Monthly Archives: November 2011

City By Combo Auction

I recently heard talks by Ryan Avent, author of “The Gated City”; and Matt Yglesias, author of “The Rent Is Too Damn High.” Both agreed that the inefficiency of urban land use has increased greatly in the last few decades, at least in the biggest US cities like New York. Most of the infrastructure that makes such cities great was made during the era of political machines, when a dominant party had great power to coordinate activities city wide.

We dismantled political machines out of revulsion for unchecked power. But now our cities fail to coordinate. Local zoning boards may often coordination to benefit local interests, but they also often fail to coordinate with distant boards to achieve city-wide gains. For example, when each area limits density to keep out poor folks, such as via lot size and height rules, the city fails to provide a place for needed poor workers. How can cities better coordinate, without the vast corruptible discretion of political machines?

Imagine for simplicity that we are starting a new city, or at least a new city area, from scratch. Some developers are thinking about building various types of housing, targeted at various types of residents. National chains are considering locating stores and food outlets. Employers and private schools are thinking of locating there as well. The question is: who will build where, and what utilities such as roads, power, water, sewer, internet will be built where to supply this new area?

One solution is to have a single developer initially own the entire area, and negotiate directly with all these parties. Political machines once filled a similar role. Today politicians and boards for zoning and utilities try to fill such roles. But there are other options. Yesterday I explained the concept of a combinatorial auction, using the example of assigning offices when moving to a new office building. Today I’d like to elaborate on how such a mechanism could be used to coordinate urban land use and utilities.

It would look a lot like the scenario I outlined yesterday for allocating offices. Just on a bigger scale. Each party would submit bids describing their willingness to pay for various combinations of land features. Bids could specify:

  1. Land area, soil type, topography.
  2. Views (or not) of mountains, ocean, factories, etc.
  3. Distance (meters or road time) from residents, shopping, jobs, schools, parks.
  4. Local limits on ambient sound, smells, light, etc.
  5. Limits on nearby resident demographics, and the “class” of shops.
  6. Limits you are willing to supply for own sound, smell, demographics, class.
  7. Utility services (e.g., power, water, internet, trash) required, at what prices.

A computer could then search for a max value set of mutually compatible bids. The winning assignment might specify:

  1. Which parties get what land for which uses.
  2. Local limits on building heights and appearances.
  3. What land is used for utilities such as roads, power generation, etc.
  4. What utility capacity is supplied at each place, and related price limits.
  5. Local policies limiting local behavior making sound, smell, light, etc.

Revenue from winning bids could help pay for city services. The cost of utility services could be included either via a cost model, or via bids from competing service suppliers. Adjustments might be made for an expected underbidding for shared resources. Bidding assistants and iterative bidding might keep bid elaboration efforts manageable. Calculation of max value bid sets might even be farmed out to competing calculators (who keep bids secret).

Now of course real cities are not usually built all at once, so we’d need to adapt the above process to incremental city change. Bids for each new time period could request options for similar future use at the same price, and specify a compensation due if that option is revoked. Futures markets estimating future winning bids might help determine the opportunity cost of awarding such commitments.

Yes there might still be opportunities for corruption and favoritism in this system, such as by leaking secret bids, and biasing the auction rules. But this still seems far less corruptible than today’s system. And we might use futarchy to take away even more opportunities for corruption.

Yes, it would be very hard to get agreement to change to this system from today’s system of property rights and regulatory restrictions. I despair of it happening in our comfortable and change-averse cities. So we might have to wait until a big disruption creates lots of other change. More about that tomorrow.

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Office By Combo Auction

Twenty years ago when I worked at NASA Ames, our group moved to a new office building. We put up a map of the new offices, and invited folks to put their name on a office they liked. People were ranked by seniority, and a higher ranked person could bump a lower ranked one from an office. People changed their office assignments based on what office they liked and who they wanted to be near until changes slowed to a trickle. And that was our new office arrangement.

