Popular vs Valuable

[Xerographica]

Ten coworkers are trying to decide which restaurant to go to after work…

X = The Dumpling Palace (Chinese food)
Y = The Spaghetti Place (Italian food)

With voting… the coworkers would simply raise their hands to indicate whether they prefer X or Y….

X = 6 votes
Y = 4 votes

Voting is a really quick and easy way to figure out which option is the most popular. In this case... the Chinese restaurant is the most popular option. But is it necessarily the most valuable option?

One way to figure out which option is the most valuable option would be to add up everybody's willingness to pay (WTP) for their preferred option. Each person would write three things on a piece of paper...

1. Name
2. WTP
3. Preferred option

Then they would put their paper into a hat. When the last person put their paper into the hat... the "accountant" (the person with the best maths)... would add up the WTPs and voila!

X = $4 dollars
Y = $8 dollars

The Chinese restaurant is the most popular option but the Italian restaurant is the most valuable option. In fact, the Italian restaurant is twice as valuable as the Chinese restaurant. This means that $4 dollars worth of value would have been destroyed if the coworkers had gone to the Chinese restaurant rather than to the Italian restaurant.

In order for people to be honest about their WTP... the losers wouldn't have to pay anything but the winners would have to pay the losers $8 dollars. The $8 dollars wouldn't be evenly distributed... it would be proportionally distributed. If Bob's WTP for the Chinese restaurant was $2 dollars... then this would be half of the total spent for the Chinese restaurant. So he would get half of the money spent on the Italian restaurant ($8/2 = $4). Bob wouldn't have much room to complain that this compensation wasn't fair because he's the one who decided what "fair" was in the first place.

Essentially, when Bob wrote down that his WTP for X was $2 dollars... he was basically saying… “I prefer to eat at a Chinese restaurant. But… for $2 dollars I wouldn’t mind eating at an Italian restaurant.” So his WTP was also his WTA (willingness to accept).

One clear drawback of this method is that it's far more time consuming than simply voting. Even if there was an app for it then it still wouldn't be as fast as people simply raising their hands. Not only is it more time consuming... but it requires more mental effort. Unless you're Buridan's ass... it shouldn't be too difficult to decide that you prefer to eat at The Dumpling Palace. It requires more brainpower to decide exactly how much you prefer to eat at The Dumpling Palace. It's one thing to determine your preference. It's another thing to determine the intensity of your preference.

Can anybody think of any other drawbacks? Are there certain situations where it would be better.... or worse... to determine which option was most valuable? Can anybody imagine ever doing this with their significant other? You prefer to watch a romantic comedy. Your girlfriend prefers to watch a Kungfu movie. She ends up paying you $4 dollars to watch a Kungfu movie. Are you both happy? Or are you both disgruntled? If you fall asleep half way though the movie does she ask for a partial refund?

Personally... I do think it's good to know just how popular an option is. I like surveys! But I think it's even better to know just how valuable an option is.

Today a fellow replied to something I wrote on Medium. He tagged his story with the word "inequality". Under his story Medium decided to display links to three popular stories also tagged with "inequality"...

1. Maybe We Should Start Diverting Social Security to Millennials by Ester Bloom (290 hearts)
2. Urgent Memo from the Council for Human Decency by Holly Wood (131 hearts)
3. Surge Pricing for Diapers by The White House (90 hearts)

Chances are really good that quite a few of you would also *heart* these stories. But does this necessarily mean that quite a few of you would also be willing to allocate a nickle or even a penny to these stories?

[Alvecia]

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

[Xerographica]

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

But in which situations, exactly, is this a drawback?

The nine coworkers groan and say, "Oh no... the CEO wants to have dinner with us again! Guess we're eating sushi for the 5th day in a row!"

[Galloism]

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

But in which situations, exactly, is this a drawback?

The nine coworkers groan and say, "Oh no... the CEO wants to have dinner with us again! Guess we're eating sushi for the 5th day in a row!"

Yeah, they probably will.

Especially the guy who's allergic to sushi.

[Ethel mermania]

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

But in which situations, exactly, is this a drawback?

The nine coworkers groan and say, "Oh no... the CEO wants to have dinner with us again! Guess we're eating sushi for the 5th day in a row!"

as long as he is buying.

[Maqo]

In order for people to be honest about their WTP... the losers wouldn't have to pay anything but the winners would have to pay the losers $8 dollars. The $8 dollars wouldn't be evenly distributed... it would be proportionally distributed. If Bob's WTP for the Chinese restaurant was $2 dollars... then this would be half of the total spent for the Chinese restaurant. So he would get half of the money spent on the Italian restaurant ($8/2 = $4). Bob wouldn't have much room to complain that this compensation wasn't fair because he's the one who decided what "fair" was in the first place.

Its kind of obvious that total value can be maximized by summing the value gained for each option for the people participating, and then selecting the item with the highest total value.
That doesn't mean that you can arrive at the greatest total value by asking people their 'willingness to be paid' - as with most of your systems, a strategic player can take advantage and maximize his own benefit.
Strategies arise where you try to understate your valuation so that you only just win, or only just lose. Even to the point of switching sides. Perhaps this is difficult on the first round, but on the second round you have a good idea of people's valuations.

