Ticket Prices Pay For The Whole Seat, But You'll Just Need The EDGE

The chamber is sparsely, yet tastefully appointed. The lone orchid is in bloom, shrouded from the glassy-eyed gaze of the man in the chair, partly obscured by the shadow cast by the naked bulb incongruously dangling from a plain black wire and partly obscured by the thick rawhide strap fastening his head to the sturdy oaken top rail.

The silence is broken by the sharp, staccato click of steel-shrouded heels on blood-red tile. The woman is carrying a cage that John Hurt or George Orwell fans will immediately recognize. At one end is a military-grade OBA facemask with the window removed. Secured to that is a wire mesh tunnel, perhaps eighteen inches long with deadfall gates at each end. At the other end is a tiny tin shack, roof rusted, housing a hillbilly rat famished from a sparse diet of millet crumbs.

The woman quickly, professionally, and wordlessly attaches the contraption first to the dedicated bracket emerging from the top of the chair, then with a fluid motion that suggests a journeyman's familiarity with shipboard firefighting gear, strapped the repurposed breathing mask to the man's sweat-soaked face. The involuntary whine that escaped his lips did precisely nothing to deter either her resolve or her efficiency of motion.

The comically large gold-plated key in his right hand was leaving an impression in his flesh, even as he strained vainly against his restraints. He didn't notice as she glided out of view behind him and began releasing the first safety catch on the deadfall nearest the snaggletoothed rodent snuffling at the far end of the cage. He did notice as the deadfall fell and the rat cautiously advanced down the tunnel, its claws raking against the wire mesh in the most awful symphony he could imagine.

As her elegantly manicured fingernail stretches toward the next catch, his whine escalates rapidly through a keen, then a wail, finally landing on an eardrum-shattering shriek. His hand flies open and before the prop key can even clatter to the floor, the device is whisked from his trembling head and is being spirited away by a dedicated assistant. The leather bonds on his head, arms, and legs are released, and he slumps to the floor, weeping in the sort of ecstatic bliss that only a brush with the deepest of fears can evoke.

I invite you to draw your attention to the woman. If she were in possession of a psychiatry degree and the room were part of her professional offices, this would be called "aversion therapy" and would be perfectly legal. If, contrarily, her job were unlicensed and she used the professional title of "dominatrix," the session described above would be called "edgeplay" and would be illegal, at least if money changed hands.

Consider the possibility that emotional therapy is a vocation, and that the wisdom embedded in the heuristics employed by seasoned professional doms is as good (if not better in some cases) than the classroom education obtained in graduate school. If paid licensed therapy is euvoluntary, why isn't paid BDSM?

End prohibition now. Therapy is not a crime.

Behavioral Economics and Voluntary Cocercion

Dan Ariely on discipline:


Good timing. Adam's piece this week is on prudence.

If you want a mechanism that discourages you from overeating, or from indulging in risky sexual activity, or from you-name-it, why not consider religion?

Libertarians may chafe a little at the suggestion that a church hierarchy imposes "voluntary" coercion, since church membership is quasi-coercive (with possible exceptions for anabaptist sects). And there are, of course, still selection effects for adherence: it still takes diligence to exercise virtuous behavior. Still, on the margin, organized religion seems like a fine, time-tested organization to help folks overcome their little daily irrationalities.

The two examples Ariely used are even classic examples straight out of the Middle Ages: gluttony and lust. Dear temperance, dear prudence,

Won't you come out and play?

Munger on Euvoluntary Exchange.

This was posted at BHL, but something tells me that it's not inappropriate to post here.



If you're a regular reader, nothing here should surprise you. But it's still worth watching for Mungo's dulcet tones.

Please enjoy.

