistols,reloading dies and a couple bullet molds as they became available to round out my caliber platform just because.
I agree sometimes we can be our own worst enemy.

Well played on the 40SW. I noticed the same demand inequity on the 17 HMR and bought a rifle in that chambering for the same reason.

 

[entropy]

Holy Crap, Orcon, you mean I did something the right way? Will wonders never cease.

The optimal strategy would have been to:

a.) already have the necessary arms/components on hand and supplement them accordingly without hoarding.
b.) make a measured but stead growth of accumulation of goods also without hoarding

I buy ammo and/or components every payday; If I can't find some of one caliber, I can find some of another, they all didn't run out at the same time. Been reloading since '76 also, so I felt no need to go out and hoard when others were.

 

[1911 guy]

Tell your friends you have pallets of .22 rimfire and they look at you crazy. Right up until they can't get any and want you to "donate to the cause".

Guns and ammo are like anything else. If you wait until they are squeezed, you'll pay top dollar for limited supply and choice. Buy at leisure and you can shop for deals and have the most choices available. Unfortunately, most people who own firearms feel that one box per caliber is "normal" and are immediately in panic mode when the local big box store is sold out. A lifetime of slowly accumulating ammunition and components has yielded hundreds of thousands of rounds. My buying slows to a trickle when availability is low.

Imagine if you waited to buy chicken soup the day after everyone is America had been convinced they were no longer making chicken soup.

 

[Teachu2]

And then there's California....

 

[chicharrones]

Late December 2012 and January 2013 is when I thought the firearms buying panic was the end of rational firearms prices as we knew it.

 

[Ed Ames]

I do not think "jumped the shark" means what you think it means.

I also don't think that "tragedy of the commons" describes what you think it describes. Private manufacturing capacity, and privately owned inventory within a supply chain, is not a "commons".

What we have seen over the past 8 years is an increase in demand (for whatever reason) which exceeded supply. You are advocating for other people to reduce their demand, because you believe the outcome would benefit you, but that's just a different game.

 

[RX-79G]

Considering that the demand was based on a false premise, it would be nice if people reduced their demand to something a bit closer to what they actually use.

 

[Ed Ames]

Was it a false premise? Or did the outcome change in part because people were voting with their wallets?

Politicians keep their jobs by reading signals from the public, and by understanding what aggregate behavior signifies about public mood. When proposing a gun restriction causes sustained record gun sales, that's a loud signal. It is shouting out that people fear, and do not want, gun restrictions.

You can point to the fact that few new restrictions have been enacted and say, "See, those purchases were based on a false premise." I can point to the fact that few new gun restrictions were enacted and say, "See, all those people making purchases succeeded in influencing public policy."

 

[RX-79G]

You seem to be implying that the Obama administration didn't enact certain types of gun control because a certain small portion of the population hoarded .22LR. Is that right?

That's nuts.

I think that gun banners everywhere were delighted that a small portion of the population hoarded the ammo to the point that it became rare and expensive, and they didn't have to do a thing because we did it to ourselves. Huge personally owned ammo stockpiles (especially of .22) is the next best thing to shoveling it into a landfill.

 

[1911 guy]

Quote:
Huge personally owned ammo stockpiles (especially of .22) is the next best thing to shoveling it into a landfill.

Wrong. Or at least partially wrong, depending on your motive for owning large amounts of ammo. I plan on using mine. It was accumulated over decades and will keep me shooting into my retirement when others are rolling pennies for gas and deciding between groceries or meds. A stash purchased in a short time and a hedge against some threat unlikely to materialize does suit your description, though.

 

[kozak6]

The initial panic after Sandy Hook depleted the supply. Then, it turned out that you could quadruple your money by flipping the .22 ammo instead.

I think greedy flippers have done more to exacerbate the shortage than panic buyers.

 

[AlexanderA]

That's a good analysis regarding the consumers' end of the equation. But eight years of panic buying boosted the manufacturers' and sellers' end. They profited handsomely from the stampede. (Obama was said to be "the greatest gun salesman in history.") Now that the buyers' end is returning to normal, the gun industry finds itself in the doldrums. It has to find something else (like perhaps innovation?) to boost sales.

 

[Ed Ames]

You seem to be implying that the Obama administration didn't enact certain types of gun control because a certain small portion of the population hoarded .22LR. Is that right?

That's nuts.

I implied no such thing. Obama was executive branch, while laws (needed for new meaningful changes) come from the legislative branch.

It certainly influenced legislators who were wondering which way the wind was blowing.

I think that gun banners everywhere were delighted that a small portion of the population hoarded the ammo to the point that it became rare and expensive, and they didn't have to do a thing because we did it to ourselves.

Probably true. But the "true believers" in gun prohibition are a small minority. They can't get anything done without getting others to go along with their ideas. The more pragmatic majority follows the public mood, which was pretty well illustrated by record sales in the firearms industry.

Huge personally owned ammo stockpiles (especially of .22) is the next best thing to shoveling it into a landfill.