Lets say you have people A, B and C voting on options X and Y.
A values X at $24, Y at $4. He thus 'votes' '$20 for X'.
B values X at $3, Y at $7. He thus votes '$4 for Y'
C values X at $6, Y at $7. He thus votes '$1 for Y'.

Votes are tallied and it comes out at $20 for X, $5 for Y. B gets $16 payment, C gets $4 payment. Total value realized = $33 (compared to $18 if just straightforward voting).

But on the second round, next time they go out, everyone has more information. Lets say B and C hold steady. What should A do?
He should vote '$6 for X'. (or $5.00000001, but lets use whole dollars)
X still wins - but pays out the minimal amount to the losers. The total value is still $33, but A now gets $18 for himself rather than $4.

Or lets say that A and B hold steady. What should C do?
He should vote '$15 for Y'. That way he gets paid out $15.8 rather than the $4 he previously would have gotten. Total value is still $33.

With different valuations, you can even create a situation where it is beneficial for someone to 'switch sides' and gain a portion of the payout while still getting the service they want more.

But not everyone will hold steady: A and C will both strategize at the same time; and not everyone will vote honestly in the first round. It MAY be that an UNSTABLE equilibrium is reached where all players vote honestly. I don't know enough about game theory calculations to work out exactly what to do, but most likely this game is already described somewhere. Its fairly obvious that it isn't stable.

EDIT:Another quirk is that betting honestly and LOSING is going to give you significantly more value than betting honestly and winning. Wat?
If you value X at $10 and Y at $20, so you bet '$10 for Y':
a) if you LOSE, you're going to be compensated >$10 (total votes for X = A, total votes for Y = B, you gain A * 10/B where A > B). Your total value gained will be $10+ >$10 = >$20.
b) if you WIN, you're going to lose $10 (whatever you voted for). Your total value gained will be $10 (your valuation of Y - your voting amount).
If the outcome of the game is that you're (personally) better off losing than winning, you'd better believe that the optimal strategy will not be honesty.

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

But in which situations, exactly, is this a drawback?

The nine coworkers groan and say, "Oh no... the CEO wants to have dinner with us again! Guess we're eating sushi for the 5th day in a row!"

You're equating intensity of preference with amount paid. Hopefully it should be obvious that this isn't the case when ability to pay is significantly different.

Lets say the poorest person in your group has a seafood allergy, and the richest person in your group loves seafood. The poor person has the most intense preferences ("I will literally die if we go where you want to go") but if the only way they're allowed to express this preference within the group is with money, they can't adequately communicate this intensity in the face of the purchasing power of other members.



It's really worth noting that there are many, many different voting methods that are far better than simple majority. https://en.wikipedia.org/wiki/Voting_system. If you decide to discuss any of these, it is extremely important to include 3+ candidates and more voters than candidates, or many of the distinctions disappear.

[The Joseon Dynasty]

This is probably not a strategyproof auction. It's very similar to your last one, which I demonstrated would not work in your last thread.

[Alvecia]

One drawback would be the relative value of each person's WTP.
The WTP of two seperate people would be the same, i.e. $10
Yet, if person A has twice as much money as person B, Person A's valuation is half as much.

But in which situations, exactly, is this a drawback?

The nine coworkers groan and say, "Oh no... the CEO wants to have dinner with us again! Guess we're eating sushi for the 5th day in a row!"

Bynot calculating relative wealth, you are not calculating the true value.
Value being defined as


value/ˈvaljuː/


noun
1.the regard that something is held to deserve; the importance, worth, or usefulness of something.

[Empire of Narnia]

Reminds me of the time I was able to over-ride my friends choice of restaurant by offering to pay for everyone's meal if we went to Mickey D's. We went to McDonald's, no regrets. The food was god but destroying democracy was priceless.

[Xerographica]

Strategies arise where you try to understate your valuation so that you only just win, or only just lose. Even to the point of switching sides. Perhaps this is difficult on the first round, but on the second round you have a good idea of people's valuations.

Yesterday I decided to eat Chinese food. Therefore... today I'm going to make the same decision?

Today the stock market's valuation of C is X. Therefore... tomorrow the stock market's valuation of C will also be X? Because... circumstances aren't complex?

Lets say the poorest person in your group has a seafood allergy, and the richest person in your group loves seafood. The poor person has the most intense preferences ("I will literally die if we go where you want to go") but if the only way they're allowed to express this preference within the group is with money, they can't adequately communicate this intensity in the face of the purchasing power of other members.

Why in the world would Sally, who has a severe seafood allergy, voluntarily choose to participate in the voting or spending decision making process when one of the options is seafood? Does Sally have a death wish? Does she enjoy playing Russian roulette?

Here's an idea... let's play spin the bottle with everybody who has already participated in this thread...

Xero
Alvecia
Galloism
Ethel mermania
Maqo
The Joseon Dynasty
Empire of Narnia

I proposed this idea... therefore... everybody on this list has no choice but to participate? Really? Ok. Let me grab a few breath mints.

I want you to like tax choice on Facebook. Let's play "show your WTP" in order to decide whether you do so! I proposed this idea... therefore... you have no choice but to participate? Really? Ok. I'll telegram Alvecia my WTP for you to like tax choice on facebook. You telegram Alvecia your WTP for you to not like tax choice on facebook. Then he will post the results and we will abide by them.