Now imagine a much more elaborate system. Imagine that all the workers in your office are moving to a new building, requiring a new assignment of floor space to offices, conference rooms, copier/printer rooms, lunch rooms, hallways, etc. Now imagine that this assignment is done by combinatorial auction.

That is, imagine each person in your office has a budget of cash or bidding points, and submits bids saying how much he or she would pay for various office scenarios. Such bids can express values for:

  1. Whether one sits in an open cubicle or closed room, and how many officemates.
  2. Office features like size, windows, carpet, lights, climate controls, elevation, etc.
  3. Distance of office from entrances, bathrooms, conference rooms, lunch rooms, etc.
  4. Distance of office (in time or space) from the offices of other particular associates.
  5. Utilities like wired internet, big power plugs, or paper mail delivery.
  6. Local policies like if allow loud conversations, or food eaten at desk.

Given such bids, a computer could search for the office assignment that achieves the highest total bid value. Such an assignment might say:

  1. Who sits in which office.
  2. Which rooms are assigned as offices, conference rooms, lunch, printers, etc.
  3. If changes can be made, each office’s carpet, lights, windows, climate controls, etc.
  4. If changes can be made, what internet, power, etc. are supplied to each office.
  5. If partitions can be moved, the number and size of rooms.
  6. For each area, policies on loud conversations, food at desk, etc.

When choices like differing carpets vary in cost, cost functions could let one seek the assignment that maximized the total bid value minus costs. Such cost functions could express scale economies, such as it being cheaper to give all rooms the same carpets. When management cares about office arrangements beyond satisfying office workers, management preferences could be expressed in management bids, or in constraints on the final arrangement.

To save workers from having to express too many bid details, the process can be iterative, always showing a tentative assignment given the last round of bids, so bid elaboration efforts can focus on aspects that make a difference. (Bids themselves would stay secret.) Bidding assistant software might also infer preferences from user ratings of past or hypothetical offices.

Now even with a perfect choice of who gets what bidding budget, this process isn’t at all guaranteed to give an optimal office arrangement. For example, workers would likely underbid for shared resources like conference rooms; they’d want them but rather that others pay for them. There is now a whole academic field of “mechanism design” that studies the general problem of choosing rules for how such “direct revelation” bids are expressed, how they are updated across rounds, who wins what in the end, and who pays how much.

And yet, even the simple process described above would get a lot of things right, things that most offices get pretty wrong. After all, workers would actually get offices that had a consistent relation to their office preferences. Which makes it a shame that we don’t do this sort of thing more.

Yes, I realize that such computer-based solutions have not been feasible until recently, that there is work to be done to make them easy, and that innovation takes time. I also grant that bosses may see this as threatening their power, and that we may have social norms against using “money” in such a “personal” context (even in business!).

I also don’t want to give the impression that combinatorial auctions are my idea. I worked on them during ’93-’95 as a grad student under John Ledyard and David Porter. There is now a whole academic field of combinatorial auctions. See this book, its intro, and also articles on applications to environmental offsets, spectrum, airport landing slotsland consolidation, purchasing, and procurement of trucking and school lunches. See also a sf story.

And yes, assigning offices is far from the biggest problem we face in this world. This post mainly uses it as a vivid example to introduce the concept of combinatorial auctions. I’ll elaborate on a bigger application tomorrow.

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The Protection Exception

We have many regulations, justified in many ways. One common type of regulation prevents people from making and enforcing certain voluntary agreements, and one common justification for such regulation is that we protect people from hurting themselves via such agreements. For example:

Chief Justice Robert Bauman ruled in favour of the section of the [Canadian] Criminal Code outlawing polygamous unions. … Bauman said while the law does infringe on religious freedom, it is justified given the harm polygamy causes to children, women and society. (more)

However, almost every such protection comes with one huge loophole, big enough to drive many a truck through: we let people emigrate to other countries. For example, we protect you and your kids from the harms of voluntary polygamy agreements, except that you and your kids may move to a nation that allows polygamy. The same applies to pretty much any other regulatory protection we offer, such as protections against buying unsafe products, hiring unlicensed professionals, paying for sex, or selling yourself into slavery. You are allowed to do any of these things as long as you first move to another nation that allows it.

