Everyday Peeple

Forget Parcheesi. Bayesian games are proper fun for the whole family. In a Bayesian game, one (or both) players doesn't know what type of person the other is. This is important because play will vary depending on the nature of your opponent. If you face the decision about whether or not to be the tough guy in a barroom confrontation, it's in your best interest to know whether or not the other dude can mop the floor with you. By reverse induction, it's therefore wise in such situations to signal to others that you're tough, or crazy or dangerous. This is true whether or not you're actually a badass. Acting tough in a barroom brawl game is therefore a pooling equilibrium. Contrast this with, say, the automobile market. A '31 Duesenberg Phaeton gets a motorist from Point A to Point B roughly as effectively as an '86 Yugo (provided you can find one still in working condition), yet for the price of one Doozy ($1.4M at auction), you can buy close to 1500 Zastava Korals (again, provided that many exist in the wild. A Dusenberg isn't 1500 times as efficient at transporting humans, so the price reflects something else about the owner. This is a separating equilibrium.

For most existing Bayesian-type games, we have pretty well-established heuristics about what to expect and how to play. We know when to be sincere (the marriage game) and when to be strategically dishonest (the dating game). But that's for well-established, properly-understood situations.

Meet Peeple, aka Yelp, but for humans. Yes, yes: the idea was stolen from either Dinosaur Comics or SMBC, depending on whether you ask Ryan or Zach (I do so hope they duke it out in the comments [they won't]). So far, most of the press has been pretty unkind. It's easy enough to imagine anonymous vandals ruining moderate-to-high profile people's reputations with relative ease and impunity. If this happens, the sensible response from folks with chronically bad ratings is to poison the well, so to speak. That is, if a separating equilibrium arises, where actually awful people tend to accumulate negative reviews, then those awful people will have an incentive to sock-puppet up and leave piles of negative reviews on the profiles of their rivals, thereby creating a pooling equilibrium where everyone looks awful. Sort of like Encyclopedia Dramatica, but with less fun and imagination.

Still, I think it'd be a nice experiment to see what sort of Bayesian game arises. Recall that some Bayesian games have no pure dominant equilibrium strategy. If I were a betting man, I'd say that there would be some chaos (pooling eq) among second-tier culture warriors, but most other folks would enjoy more-or-less accurate ratings. If I were a betting man.

Edit: the above assumes that the proposed venture isn't merely a silly hoax (pr ~.6)

 

Rise of the Machines

The always-interesing Robin Hanson talks about brain uploads here:

What do you think? In a world of machine intelligence, even where the minds are emulations of meat-generated human brains, how will the face of euvoluntary exchange adjust? With insanely fast clock speeds, uploads are likely to quickly outstrip traditional humans in population as well as wealth. Our descendants could end up in a world where BATNA disparity is far beyond what we encounter these days. How will moral intuitions change? How will the institutions of trade adapt? Will the basic lessons of economics still apply?

Dubbers Asks: The Living Bejeebers

Is foreign intervention euvoluntary? Not according to Chris Coyne. He's found that even using the barest criteria for success forwarded by State Department elites, foreign adventures fail to meet the standards proposed. One cynical way of looking at it is that Coyne felled a lot of trees and spilled a lot of ink proving something everyone already knows: politicians lie. This is hardly a revelation.

What is a revelation is to whom they're lying. And it's a further revelation who it is that endeavors to believe those lies.

On Twitter, to Thy Dungeon Master, Dubbers asks a simple question: "how does war enthusiasm relate to income? My prior: negative correlation." The freight on this question is stamped "GSS" and it so happens that I know how to skipper that vessel, folks. I offered to do the leg work, and I also admit that my priors were the same as Carden's: high income means more aversion to war.

I was disappointed to discover that the GSS doesn't have that specific question (that I could find anyway; there are more than 5000 variables in that bad boy), but it does have a few plausible proxies. I went with USINTL, "take active part in world affairs" with a binary output: [take active part | stay out].

More below the fold. Lots more. Warning: what you'll find below may look pretty technical, but I promise I'll make it as easy as possible for the average reader to understand.

Wanna Bet?

My man Eli has some musings on the role of bets (Adam Gurri's notes here). In very very brief, Tyler Cowen says he won't make OTC bets with folks for essentially two reasons: he's made his bets by the kaleidoscope of life choices he's already made (career, family, research agenda, et al) and that beliefs are insufficiently separable to make one-off bets anyway. The thing that strikes me funniest here is that the very last person I'd think of upbraiding for refusing to wager would be Tyler Cowen. Seriously. I've racked my brain to think of someone else I personally know, and I keep coming up blank. Tyler has spent decades cultivating a rich personality that thrives on provoking provocateurs. He's the only guy I've met who can out-Strauss Strauss. Contrast this with your typical pontificatrix. Many economists are content to stuff a bunch of terms into a panel regression and use the results to make claims about the future. They use Bayes' formula as a tool to update their beliefs. Tyler wields it as a pair of hedge clippers, composing unforgettable topiary in other people's gardens. Truth is something else entirely in his hands. Asking Tyler to bet is like asking Jiro Ono to pan-fry a trout. Sure he could do it, but it's a waste of his talents and more to the point, it misses his purpose as an economist by a country mile.