[Maqo]

Strategies arise where you try to understate your valuation so that you only just win, or only just lose. Even to the point of switching sides. Perhaps this is difficult on the first round, but on the second round you have a good idea of people's valuations.

Yesterday I decided to eat Chinese food. Therefore... today I'm going to make the same decision?

Today the stock market's valuation of C is X. Therefore... tomorrow the stock market's valuation of C will also be X? Because... circumstances aren't complex?

It won't necessarily be *exactly* the same. But on day 2 I have more information about your preferences than I do on day 1, and can easily use that to my advantage. Or I can infer that knowledge from other information like what you've said in the past, or what the statistically average person likes - I could even just pretend that you're roughly the same preferences as me, and then strategise against myself. I don't have to go in blind.

But you really picked out the least important point.
The real issue is that your system is open to multiple strategies which don't involve voting honestly. Voting honestly is (at best) an unstable equilibrium - and I'd wager its actually the least optimal choice you could make.
Under the system proposed, you are significantly better off when you vote honestly and LOSE than if you vote honestly and WIN. You don't see that as a big problem?

A significant improvement would be that the winners only have to pay the loser's valuation. That way at least you get rid of the perverse situation above where you minimize your personal utility when you win the vote.

Thats really the only way that makes sense as well... if the winners have to pay their valuation, rather than the losers having to pay their valuation, its like:
Alex: Hey Bob, how much do I need to pay you for you to do X for me?
Bob: About $5. Hey much do I need to pay you to do Y for me?
Alex: About $10.
Alex: So how about I pay you $10 for you to do X?

Lets say the poorest person in your group has a seafood allergy, and the richest person in your group loves seafood. The poor person has the most intense preferences ("I will literally die if we go where you want to go") but if the only way they're allowed to express this preference within the group is with money, they can't adequately communicate this intensity in the face of the purchasing power of other members.

Why in the world would Sally, who has a severe seafood allergy, voluntarily choose to participate in the voting or spending decision making process when one of the options is seafood? Does Sally have a death wish? Does she enjoy playing Russian roulette?

Your previous variation on this idea was that, yes, people could initiate votes that other people would be forced to participate in. It is an important factor here that people must be able to refuse to participate.

Whether she literally has a seafood allergy is not really relevant though: its about having intense preferences, but not be able to express them with money. Or a person may have extremely weak preferences, but a low valuation for /a lot of money. Spending can't be taken as a proxy for intensity unless other factors are controlled for.

[Xerographica]

It won't necessarily be *exactly* the same. But on day 2 I have more information about your preferences than I do on day 1, and can easily use that to my advantage.

How is this not a two way street?

Argument1

A significant improvement would be that the winners only have to pay the loser's valuation. That way at least you get rid of the perverse situation above where you minimize your personal utility when you win the vote.

Argument2

Whether she literally has a seafood allergy is not really relevant though: its about having intense preferences, but not be able to express them with money. Or a person may have extremely weak preferences, but a low valuation for /a lot of money. Spending can't be taken as a proxy for intensity unless other factors are controlled for.

In the movie Indecent Proposal... a rich guy... Robert Redford... offers a poor married woman... Demi Moore... a million dollars if she'll sleep with him.

Let's imagine that I had written the script of this movie. In my version... Redford and Moore would have played "Show your WTP/WTA!" Redford would have written his WTP down on his piece of paper. Moore would have written her WTA on her piece of paper. Then they would have shown each other their papers...

Redford's WTP: $1,000,000
Moore's WTA: $500,000

According to your Argument1... even though Redford's WTP was $1,000,000 dollars... he should only have paid Moore $500,000 dollars.

But according to your Argument2... because Moore was poor... her WTA would be lower than her true valuation.

Evidently some feminists weren't very happy with the movie. Not sure if they would have been any happier with my version.

My version of Tinder would certainly be based on showing your WTA/WTP. I'm guessing it wouldn't be legal though.

Last year Jason Brennan published a book based on the premise that... If You May Do It for Free, You May Do It for Money. I strongly agree with the premise.

The following passage does a good job of highlighting the absurdity of our current culture...

Depending on their nature, incentives can shift a situation from a social to a monetary frame. Consider a thought experiment: You meet an attractive person, and in due time you tell that person, "I like you very much and would like to have sex with you." Alternatively, consider the same situation, but now you say, "I like you very much and would like to have sex with you, and, to sweeten the deal, I'm also willing to pay you $20!" Only a certain kind of economist would expect your partner to be happier in the second scenario. However, offering $20 worth of (unconditional) flowers might indeed make the desired partner happier. - Uri Gneezy, When and Why Incentives (Don’t) Work to Modify Behavior

[Kubra]

sure I'll put down a nickel turn me upside and see if one falls out
Oh wait, I have no money whatsoever
In general, I'm not a fan of systems of decision making that lower my own input in the decision making process, apparently you're not a fan of ones that involve folks like me at all.

[Maqo]

It won't necessarily be *exactly* the same. But on day 2 I have more information about your preferences than I do on day 1, and can easily use that to my advantage.

How is this not a two way street?

It definitely it a two way street. Everyone will be attempting to strategize all the time. How does your strategy change knowing that other people will also be playing with strategy? That's what the field of Game Theory is about.
The only thing you can be sure of is that people won't be betting honestly.