Toward a Euvoluntary Military Service

From Anthony Gregory, writing in Reason:

Rather than reinstating the draft, a less drastic proposal exists, one more consistent with human rights, more conducive to peace, and more respectful of those on the front lines: a truly voluntary military. Today, unlike most any other U.S. institution, the armed forces practice indentured servitude: Employees agree to a term of service and face imprisonment or even execution should they quit. We do not consider it a "voluntary" job if a warehouse or factory forcibly prevents workers from quitting at will. Those who wish to honor the humanity of America’s soldiers should agitate not for conscription but for the freedom to resign. The remaining soldiers would be there by choice, and if they continued fighting unjust, counterproductive wars, it would be harder to regard them as victims of bad leadership and an apathetic populace.

ATSRTWT

 This is actually part of Chapter 3 of my dissertation, so I could discuss it at length. I'm cruel, but I'm not that cruel. Instead, I want you to ask yourself if the nature of a fixed labor contract for military service is necessarily coercive on net. Be sure to show your work. Remember that in order to establish systematic bias, you need to have some evidence of fraud or of an admixture of excess kurtosis coupled with excessively high discounting.

It's easy enough to model a coercive military service using an extensive form game, but it might be less easy to provide empirical evidence to support that theory. How would you build your case?

Hayek on Coercion

Hey, there, euvoluntarists!  A quiz.  Which of the following did Hayek claim in "Constitution of Liberty"?


According to Hayek, which of the following constitutes coercion
a) morose husband
b) nagging wife
c) hysterical mother
d) constant threat of arrest resorted to by arbitrary power

As Hayek puts it: “While we may pity the weak or the very sensitive person whom a mere frown may “compel” to do what he would not do otherwise, we are concerned with coercion that is likely to affect the normal, average person...A morose husband, a nagging wife, or a hysterical mother may make life intolerable unless their every mood is obeyed. But here society can do little to protect the individual beyond making such associations with others truly voluntary.”  (p. 138)

The reason?  "[W]e are tempted to define “coercion” by the use of such terms as “the interference with legitimate expectations,” or “infringement of rights,” or “arbitrary interference”. But in defining coercion we cannot take for granted the arrangements intended to prevent it. . . . Coercion not only would exist, but would be much more common if no such protected sphere existed [i.e. if there were no rights]. Only in a society that has already attempted to prevent coercion by some demarcation of a protected sphere can a concept like “arbitrary interference” have any meaning." p. 139.   

So, a, b, or c may be miserable, but you can leave.  (Of course, there is the hold-up problem, and the transactions cost of leaving).

Only d is "coercion," for Hayek.  Lacking the will to stand up to b, or leave c, doesn't make those scary things coercive.  What he leaves out, of course, is the physically abusive husband.  Presumably beating your wife and essentially enslaving her are coercive.  But even then, she could leave, unless literally chained or physically prevented, in most cases.  Hayek is ruling out psychological constraint, which makes sense in the abstract, but.... I don't know.

For a really great discussion of coercion and (truly) voluntary action, go here.  Interesting. 

A grateful nod to DB.

I'm Happier When I'm Forced to Give?

Prosocial Spending and Well-Being: Cross-Cultural Evidence for a Psychological Universal 

Lara Aknin et al. Journal of Personality and Social Psychology, forthcoming 

Abstract: This research provides the first support for a possible psychological universal: Human beings around the world derive emotional benefits from using their financial resources to help others (prosocial spending). In Study 1, survey data from 136 countries were examined and showed that prosocial spending is associated with greater happiness around the world, in poor and rich countries alike. To test for causality, in Studies 2a and 2b, we used experimental methodology, demonstrating that recalling a past instance of prosocial spending has a causal impact on happiness across countries that differ greatly in terms of wealth (Canada, Uganda, and India). Finally, in Study 3, participants in Canada and South Africa randomly assigned to buy items for charity reported higher levels of positive affect than participants assigned to buy the same items for themselves, even when this prosocial spending did not provide an opportunity to build or strengthen social ties. Our findings suggest that the reward experienced from helping others may be deeply ingrained in human nature, emerging in diverse cultural and economic contexts.