But that's all a bit of a digression. You come here to read about euvoluntary exchange, not about economics professors' betting peccadilloes. The curious thing about betting is its remarkably low status. Why, just look at the mood affiliation of gambling. Las Vegas and Atlantic City are virtually synonymous with "sleaze", whether that affiliation is deserved or not. Even Monaco is where old Continental money goes slumming, gauche American imaginations notwithstanding. To get voter to swallow state-run lotteries, political elites had to rhetorically bundle it with the highest-status of all public expenditures: education. And that's just for betting over random outcomes! When we're talking about bets over beliefs, we're betting on (T)ruth (I'm not sure whether that deserves a capital 'T' or not).

Isn't that amazing? Truth is unarguably more important than how many pips on a pair of dice face up, and bets help separate wheat from chaff, yet not only are people loath to put their money betwixt their dentures, but regulatory agencies and even Congress actively and viciously shut down real-event betting markets on the most absurd grounds: incentive to cause grief (for example). This is amazing to me, steeped as I am in the EE conditions. If anything, betting markets provide a positive externality by spreading truth and corralling bloviation. Such markets should, under EE reasoning, be subsidized, not banned. Surely there's something else going on here.

And I think it's something to do with mixing the sacred and the profane. Sure, Robin says it's all about hypocrisy, and I don't think that's necessarily wrong, but I also don't think most folks would describe it that way, even after clear and careful consideration. I think most folks view the search for truth in terms of escaping from a benighted state of ignorance and the search for money as a base, necessary pursuit that keeps folks alive and comfortable. Mixing these two is like when a toddler gets gravy on her peas. You just ruined dinner.

As for why it worked for lotteries, I think that that sort of ad campaign had a nice firewall separating the mercenary from the scholar. Schools need money anyway, so why not just take advantage of some "harmless" fun? Alex is sort of right when he says that bets are a tax on bullshit, and I'm confident that he'd agree with me in saying that the lottery is a tax on stupidity. Still and all, I think that betting markets fall a bit outside the EE considerations and into the realm of Haidt's disgust dimension. Recall that life insurance used to be illegal on the grounds that it was tantamount to a wager on the arrival of the Grim Reaper.

Consumer Protection

My wife and I met when we were both working at the Federal Trade Commission, in our nation's capital.  I worked for Regulatory Analysis (or "Reg-A" as we called it).  She worked for Consumer Protection.

Fraudulent advertising is against the law*, and misrepresentation of a product is a tort.

So....did this guy have a cause of action?

*The "Wood Products Labeling Act" may be of particular relevance here.

Adam Smith and the Epistemological Problem

Adam Smith, Theory of Moral Sentiments III.I.46:

Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe [...] would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people [...] And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure [...] with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own. To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them? Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference?  [...] [W]hat is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct.

I hesitate to parse this passage for the simple reason that it's oft-abused. Foes of market reasoning seize upon the first half, neatly ignoring the remainder as if to say, "see what a monster is this Adam Smith who cares more for his little finger than for the many millions of souls abroad!" I guess it's easy enough to counter this sophistry with the balance of the quote, but still, I am a mite leery.

And not entirely for only unjust cause. Even if you read it all in its entirety (and yes, the ellipses are mine, you can follow the link for the undamaged original) you might be forgiven for mistaking the argument for a piece of descriptive analysis rather than the parable that it actually is. All Smith was doing was predicting construal level theory (by a couple hundred years), an idea lately popularized by my pal Robin Hanson at Overcoming Bias. In the husk of a pecan, things and ideas that are close to us in space and time are clearer, more textured and more immediate. The farther something is, the more we abstract from it, find trends, identify patterns, and sketch impressions. Fingers are near, China is far. This helps resolve the paradox.

The more alarming problem is that public policy is aimed to influence the geology in China and the tools it wields tend to be pinky shears. "We've got to do something" often means lopping off an errant digit in the hopes that the Baikal Rift will stay put for the nonce. To put it another way, there's this monumental epistemological problem faced by policy prescription. "Someone should pass a law" retains the appeal of resembling virtuous, bold action, but it does nothing to answer fundamental questions like: "Have we correctly diagnosed the failure" or "how will actual humans implement this policy" or "how will people react to this policy" or "what are the likely unintended consequences" or a dozen others. These are inconvenient questions to ask, since they get in the way of the Very Serious Business of lopping off fingers.