Argument1

A significant improvement would be that the winners only have to pay the loser's valuation. That way at least you get rid of the perverse situation above where you minimize your personal utility when you win the vote.

Argument2

Whether she literally has a seafood allergy is not really relevant though: its about having intense preferences, but not be able to express them with money. Or a person may have extremely weak preferences, but a low valuation for /a lot of money. Spending can't be taken as a proxy for intensity unless other factors are controlled for.

In the movie Indecent Proposal... a rich guy... Robert Redford... offers a poor married woman... Demi Moore... a million dollars if she'll sleep with him.

Let's imagine that I had written the script of this movie. In my version... Redford and Moore would have played "Show your WTP/WTA!" Redford would have written his WTP down on his piece of paper. Moore would have written her WTA on her piece of paper. Then they would have shown each other their papers...

Redford's WTP: $1,000,000
Moore's WTA: $500,000

Have you ever needed to haggle for something? Like, gone to a bazaar or market in a developing nation?
Lets say there was an item for sale that you valued at $20. Would you immediately ask the merchant 'Can I buy that for $20?'
No! You'd start at $1.
And he would counter that he couldn't possibly feed his family if he didn't get at least $30 for it.
And you'd reply that you're very sorry, but you have a family to feed too, and offer $5
And he exclaim that you're ruining him, but perhaps he could sell it for $20
And you would say you can't afford it for any more than $10 and start to walk away,
And he would chase you down and call you a rotten swindler,but perhaps if his family ate their shoes tonight he could part with it for $15,
And you would counter with $12, and he would accept, and you'd both walk away happy, because his real valuation is $5 and yours is $20.

Ie, exactly the opposite of what you're describing where both people start out with their thresholds.

According to your Argument1... even though Redford's WTP was $1,000,000 dollars... he should only have paid Moore $500,000 dollars.

Yes. If you pay the exact amount you value something for in a trade, you gain no value from the trade, and so you may as well not have engaged in it in the first place. The purchaser is presumably a rational agent who wants to maximize his value - so where possible he will attempt to pay the minimum amount of money.

I'm going to bring it back to the original situation - too many metaphors spoils the broth or something.

Person A values X at $10 and Y at $20. His honest vote would be $10 for Y.
Person B values X at $5 and Y at $4. His honest vote would be $1 for X.

If person A has to pay out his entire vote, he gives $10 to B. The net value for A is the value he gains from Y, ($20) minus the cash he pays out ($10) = $10 total value.
This is in fact the MINIMUM value that it is possible for A to obtain (with rational voting). He may as well have just gone to X in the first place and not done any voting. He would be better off voting any amount < 20 for Y, and equally as well off voting any amount for X.

If A had instead bet $1 for Y and LOST, he would have gained value from X ($10) plus B's payout $1, for total $11. He would be happier to bet $1 and lose, than to bet $20 and win.

This isn't some crazy theory, or something that needs bad movie analogies, decades old quotes or blog references. Its simple addition, It can be entirely contained to your system with absolutely zero external references. And it should be immediately obvious that if A has to pay out his entire vote (all of his difference between X and Y), then he has no incentive to win, or even participate.

But according to your Argument2... because Moore was poor... her WTA would be lower than her true valuation.

The amount she could signal would be lower than her true valuation.

Its a different situation, because she's engaging in a trade that she can refuse, rather than in a 'voting' system that she has presumably agreed to the terms of. If Moore's price is $500,000, that means she would gain value from receiving any amount of money >= $500,000 in exchange for her 'services'. Because its a normal trade, if someone offers her $400,000 she can just refuse, no harm done.

But in this 'voting' system (where she must either buy or sell and cannot abstain), Moore can't write $500,000, because she doesn't have $500,000. She can't afford to win. Because if Redford writes down $400,000, she would need to pay him $500,000 which she doesn't have. The maximum she can write down is what she can afford to pay out if she wins. But that amount doesn't reflect her actual preference. Hence amount signaled does not reflect intensity.

[Wizlandia]

Ten coworkers are trying to decide which restaurant to go to after work…

X = The Dumpling Palace (Chinese food)
Y = The Spaghetti Place (Italian food)

With voting… the coworkers would simply raise their hands to indicate whether they prefer X or Y….

X = 6 votes
Y = 4 votes

Voting is a really quick and easy way to figure out which option is the most popular. In this case... the Chinese restaurant is the most popular option. But is it necessarily the most valuable option?

One way to figure out which option is the most valuable option would be to add up everybody's willingness to pay (WTP) for their preferred option. Each person would write three things on a piece of paper...

1. Name
2. WTP
3. Preferred option

Then they would put their paper into a hat. When the last person put their paper into the hat... the "accountant" (the person with the best maths)... would add up the WTPs and voila!

X = $4 dollars
Y = $8 dollars

The Chinese restaurant is the most popular option but the Italian restaurant is the most valuable option. In fact, the Italian restaurant is twice as valuable as the Chinese restaurant. This means that $4 dollars worth of value would have been destroyed if the coworkers had gone to the Chinese restaurant rather than to the Italian restaurant.