Sometimes people caricature the "happiness" research.  But the above is beyond caricature.  It just works fine, quoted verbatim and in context:  If the citizens in country A are forced to give money to citizens in country B, then BOTH countries will have happier citizens.  It is the opposite of the usual claim made about free trade:  If an exchange is voluntary, both parties are better off.  Here, if a transfer is INvoluntary, then both parties are better off.  A genuinely remarkable finding, a new step in scientific research.

Expensive Commitment at Low Prices

The good folks at Lifehacker put together a nice list of apps that provide voluntary coercion.

A sample:

Gym-Pact is pretty straightforward: attach your bank account to Gym-Pact, and when you don't go to the gym (and check in), Gym-Pact takes money out of your account. The money it collects is then redistributed to other users who actually went to the gym

My favorite of the bunch is this one:

Aherk doesn't have a mobile app, but it's easily one of the more sadistic ways to reach your goals. Aherk is designed to help you blackmail yourself. You provide Aherk with embarrassing pictures of yourself, and then a goal (say lose 10 pounds) you want to meet. If you don't meet it by the deadline, that embarrassing photo is released onto your social networks. Self-blackmail is a little tough, but once you set Aherk up, you can't back out, so you'd better accomplish those goals.

Part of the problem with any self-imposed commitment mechanism is credibility. You can always take the $100 bill out of the money-shredding alarm clock. With this Aherk thing, once you're in, that's it. You have bound your future self.

Note that this feature is wholly lacking in any pronouncement you'll ever hear from Congress, the Oval Office, or the FRB.


Note to self: draft a model of political kayfabe using this idea mixed with repeated BoS game and a dash of rational hypocrisy.

Regret Aversion by Autoproxy

My previous posts on regret leave smudgy the source of asymmetric information. When considering the euvoluntarity of insurance sales, used car transactions or the patronage of fine art, we typically analyze the nature of information asymmetries as a two-agent problem. The agent with the information advantage can end up having some severe problems with markets unraveling as the other side second-guesses signals and trustworthiness. With the way I've modeled regret, you might think of the worst problems being in cell 4: high information asymmetry and high search costs. Since folks well understand that these problems exist, there exist institutions like actuarial science, product underwriting and good ol' reputation.

What happens when it's your own brain generating the information asymmetries?

If you're a fan of Daniel Kahneman and Amos Tversky, you'll be familiar with the affective and the deliberative mind. If you're a fan of Robin Hanson, you'll be familiar with near-mode and far-mode thinking. A reasonable contrast between affective and deliberative reasoning is that the affective mind relies heavily on heuristics and intuition: it's atavistic and it reacts quickly. It's the system that lets us perform tasks we already know pretty well. As I'm typing, I don't have to hunt and peck for my letters, because my affective system knows where the keys are. My deliberative system tells me what words to write, as each sentence that rolls off this little assembly line is something new under the sun. The deliberative system is cool and calculating, more likely to carefully weigh the contents of a balance sheet. Certainly, both systems are prone to failure: affective reasoning can fall afoul of inappropriate heuristics and the deliberative system can run into some nasty problems with incomplete accounting or non-ergodicity.

The Lieberman-Trope construal level theory that has been folded into economics by Robin Hanson is a slightly different take on decision-making that relies on a cognitive distance analogy. Increasing distance reduces graininess and enables more abstract thinking. For the purposes of this here post, the present is near, the future is far.

