by Xerographica » Wed Mar 16, 2016 6:18 pm
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Alvecia » Wed Mar 16, 2016 6:21 pm
by Xerographica » Wed Mar 16, 2016 6:31 pm
Alvecia wrote: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.
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Galloism » Wed Mar 16, 2016 7:11 pm
Xerographica wrote:Alvecia wrote: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!"
by Ethel mermania » Wed Mar 16, 2016 7:56 pm
Xerographica wrote:Alvecia wrote: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!"
by Maqo » Wed Mar 16, 2016 8:54 pm
Xerographica wrote: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.
Xerographica wrote:Alvecia wrote: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!"
by The Joseon Dynasty » Wed Mar 16, 2016 11:02 pm
by Alvecia » Thu Mar 17, 2016 2:17 am
Xerographica wrote:Alvecia wrote: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!"
by Empire of Narnia » Thu Mar 17, 2016 2:44 am
by Xerographica » Thu Mar 17, 2016 5:48 pm
Maqo wrote: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.
Maqo wrote: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.
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Maqo » Thu Mar 17, 2016 7:00 pm
Xerographica wrote:Maqo wrote: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?
Maqo wrote: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?
by Xerographica » Thu Mar 17, 2016 9:57 pm
Maqo wrote: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.
Maqo wrote: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.
Maqo wrote: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.
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
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Kubra » Thu Mar 17, 2016 10:51 pm
by Maqo » Thu Mar 17, 2016 10:54 pm
Argument1Maqo wrote: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.
Argument2Maqo wrote: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.
by Wizlandia » Thu Mar 17, 2016 11:05 pm
Xerographica wrote: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?
by Xerographica » Fri Mar 18, 2016 1:30 am
Wizlandia wrote: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.
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
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Xerographica » Fri Mar 18, 2016 2:49 am
Kubra wrote: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.
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Maqo » Fri Mar 18, 2016 2:49 am
Xerographica wrote:Wizlandia wrote: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...
by Xerographica » Fri Mar 18, 2016 3:22 am
Maqo wrote: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.
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Kubra » Fri Mar 18, 2016 11:46 am
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.Xerographica wrote:Kubra wrote: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.
by Galloism » Fri Mar 18, 2016 11:52 am
Xerographica wrote:Maqo wrote: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.
by Xerographica » Fri Mar 18, 2016 2:00 pm
Kubra wrote: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.
Kubra wrote:Look, we get it, you hate poor people, you've made it pretty clear in your threads that such is so.
Forsher wrote:You, I and everyone we know, knows Xero's threads are about one thing and one thing only.
by Wizlandia » Fri Mar 18, 2016 3:22 pm
Xerographica wrote:Wizlandia wrote: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.
by Wizlandia » Fri Mar 18, 2016 3:28 pm
Xerographica wrote:Maqo wrote: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.
But if I do so... then I'm clearly a liar
by Kubra » Fri Mar 18, 2016 3:40 pm
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.Xerographica wrote:Kubra wrote: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.Kubra wrote: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.
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