In order for people to be honest about their WTP... the losers wouldn't have to pay anything but the winners would have to pay the losers $8 dollars. The $8 dollars wouldn't be evenly distributed... it would be proportionally distributed. If Bob's WTP for the Chinese restaurant was $2 dollars... then this would be half of the total spent for the Chinese restaurant. So he would get half of the money spent on the Italian restaurant ($8/2 = $4). Bob wouldn't have much room to complain that this compensation wasn't fair because he's the one who decided what "fair" was in the first place.

Essentially, when Bob wrote down that his WTP for X was $2 dollars... he was basically saying… “I prefer to eat at a Chinese restaurant. But… for $2 dollars I wouldn’t mind eating at an Italian restaurant.” So his WTP was also his WTA (willingness to accept).

One clear drawback of this method is that it's far more time consuming than simply voting. Even if there was an app for it then it still wouldn't be as fast as people simply raising their hands. Not only is it more time consuming... but it requires more mental effort. Unless you're Buridan's ass... it shouldn't be too difficult to decide that you prefer to eat at The Dumpling Palace. It requires more brainpower to decide exactly how much you prefer to eat at The Dumpling Palace. It's one thing to determine your preference. It's another thing to determine the intensity of your preference.

Can anybody think of any other drawbacks? Are there certain situations where it would be better.... or worse... to determine which option was most valuable? Can anybody imagine ever doing this with their significant other? You prefer to watch a romantic comedy. Your girlfriend prefers to watch a Kungfu movie. She ends up paying you $4 dollars to watch a Kungfu movie. Are you both happy? Or are you both disgruntled? If you fall asleep half way though the movie does she ask for a partial refund?

Personally... I do think it's good to know just how popular an option is. I like surveys! But I think it's even better to know just how valuable an option is.

Today a fellow replied to something I wrote on Medium. He tagged his story with the word "inequality". Under his story Medium decided to display links to three popular stories also tagged with "inequality"...

1. Maybe We Should Start Diverting Social Security to Millennials by Ester Bloom (290 hearts)
2. Urgent Memo from the Council for Human Decency by Holly Wood (131 hearts)
3. Surge Pricing for Diapers by The White House (90 hearts)

Chances are really good that quite a few of you would also *heart* these stories. But does this necessarily mean that quite a few of you would also be willing to allocate a nickle or even a penny to these stories?

The biggest drawback is that each individual would lie and say that his Willingness to Pay is lower than it really is (or they completely lie about their preference). The reason why an individual would do this is because so long as they believe that the summed overall WTP is greater than the overall WTA, then by lying about their own WTP they will be able to receive the compensation (or pay a lower cost for getting their option) AND the group would engage in their preferred activity (this is of course in there best interest). Thus, whilst the theoretical concept may be nice, it is hard to implement practically because rational individuals would state a lower WTP or even lie about their preference (similarly, those who are against the option will likely state a higher WTA in order to obtain greater compensation).

Think of this as a sort of Nash Equilibrium situation. Whilst a group of people's WTP may be greater than others WTA, each individual has a dominant strategy to lie (understate) about his WTP. This ultimately harms the group as the true "valuable" activity is not revealed.

The only way in which the situation above would not occur is in the situation where each option is preferred by no more than one person.

[Xerographica]

Think of this as a sort of Nash Equilibrium situation. Whilst a group of people's WTP may be greater than others WTA, each individual has a dominant strategy to lie (understate) about his WTP. This ultimately harms the group as the true "valuable" activity is not revealed.

In the movie there's a scene where the Nobel Prize winning liberal economist John Nash is hanging out at a bar with his buddies. A blonde walks in with her brunette friends. All of Nash's buddies see the blonde and immediately start drooling. Nash, being a genius economist, is more turned on by the economics of the situation. According to the theory which has formed the basis of modern economics, Adam Smith's Invisible Hand, the best strategy would be for each of Nash's friends to act according to their own preferences. Nash saw this "bottom up" strategy as a problem because, given that his friends all had the same exact preferences, it would be a zero sum game. They would all go for their first choice, the blonde, but only one could possibly succeed (well...). The rest would strike out with her friends who would be insulted that they were all second choices. For Nash, a better (yielding a larger total benefit) strategy would be a coordinated approach. So he devised a "top down" strategy/theory which supposedly debunked Smith's theory.

I got lazy and plagiarized myself. I wrote that Nash was a genius "economist" who was more turned on by the "economics" of the situation. Actually... he was more turned on by his math. There he was... more turned on by his math... while his buddies were equally turned on by some blonde. It was "funny" because Nash's math was based on the assumption of homogeneous preferences. So no, he wasn't a genius economist. Maybe he was good at math... but he was definitely terrible at economics. His theory didn't even account for his own behavior. His coordinated approach would have misallocated his limited resources to hitting on brunettes rather than tinkering with numbers.

Like I mentioned in that blog entry, Buchanan's mind was far more beautiful...

Individuals differ, one from another, in important and meaningful respects. They differ in physical strength, in courage, in imagination, in artistic skills and appreciation, in basic intelligence, in preferences, in attitudes toward others, in personal life-styles, in ability to deal socially with others, in Weltanschauung, in power to control others, and in command over nonhuman resources. No one can deny the elementary validity of this statement, which is of course amply supported by empirical evidence. We live in a society of individuals, not a society of equals. We can make little or no progress in analyzing the former as if it were the latter. - James M. Buchanan, The Limits of Liberty

[Xerographica]

sure I'll put down a nickel turn me upside and see if one falls out
Oh wait, I have no money whatsoever
In general, I'm not a fan of systems of decision making that lower my own input in the decision making process, apparently you're not a fan of ones that involve folks like me at all.