This raises an obvious question: why do we allow this huge hole in the “protections” we maintain? It would seem to me more consistent to either:

  1. Prevent people from moving to nations that do not preserve the protections we think important, or
  2. Let locals make voluntary agreements that violate our basic protections, as long they plausibly demonstrate that they are so committed to such arrangements that they’d consider leaving the nation to get them.

Its seems pointless to consistently let people leave the nation to evade our “protections,” since after they leave, they aren’t protected. What gives?

Added 11p: Some responses to comments: Continue reading "The Protection Exception" »

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Near Is Warm, Relational

I had heard before: warm is near:

‘Holding warm feelings toward someone’’ and ‘‘giving someone the cold shoulder’’ indicate different levels of social proximity. In this article, we show effects of temperature that go beyond these metaphors people live by. In three experiments, warmer conditions, compared with colder conditions, induced (a) greater social proximity, (b) use of more concrete language, and (c) a more relational focus. Different temperature conditions were created by either handing participants warm or cold beverages (Experiment 1) or placing them in comfortable warm or cold ambient conditions (Experiments 2 and 3). (more; HT Eric Barker via Katja Grace)

I had not heard: in near mode we talk more about the relations between things, relative to their categories or properties:

An … argument found in cultural psychology suggests that cultures emphasizing interdependence (placing the self in general in social proximity to others) are more likely to emphasize relationships, whereas cultures emphasizing independence (placing the self in general in lower social proximity to others) are more likely to emphasize properties. Similar conclusions have been drawn in a wide array of research: Individuals from cultures emphasizing interdependence not only tend to categorize objects on the basis of interrelatedness, but also perceive Rorschach cards more as patterns and detect more changes in relationships between objects, compared with individuals from cultures emphasizing independence, who tend more to categorize objects on the basis of shared categories (and features), to focus on details, and to detect changes in central properties of objects. …

On the basis of this reasoning in cultural psychology, and the fact that warmer temperatures led to use of more concrete language in Experiment 2, we hypothesized that a warmer temperature would produce a greater focus on relationships, or interdependence, between objects portrayed in a perceptual focus task, and that this effect would be mediated by language use. … [Our data] analysis confirmed that participants in the warm condition had a greater relational perspective than participants in the cold condition.

See also more support for far being happy.

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Nostalgia Example

Both magic and nostalgia are common, arise more when we feel threatened, and comfort us in such situations. … Both … rely especially heavily on wishful thinking – magic presumes we are especially able to influence events important to us, while nostalgia presumes that our previous social orders were especially functional, moral, good to people like us, etc. The fact that fantasy tends to combine both magic and nostalgia suggests that some readers have an especially strong tolerance for wishful thinking, and/or demand for comfort, and fantasy targets that audience. (more)

As I’ve enjoy some science fiction by John C.Wright, I found it interesting to read the nostalgia that energizes him:

High Fantasy rests for its paramount appeal on nostalgia: the longing for a world once known, now lost. An Uzi is a more efficient killing machine than the great sword Excalibur, but the Uzi is never to be described in words [as poetic as] these: … The sewers and streets of New York are cleaner than the crooked lanes of Athens, but New York is famed neither for her acropolis nor her philosophers. … Anyone who does not sense or suspect that modernity is missing something, something important, has no heart and no taste for High Fantasy.