But they're the most important questions to ask. It is euvoluntary exchange and its growing scope that delivers poverty-remediating wealth to the world's miserable. Every act of coercion impinges on either the extant set of euvoluntary exchanges or on a stochastic potential set sometime out in the future. Toothy Teddy Rooseveltian action appeals to a mercurial temperament, but caution and judicious restraint forms the bulk of the arguments forwarded in the Federalist Papers, and for good reason. Thought, care, and reflection rather than fleeting mob passions inform the rule of law that cradles the robust institutions surrounding euvoluntary exchange. When I read Smith's passage above, I read of an ethics that is not incompatible with judicial prudence. I encourage anyone picking up a copy of TMS to do the same.

Fertilizing the Garden of Truth

Talk is cheap. To him who talks, that is. The rest of us often pay handsomely to hear others bloviate. Political and intellectual elites can earn millions on the lecture circuit, blistering audiences with gales of hot air. Empty suits parading falsehoods on television command impressive salaries, immune from censure for all but the most egregious lies. False prophets are almost never taken to task for their hornswaggles.

But then, mirabile dictu, someone finds a way to make blowhards accountable for their posturing, and what happens? Banned in the US. To no one's surprise, Intrade traffic has dropped to virtually nil.

What gives? I can see why political kayfabe artists have an interest in protecting their livelihoods, but there are two puzzles that still bug me: a) why aren't prediction markets more popular with regular people and b) even if they aren't popular, why isn't there more outcry when political elites put the kibosh on a tool that will increase the amount of honesty in political discourse. In other words, why aren't constituents more interested in the truth?

Hypocrisy is deep in our bones. We see it as strongly on Capitol Hill as in the highlands of PNG. Institutions like Intrade are the modern version of stripping the oracle bare and shoving her into the town square. Truth markets can't be euvoluntary because lying to ourselves and each other, believing those lies, loving them... this is mixed in the mortar of man qua man.

Homo Hypocritus shall cling to self-deception so long as MB>MC. Sadly, this is one of those cases where benefits are private, yet costs are socialized. Intrade blocks liars from the bailouts they expect. A hardy weed it is not.

Finding the Marble in the Oatmeal

Talking with Robin Hanson is a little like drinking from a fire hose. In my latest doorside chat, we discussed the role of books. Specifically, we discussed the role they would occupy in the future. Clearly, with the rise of cheap computing, the very large share of information won't be printed on pulped wood much longer. What purpose then books a score years hence? Two generations? A millennium?

Me being me, I pumped these thoughts into the hydrant of euvoluntary exchange. It strikes me that the decline of the bound volume bears only superficial similarities to other defunct technologies. The printed word, if you'll forgive a modicum of poetic earwax, permits communion with ancestors distant in ticks of the calendar and turns of the cartwheel. Books bend our mind's eye to the lyrics of ages long gone across hill and sea, through darkest jungle, into the beating heart of civilizations now in ash and dust, lending fleeting glimpses of hearts and minds long laid to their eternal rest. The buggy whip, the sextant, the flint axe and the oil lamp might occupy places of fondness in the cockles, but none of the day-to-day items that have fallen out of use boast the same civilization-forwarding characteristics as the printed volume.

Tomorrow's information abundance permits the reader, should she choose, to guzzle as much unfiltered knowledge as can fit through the hose-et-nozzle of her attention as she can handle, perhaps much much more. Quaint tomes harboring musky odors will sit unread on shelves as identity emblems signaling conformity with the rough grain of history. Knowledge is a super-euvoluntary commodity: without it, humanity snuffles the forest floor for edible roots, picking lice and constructing crude toys from the bones and feces of slain animals. Without the lights of generations past, there is no holly jolly Christmas.

The book is the earthly vessel of this intergenerational super-euvoluntary exchange. It has laid claim to totemic reverence in Western Civilization since before even the first movable type. Libraries are temples, are they not? Home libraries are shrines. People are unlikely to abandon their shrines, even if they are filled with trashy Harlequin Romances and 101 Tasteless Knock Knock Jokes anthologies. Their purpose is to spray their owner's guests with the essence of her intellectual and cultural identity. Unless a suitable substitute comes along, folks--ordinary folks--probably won't be queuing up to abandon this.

People who build steam locomotives in the backyard or raise horses have hobbies. People who will continue to collect books long after their instrumental use has waned are cultured. Maybe this is an important distinction, maybe not. Either way, I can't imagine the stock of books changing all that much over the next century, even if the flow dries up considerably.