I'm pretty sure that my scenario didn't involve duct taping anybody's mouth shut.

Coincidentally, my most recent blog entry is all about persuasion... Markets maximize the exchange of information by maximizing the rationality of persuasion.

Right now kids can't vote. So it's pretty irrational to try and persuade kids to vote for, or against, Trump. Do you think kids should be allowed to vote? I sure do. Let's make it more rational to share civic information with children. Let's make it more rational for kids to learn about their country's leaders.

Of course it's far better to use spending rather than voting to decide things. With voting... kids would have equal influence. With spending... kids would have a lot less influence. Just like you would have a lot less influence. Well... monetary influence at least. If you have good information then you might have lots of informative influence.

If we replaced voting with spending.... then it would be far more rational for people to pull information. Which means that it would be far more rational for you to push information. As a result, everybody's decisions would be far more informed.

[Maqo]

Think of this as a sort of Nash Equilibrium situation. Whilst a group of people's WTP may be greater than others WTA, each individual has a dominant strategy to lie (understate) about his WTP. This ultimately harms the group as the true "valuable" activity is not revealed.

In the movie there's a scene where the Nobel Prize winning liberal economist John Nash is hanging out at a bar with his buddies. A blonde walks in with her brunette friends. All of Nash's buddies see the blonde and immediately start drooling. Nash, being a genius economist, is more turned on by the economics of the situation. According to the theory which has formed the basis of modern economics, Adam Smith's Invisible Hand, the best strategy would be for each of Nash's friends to act according to their own preferences. Nash saw this "bottom up" strategy as a problem because, given that his friends all had the same exact preferences, it would be a zero sum game. They would all go for their first choice, the blonde, but only one could possibly succeed (well...). The rest would strike out with her friends who would be insulted that they were all second choices. For Nash, a better (yielding a larger total benefit) strategy would be a coordinated approach. So he devised a "top down" strategy/theory which supposedly debunked Smith's theory.

I got lazy and plagiarized myself. I wrote that Nash was a genius "economist" who was more turned on by the "economics" of the situation. Actually... he was more turned on by his math. There he was... more turned on by his math... while his buddies were equally turned on by some blonde. It was "funny" because Nash's math was based on the assumption of homogeneous preferences. So no, he wasn't a genius economist. Maybe he was good at math... but he was definitely terrible at economics. His theory didn't even account for his own behavior. His coordinated approach would have misallocated his limited resources to hitting on brunettes rather than tinkering with numbers. ,

Somehow I'm continuously surprised by just how badly you can misinterpret what you're reading. I should know better by now.
For one, that scene in the movie isn't actually a Nash equilibrium. You probably shouldn't rely on Russel Crowe movies for your factual accuracy. Perhaps you could read Nash's papers instead.
Two, Nash's contributions do not rely on homogeneous preferences, nor on a top-down approach, nor even a coordinated approach. His major contributions to game theory are in non cooperative games. And it's even one of the key points of a Nash equilibrium that it doesn't imply optimality.

Your situation (where everyone votes their true values) is the textbook example of a system not at Nash equilibrium. Every single player can improve their value gained if other players hold steady.

Like I mentioned in that blog entry, Buchanan's mind was far more beautiful...

Well you heard it here first.. John Nash was a terrible economist
"Your Nobel Prize winning economist is wrong! Here's a quote from my (earlier) Nobel Prize winning economist"

[Xerographica]

This isn't some crazy theory, or something that needs bad movie analogies, decades old quotes or blog references. Its simple addition, It can be entirely contained to your system with absolutely zero external references. And it should be immediately obvious that if A has to pay out his entire vote (all of his difference between X and Y), then he has no incentive to win, or even participate.

We're hanging out and we're both hungry. You prefer Chinese food and I prefer Mexican food. We can't put it to a vote though because there's only two of us. We could certainly arm wrestle for it... or play rock paper scissors... or flip a coin... but instead, we decide to simply whip out our WTPs.

We go to the WTP app on our phones and each enter our WTPs.

My WTP: $7 dollars
Your WTP: $3 dollars

Your argument is that, rather than pay you $7 dollars, I should pay you $3 dollars. But if I do so... then I'm clearly a liar. Like, blatantly a liar. I just said that I was willing to pay you $7 dollars... but then I ended up only paying you $3 dollars. Evidently, based on my actual actions.... I was only willing to pay you $3 dollars. Since our WTPs were actually the same... then we might as well play rock paper scissors or flip a coin to decide whether we have Chinese food or Mexican food.

The system really wouldn't work if the winner could go back on their word. If you win... then what you said you're willing to pay is exactly what you're actually going to pay. No more... and certainly no less.

[Kubra]

sure I'll put down a nickel turn me upside and see if one falls out
Oh wait, I have no money whatsoever
In general, I'm not a fan of systems of decision making that lower my own input in the decision making process, apparently you're not a fan of ones that involve folks like me at all.

I'm pretty sure that my scenario didn't involve duct taping anybody's mouth shut.