Now consider what happens with regret when we pit these systems against each other. Now, instead of two individuals, we consider information asymmetries within a single mind. The near-mode me who relies on affective reasoning may light up that cigarette or guzzle that rotgut or... what, eat (inject, smoke? I have no idea how this works) that crystal meth, over the pitiful objections of my far-mode, deliberative mind. This conflict is a plausible source of what Buchanan refers to as "parentalism", where folks know they have this failure of willpower, where the rider can't control the elephant and they wish for an external drill sergeant to whip them into shape. Unfortunately for the well-intentioned paternalist, there may be no good way to ex ante distinguish between cases that will result in true regret and those that don't. Furthermore, there's a rather nasty selection problem when it comes to ex post regret expression: satisfied customers infrequently speak of their approval, leaving loud hair-tearers, tooth-gnashers and clothes-renders to fill the silence. It's easy to overestimate the level of regret in such an environment, tipping the distribution in the direction of non-euvoluntary.

So how do we conquer problems with willpower? Click the tag for "voluntary coercion" for some good examples. These aren't perfect, as they still require a moment of lucidity to opt in to these schemes and it may be that due to a person's initial endowment that they may not even realize they have a problem. Still, these solutions are plausibly preferable to the unfortunate consequences of direct state intervention. Yes, illicit drugs can be bad for your health, but prohibition breeds violent crime. This tradeoff strikes me as both deontologically and consequentially unacceptable.

So if I might pose Andrea's question again, so what? We know that people have problems with regrettable decision-making, we know that gross intervention carries costs, and we know that voluntary coercion may be insufficient for some folks. What's a euvoluntaryist to do? What civil institutions could plausibly exist in a reasonable counterfactual state of the world that might solve some of these problems? What are some reasonable policy steps to un-muzzle these institutions?

Voluntary Coercion: Fear the Mechanical Mother

There are several me's. There's the me today who eats six jelly donuts, and the me tomorrow who looks at the scale and say, "I HATE yesterday me!"

Some people have trouble getting out of bed when their alarm goes off. I've never had that trouble, but I know people who do. (We have talked about the problem before, here at EE).

For them, the current "me" is the rational one, who wants to constrain the future "me" who is going to act badly.

So, while in the case of the jelly donuts, future me cannot travel back in time and berate the past me who ate the high calorie snack. But in the case of the alarm clock, all rational me has to do is figure out a way to force future me to act in the way that current me wants. In effect, current rational me gets to write a contract, knowing that future me will be trying really hard to cheat on that contract.

And future me is just as smart as current me. So you need a commitment device. And here it is! As the designer, Paul Sammut, puts it:

"I wanted to make something that would essentially force me to get out of bed when I wanted to get out of bed the night before," said Sammut. "And I was thinking about ways of doing it and I thought about how in high school I had the perfect solution to this, which was my mother, and how she would, if it was time for me to wake up, she would force me out of bed."

He built the prototype in his spare time and uses it every day.

"Now I wake up before it goes off," said Sammut. "I subconsciously fear it and know I have to get up."

Now, I guess I need a mechanical mother to keep me away from those jelly donuts....

Voluntary Coercion: Is It Really Voluntary? Is It Really Coercion?

Have trouble getting up in the morning? Perhaps the negative consequences aren't big enough.

You can make the consequences as big as you want, though, by using this super keen money destroying alarm clock!

Couldn't be simpler. You just have to decide how big a prospective loss will be big enough to motivate you to get out of bed, and then put that amount of cash in the shredder hopper. Then, when the alarm goes off, you have one minute to get up and turn off the money killer. If you don't, it starts LOUDLY shredding your cash.

Since it goes one bill at a time, you might put a $1, a $5, a $10, a $20, a $50, and then some $100s. If it shreds slowly but loudly, say one bill every 30 second, you can "buy" an extra minute of nappy-nap for $6. But then the price goes up rapidly.

Now, I never have trouble getting up, and usually wake before the alarm. So stuff like this makes no sense to me. But it does raise some interesting questions.

1. The remorseless, mechanical money muncher is an effective commitment device. YOU put the money in, and you set the time you want it to start munching. So is it voluntary, or coercive, or both?