The difference between a culture that respected and reveres the virginity of the maiden fair and the bravery of the warrior prince, and the cult that reveres the bravery of the transgendered community and protects the crooked penis of a presidential adulterer with comically ferocious self-righteousness, is not merely a difference between an ape and a man, a savage and a savant. … The Middle Ages may have been evil and cruel and dirty in many things, but they were never held Mutually Assured Destruction by thermonuclear annihilation to be a work of wise political policy. …

The only tales ever told in the history of the world without any element of magical or the supernatural were those told in the modern age. … There is a common thread linking speculative fiction with romances and epics and fairy tales of old. That thread is an acknowledgement that the world is wider and wilder and weirder than we suspect, and that there are fields beyond the fields we know where elves might dance in moonlight or demons rage in flame or angels clothed in brightness soar at their lord’s command on errantry to deeds immense of which we mortal men hear no slightest fame. …

The current world in which we live, the current age of darkness, rests on certain assumptions which High Fantasy undermines: the assumption that might makes right, the assumption that man is the master of his own fate, the assumption that the universe is a machine and everything in it (including man) is merely a raw material to be exploited in the restless search for pelf and pleasure. … The assumptions of the modern world, … Low Fantasy undermines them by showing the reader a glimpse of a world where the strength of a man’s arm decided the triumph or downfall of cities, and the honor of his word and the courage of his heart decided the strength of that arm. (more; HT David Brin)

Wright’s skill with words shows me the depth of his feelings, even though such feelings fail to resonate with me – his nostalgia still seems to me mostly wishful thinking. Yes, modernity is missing something, and stories of other eras can highlight what we lack. But some of what we lack is impossible, and so is missing everywhere. And every time and place is missing something; there are so many tradeoffs.

But let me make a prediction. In the future, stories will be told that are set in forager worlds, in farming worlds (where most of our fantasy is set), in industry worlds (like our world), in em worlds, perhaps in further worlds we can now only dimly imagine, and finally in worlds of a vast stable future lasting for trillions of years. My prediction is that in that vast stable future, when they tell nostalgic stories about other eras, they’ll tell more stories set in industry worlds than in farming or forager worlds.

John C. Wright can’t see the romance of our era, compared to farming era romance, but I doubt the first farmers could see much romance in their world, compared to forager worlds. But eventually story tellers will find many fine ways to see our dream-time era conflicts as engaging. For a cosmologically brief time, everything changed rapidly, anything seemed possible, and its mostly rich residents indulged in a great many real-life fantasies.

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Data On Sarcasm

Our capacities to communicate covertly, out of view of social reporting, are central to our abilities to coordinate to hypocritically pretend to support norms while actually evading them. Like laughter and eye-contact, sarcasm seems a central supporting skill. Here is some of what we know about sarcasm:

According to one study of a database of telephone conversations, 23 percent of the time that the phrase “yeah, right” was used, it was uttered sarcastically. Entire phrases have almost lost their literal meanings because they are so frequently said with a sneer. … Brains have to work harder to understand sarcasm. …

Lsten[ing] to complaints to a cellphone company’s customer service line, … students were better able to solve problems creatively when the complaints were sarcastic as opposed to just plain angry. … The mocking, smug, superior nature of sarcasm is [sometimes] perceived as more hurtful than a plain-spoken criticism. … “You’re distancing yourself, you’re making yourself superior,” Haiman says. “If you’re sincere all the time, you seem naive.” …

We’re more likely to use sarcasm with our friends than our enemies, … [New York students] were more likely [than Memphis students to suggest sarcastic jibes when asked to fill in the dialogue in a hypothetical conversation. Northerners also were more likely to think sarcasm was funny. …

Haiman lists more than two dozen ways that a speaker or a writer can indicate sarcasm with pitch, tone, volume, pauses, duration and punctuation. … Expressions around the mouth, as opposed to the eyes or eyebrows, were most often cited as a clue to a sarcastic statement. (more; HT David Brin)

Note that higher status and IQ cultures tend to use sarcasm more, just as smart folks tend to lie more, even though they are no better at discerning lies (source: Triver’s new book).