Coincidentally, my most recent blog entry is all about persuasion... Markets maximize the exchange of information by maximizing the rationality of persuasion.

Right now kids can't vote. So it's pretty irrational to try and persuade kids to vote for, or against, Trump. Do you think kids should be allowed to vote? I sure do. Let's make it more rational to share civic information with children. Let's make it more rational for kids to learn about their country's leaders.

Of course it's far better to use spending rather than voting to decide things. With voting... kids would have equal influence. With spending... kids would have a lot less influence. Just like you would have a lot less influence. Well... monetary influence at least. If you have good information then you might have lots of informative influence.

If we replaced voting with spending.... then it would be far more rational for people to pull information. Which means that it would be far more rational for you to push information. As a result, everybody's decisions would be far more informed.

Lol you're basically saying that kids voting is a-ok, insofar as the value of their vote is significantly reduced. You're alright with universal suffrage, insofar as you can undermine the spirit and foundation of universal suffrage.

As for the informative role, oh do go on. Shall we have our own deliberative assembly? Perhaps you can find a historical precedent for this sort of system? You know, where the comparatively less moneyed take on an advisory role?

Look, we get it, you hate poor people, you've made it pretty clear in your threads that such is so.

[Galloism]

This isn't some crazy theory, or something that needs bad movie analogies, decades old quotes or blog references. Its simple addition, It can be entirely contained to your system with absolutely zero external references. And it should be immediately obvious that if A has to pay out his entire vote (all of his difference between X and Y), then he has no incentive to win, or even participate.

We're hanging out and we're both hungry. You prefer Chinese food and I prefer Mexican food. We can't put it to a vote though because there's only two of us. We could certainly arm wrestle for it... or play rock paper scissors... or flip a coin... but instead, we decide to simply whip out our WTPs.

We go to the WTP app on our phones and each enter our WTPs.

My WTP: $7 dollars
Your WTP: $3 dollars

Your argument is that, rather than pay you $7 dollars, I should pay you $3 dollars. But if I do so... then I'm clearly a liar. Like, blatantly a liar. I just said that I was willing to pay you $7 dollars... but then I ended up only paying you $3 dollars. Evidently, based on my actual actions.... I was only willing to pay you $3 dollars. Since our WTPs were actually the same... then we might as well play rock paper scissors or flip a coin to decide whether we have Chinese food or Mexican food.

The system really wouldn't work if the winner could go back on their word. If you win... then what you said you're willing to pay is exactly what you're actually going to pay. No more... and certainly no less.

Yes, your system incentivizes lying about your preferences. That was his point.

[Xerographica]

Lol you're basically saying that kids voting is a-ok, insofar as the value of their vote is significantly reduced. You're alright with universal suffrage, insofar as you can undermine the spirit and foundation of universal suffrage.

Have you ever publicly endorsed children's suffrage? I have. Either everybody votes, or nobody votes. The only qualification should be that you can't be accompanied in the voting booth.

Look, we get it, you hate poor people, you've made it pretty clear in your threads that such is so.

While I do endorse universal suffrage... from my perspective, it would be far better to replace voting with spending. Does this mean that I hate poor people? No. It doesn't. It means that I understand that everybody, but especially the poor, will benefit when QIRE isn't broken so often.

[Wizlandia]

Think of this as a sort of Nash Equilibrium situation. Whilst a group of people's WTP may be greater than others WTA, each individual has a dominant strategy to lie (understate) about his WTP. This ultimately harms the group as the true "valuable" activity is not revealed.

In the movie there's a scene where the Nobel Prize winning liberal economist John Nash is hanging out at a bar with his buddies. A blonde walks in with her brunette friends. All of Nash's buddies see the blonde and immediately start drooling. Nash, being a genius economist, is more turned on by the economics of the situation. According to the theory which has formed the basis of modern economics, Adam Smith's Invisible Hand, the best strategy would be for each of Nash's friends to act according to their own preferences. Nash saw this "bottom up" strategy as a problem because, given that his friends all had the same exact preferences, it would be a zero sum game. They would all go for their first choice, the blonde, but only one could possibly succeed (well...). The rest would strike out with her friends who would be insulted that they were all second choices. For Nash, a better (yielding a larger total benefit) strategy would be a coordinated approach. So he devised a "top down" strategy/theory which supposedly debunked Smith's theory.

I got lazy and plagiarized myself. I wrote that Nash was a genius "economist" who was more turned on by the "economics" of the situation. Actually... he was more turned on by his math. There he was... more turned on by his math... while his buddies were equally turned on by some blonde. It was "funny" because Nash's math was based on the assumption of homogeneous preferences. So no, he wasn't a genius economist. Maybe he was good at math... but he was definitely terrible at economics. His theory didn't even account for his own behavior. His coordinated approach would have misallocated his limited resources to hitting on brunettes rather than tinkering with numbers.

First, that movie's example is NOT an example of Nash Equilibrium (in that example there wasn't a clearly dominant strategy). Second, there is no reason why the individuals had to have homogenous preferences; so long as each individual has a dominant strategy, Nash Equilibrium applies.