 Reference:

Conversion Therapy: California SB 1172

Governor Brown recently signed Senate Bill 1172, banning therapies that supposedly cure homosexuality*. If I'm reading the peanut gallery correctly, the concern is over coercion: aggrieved parents sign their gay kids up for ex-gay conversion therapy, in which the kids are subjected to treatments of questionable efficacy that could be described as harassment in, say, a workplace context. I am insufficiently familiar with the therapy to comment on it in much detail; the little I know about it is from clearly biased sources, but I believe the presumed coercion is relevant to the conditions of EE and worth considering.

So, I imagine the legitimate problem is the coercion, yes? Parents shouldn't force their kids to alter a fundamental part of their innate personality just to suit their misguided moral proclivities, right? What if a kid wanted to opt in to the treatment? What if a rational adult wanted to? Would there be a EE condition still violated? Is there an expectation of regret? A BATNA disparity? Is there some presumption that personality traits aren't up for auction?

I suspect that the moral intuition behind this ban is aesthetic and probably tied to atavistic teamsmanship. People with forager moral norms think attempts to subvert human nature is abhorrent. However, this argument won't fly with those who hold farmer norms, so the arguments are easily couched in anti-coercion terms. Note that the therapy itself was banned rather than the coercion. Recall that the medical profession has oodles of experience in detecting coercion (viz. living wills, euthanasia, cool-down periods et al).

So what do you think? Under what conditions is ex-gay therapy euvoluntary? Even when it is euvoluntary, would you still be comfortable banning it anyway on other deontological grounds? How about aesthetic grounds? Is there an intermediate solution? How can the state protect folks against private coercion without preventing consenting adults from engaging in mutual acts of commerce?




*For the purposes of editorial clarity, I have elected to refrain from peppering today's comments with quotation marks. I hope you will appreciate my restraint and will understand that my failure to clearly and forcefully comment on the nature of the therapy itself is not meant to either endorse or condemn the practice.

Ray's Hell Burger

So, went to Ray's Hell Burger in NoVa. Very nice. Had the Hanger Steak. Fantastic.

Got home, and noticed that the bill notes "20% gratuity added" into the bill already. This was not mentioned on the menu (at least not in an obvious way), and it was never actually mentioned. The bill was LONG, because we ordered a lot of stuff. (There were also a lot of us).

The bill was also folded up, and tucked behind the "sign here" bill, which listed three lines:

Total: $287.55
Tip: __________
Grand Total: ________

I did not unfold the long bill, just saw this bill, and added a tip of $55. That's about 19.2%.

The point being that I paid $342.55 for a meal that cost $240. The service was fine. But the server intentionally folded up the main bill to disguise the fact that a gratuity was already added, and the bill to be signed just had a total, and a line for "tip," not "additonal tip."

Now, I understand that restaurants do this, and they are welcome to.

But I am welcome to do this: be careful if you go to Ray's Hell Burger III, 1650 Wilson Ave, in Arlington, VA. They are a bunch of sneaky, dishonest thieves. I certainly won't be going back to that ripoff joint.

Raising the point, for this blog: What is the burden of restaurants to explain charges? Am I right to feel ripped off? Is the restaurant obliged to provide an itemized bill that is understandable, or is the two page one enough? And should the waiter say, "Since your party is large, a 20% gratuity will be added," to make sure you know. She obviously did not WANT me to know, and did everything she could to hide it.

On the other hand, it is common for groups of six or greater (we were definitely greater) to have such practices. Is the italicized segment above just out of line?

Finally, I did NOT call and try to get the charge removed. I did not give the restaurant a chance to respond, or to make it right. I went straight to the internet. Isn't it more accurate to say that *I* am being the jerk here, giving normal restaurant practice?

On the "No Regret" Condition: Movies? Really?

One of the key preconditions for an exchange to be euvoluntary is "no regret." That is, the buyer must actually get something like what (s)he expects, and must actually want it.

A story about a law suit, called to our attention by alert reader Benjamin C., goes like this:

A Michigan resident is suing FilmDistrict because their newly released film "Drive" was not enough like "The Fast and The Furious." From the class-action lawsuit, the plaintiff hopes both to get back the $10 she spent on her movie ticket and to legally put "an end to misleading movie trailers." The article, which can be accessed here, asks whether "the advertising has been so deceiving as to be illegal."

Benjamin asks whether "we might also consider whether or not government has any business saying that a movie about driving can't be advertised with footage of a man driving."

Or, more technically, even if we agree that the exchange is not euvoluntary, the state should still allow the transaction. The young woman wanted to see a kind of "The Fast and the Furious" remixed, and actually thought that is what she was buying a ticket for. But the harm of regret has to be balanced against the harm of preventing advertising a movie about driving using (as Benjamin notes) "footage of a man driving."

UPDATE: Patrick at PopeHat has a nice analysis, and more background.