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Japan’s Fat Tax

This has been going on for three years, yet I just learned of it:

In 2008, Japan’s Ministry of Health passed the ‘metabo’ law and declared war against obesity. …

Japanese people are normally envied for their lean physiques. In fact, the OECD ranks them, with only 3% population obesity, one of the least obese developed countries. … Comparing the time periods 1976-1980 and 1996-2000, prevalence of obese boys and girls increased from 6.1% and 7.1% to 11.1% and 10.2%. …

The law mandates that local governments and employers add a waist measurement test to the annual mandatory check up of 40-75 year olds. For men and women who fail the test and exceed the maximum allowed waist length of 33.5 and 35.4 inches, they are required to attend a combination of counseling sessions, monitoring through phone and email correspondence, and motivational support. …

Employers or local government … are required to ensure a minimum of 65% participation, with an overall goal to cut the country’s obesity rates by 25% by year 2015. Failure to meet these goals results in fines of almost 10% of current health payments. (more)

Even before Japanese lawmakers set the waistline limits last year, the International Diabetes Federation (IDF) amended its recommended guidelines for the Japanese. The new IDF standard is 90 centimeters (35.4 inches) for men and 80 centimeters (31.5 inches) for women. But the Japanese government has yet to modify its limits. (more; HT Melanie Meng Xue)

Two interesting patterns:

  1. Japanese waist limits are stricter on men, yet since men are taller health-based rules would be stricter on women.
  2. The thinnest rich nation (Japan) passed a big law to make itself thinner just as the biggest medical spending nation (USA) debated a big law (Obamacare) ensuring it would spend more on medicine.

My tentative explanations:

  1. Most societies find it easier to disrespect/mistreat/etc. low status men than low status women.
  2. National policy is more about reaffirming and supporting symbols of national pride than about addressing national needs. The USA is proud of its medicine and Japan is proud of its thinness.

Note that that if you want to regulate health it makes far more sense to regulate weight than medicine, since weight is far more related to health than medicine.

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Atheists Distrusted

Most folks distrust athiests, because atheists don’t fear punishment from God:

Recent polls indicate that atheists are among the least liked people in areas with religious majorities (i.e., in most of the world). The sociofunctional approach to prejudice, combined with a cultural evolutionary theory of religion’s effects on cooperation, suggest that anti-atheist prejudice is particularly motivated by distrust. Consistent with this theoretical framework, a broad sample of American adults revealed that distrust characterized anti-atheist prejudice but not anti-gay prejudice. … A description of a criminally untrustworthy individual was seen as comparably representative of atheists and rapists but not representative of Christians, Muslims, Jewish people, feminists, or homosexuals. … Results were consistent with the hypothesis that the relationship between belief in God and atheist distrust was fully mediated by the belief that people behave better if they feel that God is watching them. … Atheists were systematically socially excluded only in high-trust domains; belief in God, but not authoritarianism, predicted this discriminatory decision-making against atheists in high trust domains. (more)

So are atheists actually less trustworthy?  I’d guess that they are, but that the difference is less than people think. Believing that atheists are untrustworthy, like believing in God, helps signal your trustworthiness to others.

I suspect a similar effect applies to human law enforcement. Most people probably also signal their trustworthiness by over-estimating their chances of getting caught and punished if they commit a crime.

Added 1p: Here are experiments on religion and trustworthiness: Continue reading "Atheists Distrusted" »

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Alcohol As Placebo

A week ago I had dinner with a respected drug policy expert who disapproves of drug legalization because he sees big negative externalities from alcohol use, and expects legalizing other drugs to make that worse. Which makes some sense. But the picture changes once one realizes that alcohol’s disruptive effects are mostly in our heads:

We Brits believe that alcohol has magical powers – that it causes us to shed our inhibitions and become aggressive, promiscuous, disorderly and even violent.