I guess it depends on what you mean by "huge". Since 500/day is a pretty standard burn rate, and the average person could easily shoot once a month if they wanted, that's 6,000rds per year, or maybe 360,000 rds per life. If you are stocking up for family use as well you might want a multiple of that...so 360k up to perhaps a million seems pretty unexceptional. It wouldn't cover a serious shooter's needs of course, as they might practice 7 days a week meaning they need about two million rounds plus whatever they shoot for fun. So those aren't huge numbers in this context.

Do many people have five million+ rounds stockpiled? Doesn't seem likely.

 

[Cannibul]

I implied no such thing. Obama was executive branch, while laws (needed for new meaningful changes) come from the legislative branch.

It certainly influenced legislators who were wondering which way the wind was blowing.



Probably true. But the "true believers" in gun prohibition are a small minority. They can't get anything done without getting others to go along with their ideas. The more pragmatic majority follows the public mood, which was pretty well illustrated by record sales in the firearms industry.



I guess it depends on what you mean by "huge". Since 500/day is a pretty standard burn rate, and the average person could easily shoot once a month if they wanted, that's 6,000rds per year, or maybe 360,000 rds per life. If you are stocking up for family use as well you might want a multiple of that...so 360k up to perhaps a million seems pretty unexceptional. It wouldn't cover a serious shooter's needs of course, as they might practice 7 days a week meaning they need about two million rounds plus whatever they shoot for fun. So those aren't huge numbers in this context.

Do many people have five million+ rounds stockpiled? Doesn't seem likely.

My wife would tell you I'm trying really hard to get there!

 

[Orcon]

I do not think "jumped the shark" means what you think it means.

I also don't think that "tragedy of the commons" describes what you think it describes. Private manufacturing capacity, and privately owned inventory within a supply chain, is not a "commons".

What we have seen over the past 8 years is an increase in demand (for whatever reason) which exceeded supply. You are advocating for other people to reduce their demand, because you believe the outcome would benefit you, but that's just a different game.

I think jumped the shark means exactly what I think it means, and granted the industry wasn't in decline but it wasn't exactly the talk of the town either. The gimmicky tacticool, zombie-apocalypse and prepper oriented marketing wasn't nearly as prevalent during the previous administrations (though I am too young to know how bad it was under Clinton). For many the market forces brought firearms ownership from being somewhere in the background of daily life to the singly most important goal aside from sustenance.

I know it's a private industry, we are also talking firearms and ammo not cattle and grass. The tragedy of the commons describes precisely what happened, perhaps you are reading it a bit too literally. It's a resource pool that we as reloaders or firearms enthusiasts all have to draw from and when the resource pool is too heavily exploited everyone loses. I know a guy that is still sitting on over 20k .22LR and doesn't even own a firearm to shoot it with, "because you just never know" as he puts it. The "used" gun racks at my LGS are plum full of ARs right now because of people who over-extended and are hoping to recoup some loses now that they realize the sky isn't falling.

 

[Ed Ames]

I think jumped the shark means exactly what I think it means, and granted the industry wasn't in decline but it wasn't exactly the talk of the town either. The gimmicky tacticool, zombie-apocalypse and prepper oriented marketing wasn't nearly as prevalent during the previous administrations (though I am too young to know how bad it was under Clinton). For many the market forces brought firearms ownership from being somewhere in the background of daily life to the singly most important goal aside from sustenance.

Jumping the shark would imply a desperate effort to restore relevance by introducing - and hyping - something that isn't otherwise relevant. As I recall it comes from a failing TV show that tried (and failed) to revive interest by having a character literally jump over a shark, even though jumping over sharks was not something that made any sense in the context of the show. In other words, it is a creative failure during a period of decline.

It doesn't really apply to an entire industry (TV didn't jump the shark just because one show did) and it doesn't apply to people who are seeing massive growth (jumping the shark is a failed stunt, in that it doesn't increase interest).

As for zombie/tacticool/preppie guns, I don't think they had anything to do with the public's rush to buy guns. That was individual companies within tbe industry trying to bring sales to their particular products in competition with others in rhe market.

The gun industry has always followed fashions in fiction. In the 1950s through 1970s there were all sorts of cowboy guns because cowboy fiction was popular. Before that there were .22lr rifles with African safari scenes stamped on them. Dirty Harry sold a lot of .44mag revolvers in the 1970s and 1980s. In the 2000s a lot of fiction took a zombie apocalypse turn. The zombie movie wave, and Iraq movie wave, inspired some gun sales too.

I know it's a private industry, we are also talking firearms and ammo not cattle and grass. The tragedy of the commons describes precisely what happened, perhaps you are reading it a bit too literally. It's a resource pool that we as reloaders or firearms enthusiasts all have to draw from and when the resource pool is too heavily exploited everyone loses. I know a guy that is still sitting on over 20k .22LR and doesn't even own a firearm to shoot it with, "because you just never know" as he puts it. The "used" gun racks at my LGS are plum full of ARs right now because of people who over-extended and are hoping to recoup some loses now that they realize the sky isn't falling.