2. The advantage of the thing is the knowledge that it cannot be stopped, or argued with, or reasoned with. It will destroy unless you act the way you want to act, at the time you sign the "contract." But you do NOT want to get up, when the alarm actually goes off. (If you are the sort of person who might need this clock, that is.) Isn't this a pretty good description of the state? We agree to be coerced, if we disobey. And the state has no discretion, because it punishes all transgressions equally.

3. Should the thing be legal? After all, destruction of money is a federal crime. Of course, the point of the clock is that you will NOT destroy the money; that's why you put the money in a place where it COULD be destroyed.

UPDATE: Chris Conover comments, on Facebook: It's a great idea that technically, the state deems illegal. That, in a nutshell, describes too much of what the state does these days: prohibiting voluntary (read: mutually beneficial) acts between consenting adults. In this case, if the state were to enforce its ban on destroying currency, it would be prohibiting a consenting act between one's present and future self.

FT Caldwell Article on Colleague Ruth Grant's Book

Prof. Ruth Grant has a terrific new book, "Strings Attached."

Christopher Caldwell of FT writes a nice extended review and commentary. Here is an excerpt:

In Ruth Grant’s latest book, Strings Attached: Untangling the Ethics of Incentives, the professor of political philosophy at Duke University gives one the sense that day-to-day rules of American life are being set in a crooked fashion. Police officers hand out traffic tickets according to a daily quota. A South Carolina legislator proposes reducing prison sentences for inmates who donate their organs. The federal government collects billions in taxes for state road building projects, but will release the money only if states surrender their constitutional right to set the legal drinking age.

These stories all involve government incentives. The policy bestseller Nudge by Richard Thaler and Cass Sunstein has lately brought a similar approach into vogue. Nudge suggests displaying vegetables more prominently than desserts in school cafeterias and automatically enrolling company employees in retirement plans unless they protest. Prof Grant identifies the Thaler-Sunstein approach as “choice architecture”, a slightly different programme than the “incentivisation” she assails. But both offer politicians a way to herd citizens like cattle, while purporting to set them free.

There are two basic ways to get people to do something: coercion and persuasion. Both have their problems. Coercion is cruel. Persuasion doesn’t always convince. That is where incentives come in – you can offer someone something to do something he would not do otherwise. It is a trade. But it is also an exercise of power. These incentives are employed to counteract people’s natural motivations.
That is the way people understood the word “incentive” when it entered public-policy discussions a century ago. It was part of the American world view of the Progressive Era, a strange combination of utopianism and two-dimensional, “let’s get down to brass tacks”, “every man has his price” cynicism. This was the world of Taylorism and Charlie Chaplin’s Modern Times and social engineering proposed without embarrassment.

Incentivising is not only the market’s alternative to coercion. It is also powerful people’s alternative to persuasion. It can render governing classes unaccountable. Rulers get the outcome they desire, while the masses on whom it was imposed get the responsibility for having chosen it. An incentive is not a reward, something that can be fair or unfair. It is just a hedonic incitement. Prof Grant notes that the controversial bonuses paid to AIG employees after the insurer’s $180bn bail-out were revolting to those who think of bonuses as wages but acceptable to those who think of bonuses as incentives.

Dubious incentivisation is the hallmark of much of the US public sector.

ATSRTWT! And congrats to Ruth, a really good job on the book. It is an important achievement.

Magnus Jiborn

The internet is really something.

Found two works by Magnus Jiborn. Here is a book, his dissertation. And then an article.

I found the book particularly interesting. Coercion need not be involuntary. A group of coolees pulling a boat might hire someone to whip laggards. In fact, this theory of the firm has some merit: firms coordinate monitoring team production and enforcement of sanctions, ensuring that in equilibrium there are few violations. See, for example, Steven NS Cheung, THE CONTRACTUAL NATURE OF THE FIRM, JLE, 1983.

It is not far from there to Thomas Hobbes and social contract. The prisoners can get out of their dilemma if they hire a guy with a big sword to punish violations.