Take for example three people (Alex, Bob and Claire) are going to see a movie. Alex wants to watch a documentary and values watching it at $7 (or alternatively, his WTA for watching the comedy is $7). Bob and Claire want to watch a comedy, and values watching it at $6 and $8 respectively (also restrict the choice set so that only one movie can be seen). In this case, the most "valuable" option is to watch the comedy (total value $7 < $6 + $8). In this case, Alex would be compensated his $7 by having Bob pay $3 ($6/2) and Claire pay $4 (8/2). Here, Bob earns a total value of $3 ($6 value for comedy minus $3 compensation to Bob).

However, Bob has an incentive to lie and claim that he prefers to watch the documentary (and claim that his WTP for the documentary is just under $1). By doing this, Bob manages to avoid paying Alex the $3 and gets to see a comedy (and thus gets a total value of $6). Claire has a similar incentive to lie (she would claim that her WTP to watch the comedy is $1). Thus, Bob claims (lies) that he values the documentary at $1, Claire claims she values (lies) the comedy at $1, and Alex truthfully claims that he values the documentary at $7. Under this system, an outsider would conclude that watching the documentary is the "most valuable", even though it clearly isn't (as the actual WTP for the comedy is $14 vs $6 for the documentary).

Conversely, Alex has an incentive to overestimate his WTP so as to receive additional compensation. Knowing that Claire and Bob jointly value the comedy at $14 (or thereabouts), Alex decides to claim that his WTA for watching the comedy is $14 (even though in reality it is only $7). If another person (say Dave) also preferred the documentary, he too would claim a higher WTA for watching the comedy (which would tip the summed WTA to over $14). In this scenario, an outsider would conclude that watching the documentary is more "valuable", even though (as we established at the beginning) it is not.

In essence, this is similar to the tragedy of the commons in that the people involved will strategically understate their WTP for an option that is likely to pass (so as to have to pay less compensation) or overstate their WTP for an option that is unlikely to pass (so as to receive more compensation).

[Wizlandia]

This isn't some crazy theory, or something that needs bad movie analogies, decades old quotes or blog references. Its simple addition, It can be entirely contained to your system with absolutely zero external references. And it should be immediately obvious that if A has to pay out his entire vote (all of his difference between X and Y), then he has no incentive to win, or even participate.

Your argument is that, rather than pay you $7 dollars, I should pay you $3 dollars. But if I do so... then I'm clearly a liar. Like, blatantly a liar. I just said that I was willing to pay you $7 dollars... but then I ended up only paying you $3 dollars. Evidently, based on my actual actions.... I was only willing to pay you $3 dollars. Since our WTPs were actually the same... then we might as well play rock paper scissors or flip a coin to decide whether we have Chinese food or Mexican food.

The system really wouldn't work if the winner could go back on their word. If you win... then what you said you're willing to pay is exactly what you're actually going to pay. No more... and certainly no less.

No, the system doesn't work because "I" have a motivation to initially declare that my willingness to pay is lower than $7 (I would declare it to be $3.01) so as to pay "you" less in compensation. In this case, I don't really need to "go back on my word", just a little foresight and strategic thinking.

And if you reverse this by saying I should just pay you your WTA of $3 (so that I have no motivation to lower my declared WTP), then you would have a motivation to declare your WTA as $6.99 so that you can siphon an extra $3.99 in compensation.

But if I do so... then I'm clearly a liar

Yes, people will lie, and thus the system will not work (or won't work very well).

[Kubra]

Lol you're basically saying that kids voting is a-ok, insofar as the value of their vote is significantly reduced. You're alright with universal suffrage, insofar as you can undermine the spirit and foundation of universal suffrage.

Have you ever publicly endorsed children's suffrage? I have. Either everybody votes, or nobody votes. The only qualification should be that you can't be accompanied in the voting booth.

Look, we get it, you hate poor people, you've made it pretty clear in your threads that such is so.

While I do endorse universal suffrage... from my perspective, it would be far better to replace voting with spending. Does this mean that I hate poor people? No. It doesn't. It means that I understand that everybody, but especially the poor, will benefit when QIRE isn't broken so often.

Oh yes, you're all for universal suffrage, insofar as it's a lower house affair and the lower house itself is given a far lower position, or perhaps equally among all applicable levels of government but with a system that stacks the odds against them equally within all applicable levels. Which is, of course, the outcome of weighted voting. Which you're advocating. You're merely trying to give it a publicly favourable spin. Here's a comparable situation: The value of the soviet ruble was fixed to the price of gold, so it is said publicly. But meanwhile, the price of gold is not the price of the world market, but a fixed price in rubles. QED, the value of the ruble was of a fixed rate not dependent on the value of gold. The british had a system in which one could vote both on where they lived and where they held property, a system obviously weighting in favour of those moneyed. That's contrary to the spirit and foundation of universal suffrage, defined as one person one vote, weighted equally, as is common in most modern western constitutions. Which, of course, you are here opposing. Insofar as us poor folk want to have equal say in the process of decision-making, your only politically tenable options are let us keep such or rewrite constitutions via undemocratic methods.

You've implied that giving this form of suffrage (one person, one vote, weighted equally) results in frequent breaking of "QIRE", which therefore implies that the poor are unsuitable for decisions on national economic policy. Coupled with some of the subject-matter of your other threads, particularly your one on slavery, we're not painted a rosy picture of your outlook on us of the underclass. Sry that we don't see your patronizing attitude towards as victorian benevolence bruv.