20k of .22lr is what, 4 cases? Volume equivalent to a 30-pack of beer? I'd say he should probably get a better chair but that's not unreasonable if he has short legs. Oh, am I reading too literally again?

I'm not sure why you think having enough ammo to take a family of 4 to the range 10 times is a bad thing, but that's not important.

The essence of a commons is that everyone has a shared right to receive benefit from a resource. If that's not true, it isn't a commons. And it may be true for BLM land but it is clearly not true for privately owned firearms, ammo, et cetera. As such, trends in the firearms market are no more a "tragedy of the commons" than the fact that GOOG stock once sold for $800/share (or $300/share if we go back far enough) and now sells for $760/share is a tragedy of the commons. You are trying to have a tragedy of the commons without a commons, and that doesn't work.

 

[RX-79G]

Ed, I don't think you're completely off base. I agree with many of the things you're saying. Maybe Congress did get a message, or maybe they just didn't have enough votes?

The problem is: If 500 rounds a person per range visit is normal, why wasn't it normal 10 years ago? Are ranges that full these days? Something definitely happened that made people who used to buy ammo to use suddenly buy ammo to keep at such a huge rate that something as innocuous as .22LR has become a rarity that is stretching the ammo companies production capacity to the limits.


(I agree the OP misused "jumping the shark". But the commons thing is not a bad way to describe how a small number of people have negatively impacted the ammo market for everyone.)

 

[stoky]

If anti-gun people are sheep, and pro-gun hoarders are sheep, that really doesn't leave a lot of non-sheep.

just dawgs

 

[Orcon]

Jumping the shark would imply a desperate effort to restore relevance by introducing - and hyping - something that isn't otherwise relevant. As I recall it comes from a failing TV show that tried (and failed) to revive interest by having a character literally jump over a shark, even though jumping over sharks was not something that made any sense in the context of the show. In other words, it is a creative failure during a period of decline.

Well to me that's what it looked like, only instead of failing it worked. Just one man's perspective.

20k of .22lr is what, 4 cases? Volume equivalent to a 30-pack of beer? I'd say he should probably get a better chair but that's not unreasonable if he has short legs. Oh, am I reading too literally again?

I'm not sure why you think having enough ammo to take a family of 4 to the range 10 times is a bad thing, but that's not important.

He actually does have short legs but I honestly don't know why that would be relevant. 20k is not much ammo in the general scheme but like I said, he never intended to shoot the stuff. He bought it because everybody else was buying it. I'm totally in support of having ammo on hand for future use but I don't agree with the hoarder mentality.

The essence of a commons is that everyone has a shared right to receive benefit from a resource. If that's not true, it isn't a commons. And it may be true for BLM land but it is clearly not true for privately owned firearms, ammo, et cetera. As such, trends in the firearms market are no more a "tragedy of the commons" than the fact that GOOG stock once sold for $800/share (or $300/share if we go back far enough) and now sells for $760/share is a tragedy of the commons.

That would only make sense if the resource pool was depleted and it doesn't have to be a true commons, merely a common resource pool. Like if you lived in a small town with only one gas station and they can only stock enough fuel for everyone based on average consumption. One guy starts filling up his bulk tank "just in case", his neighbor starts doing the same thing because he doesn't want to get stuck without. If more people follow this trend, fuel resources are depleted before the supply can be renewed.

Picking apart analogies and idioms aside, I think that the ballot box motivated more politicians than the market did.

 

[Ed Ames]

Ed, I don't think you're completely off base. I agree with many of the things you're saying. Maybe Congress did get a message, or maybe they just didn't have enough votes?

Getting a message and not having the votes are perhaps different ways of describing the same thing.

The problem is: If 500 rounds a person per range visit is normal, why wasn't it normal 10 years ago? Are ranges that full these days?

I can only speak to what i have seen, but yes the ranges are more full. The range I usually go to went from always having lanes open to having to wait for a lane to open. At the same time, at least 3 new ranges opened up in the area and they look busy too.

About 10 years ago I used to go out to a stretch of BLM land just about every Saturday morning and shoot for an hour or two before breakfast. Usually there would be maybe two other groups shooting. I tried to go back there on a Saturday earlier this year and there were 12 groups set up in the same area.

Something definitely happened that made people who used to buy ammo to use suddenly buy ammo to keep at such a huge rate that something as innocuous as .22LR has become a rarity that is stretching the ammo companies production capacity to the limits.

It doesn't take a huge shift for that to happen. A 10% change in consumption can mean massive changes in availability. Especially if an industry has reached a capacity limit.

I suspect a big part of the issue was that the industry ignored millennials, assuming that they would be anti-gun. The industry had production levels appropriate for Boomers and Xers, and suddenly this huge cohort (bigger than the Boomers, way bigger than the Xers) starts coming of age and, surprise, buying guns at a faster rate than the Xers did.