But we are wrong. In high doses, alcohol impairs our reaction times, muscle control, co-ordination, short-term memory, perceptual field, cognitive abilities and ability to speak clearly. But it does not cause us selectively to break specific social rules. It does not cause us to say, “Oi, what you lookin’ at?” and start punching each other. Nor does it cause us to say, “Hey babe, fancy a shag?” and start groping each other.

The effects of alcohol on behaviour are determined by cultural rules and norms, not by the chemical actions of ethanol. There is enormous cross-cultural variation in the way people behave when they drink alcohol. … In … the vast majority of cultures, … drinking is not associated with these undesirable behaviours … Alcohol is just a morally neutral, normal, integral part of ordinary, everyday life – about on a par with, say, coffee or tea. …

This variation cannot be attributed to different levels of consumption. … Instead the variation is clearly related to different cultural beliefs about alcohol. … This basic fact has been proved time and again … in carefully controlled scientific experiments – double-blind, placebos and all. To put it very simply, the experiments show that when people think they are drinking alcohol, they behave according to their cultural beliefs about the behavioural effects of alcohol. …

Those who most strongly believe that alcohol causes aggression are the most likely to become aggressive when they think that they have consumed alcohol. … These experiments show that even when people are very drunk, if they are given an incentive (either financial reward or even just social approval) they are perfectly capable of remaining in complete control of their behaviour – of behaving as though they were totally sober. …

If I were given total power, I could very easily engineer a nation in which coffee would become a huge social problem. … I would restrict access to coffee, thus immediately giving it highly desirable forbidden-fruit status. Then I would issue lots of dire warnings about the dangerously disinhibiting effects of coffee. I would make sure everyone knew that even a mere three cups (six “units”) of coffee “can lead to anti-social, aggressive and violent behaviour”, and sexual promiscuity, thus instantly giving young people a powerful motive to binge-drink double espressos, and a perfect excuse to behave very badly after doing so. (more; HT Rob Wiblin)

Sometimes we want to behave well, and be around others who behave well, and sometimes we want to behave “badly,” and behave around others who behave badly. We also sometimes want to (often hypocritically) signal our disapproval of bad behavior, and pay costs to “do something” about it.

Our culture has coordinated to support all of these options, by coordinating to see alcohol and other “drugs” as inducing bad behavior. Clever eh? While we can signal our disapproval of bad behavior by opposing drugs, including their legalization, it is far less clear how much such actions actually reduce bad behavior. If we completely eliminated the symbolic items by which we now we identify situations where bad behavior is expected and tolerated, I expect we would quickly pick substitute symbols, and continue on with bad behavior. Because the fact is, much as we often want to signal disapproval of bad behavior, we nearly as often really enjoy behaving “badly.”

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Can’t Hear Bad News

I’ve long been puzzled with why students aren’t taught more about the consequences of choosing different careers, and why they don’t take more initiative to learn this for themselves. One clue: apparently students are only capable of hearing good news about future earnings. Maybe students don’t want to hear, and aren’t told, out of an urge to avoid hearing bad news? Details:

[Of] undergraduate college students … we ask … (1) their self beliefs about their own expected earnings if they were to major in different fields and (2) their beliefs about the population distribution of earnings. After the initial round in which the baseline beliefs are elicited, we provide students with accurate information on the population characteristics and then re-elicit their self beliefs. …

Students in our sample, despite belonging to a very high ability group, have biased beliefs about the population distribution of earnings. … More experienced students – those in their second or third year – hav[e] relatively more accurate beliefs about population earnings. …

The effect of information is asymmetric: There is signifcant updating when the information is good news for the respondent, i.e., when the respondent is informed that population earnings are higher than her prior beliefs, and no significant updating in instances where the respondent is informed that the population earnings are lower than her prior beliefs. … Relative to freshmen, experienced students are more likely to be non-updaters and less likely to react excessively to information. …

The information on earnings we provide causes nearly half of the students to revise their beliefs about graduating with the different majors. (more)

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