Merkle’s Futarchy

My futarchy paper, Shall We Vote on Values But Bet on Beliefs?, made public in 2000 but officially “published” in 2013, has gotten more attention lately as some folks talk about using it to govern blockchain organizations. In particular, Ralph Merkle (co-inventor of public key cryptography) has a recent paper on using futarchy within “Decentralized Autonomous Organizations.”

I tried to design my proposal carefully to avoid many potential problems. But Merkle seems to have thrown many of my cautions to the wind. So let me explain my concerns with his variations.

First, I had conservatively left existing institutions intact for Vote on Values; we’d elect representatives to oversee the definition and measurement of a value metric. Merkle instead has each citizen each year report a number in [0,1] saying how well their life has gone that year:

Annually, all citizens are asked to rank the year just passed between 0 and 1 (inclusive). .. it is intended to provide information about one person’s state of satisfaction with the year that has just passed. .. Summed over all citizens and divided by the number of citizens, this gives us an annual numerical metric between 0 and 1 inclusive. .. An appropriately weighted sum of annual collective welfares, also extending indefinitely into the future, would then give us a “democratic collective welfare” metric. .. adopting a discount rate seems like at least a plausible heuristic. .. To treat their death: .. ask the person who died .. ask before they die. .. [this] eliminates the need to evaluate issues and candidates. The individual citizen is called upon only to determine whether the year has been good or bad for themselves. .. We’ve solved .. the need to wade through deceptive misinformation.

Yes, it could be easy to decide how your last year has gone, even if it is harder to put that on a scale from worst to best possible. But reporting that number is not your best move here! Your optimal strategy here is almost surely “bang-bang”, i.e., reporting either 0 or 1. And you’ll probably want to usually give the same consistent answer year after year. So this is basically a vote, except on “was this last year a good or a bad year?”, which in practice becomes a vote on “has my life been good or bad over the last decades.” Each voter must pick a threshold where they switch their vote from good to bad, a big binary choice that seems ripe for strong emotional distortions. That might work, but it is pretty far from what voters have done before, so a lot of voter learning is needed.

I’m much more comfortable with futarchy that uses value metrics tied to the reason an organization exists. Such as using the market price of investment to manage an investment, attendance to manage a conference, or people helped (& how much) to manage a charity.

If there are too many bills on the table at anyone one time for speculators to consider, many bad ones can slip through and have effects before bills to reverse them can be proposed and adopted. So I suggested starting with a high bar for bills, but allowing new bills to lower the bar. Merkle instead starts with a very low bar that could be raised, and I worry about all the crazy bills that might pass before the bar rises:

Initially, anyone can propose a bill. It can be submitted at any time. .. At any time, anyone can propose a new method of adopting a bill. It is evaluated and put into effect using the existing methods. .. Suppose we decided that it would improve the stability of the system if all bills had a mandatory minimum consideration period of three months before they could be adopted. Then we would pass a bill modifying the DAO to include this provision.

I worried that the basic betting process could bias the basic rules, so I set basic voting and process rules off limits from bet changes, and set an independent judiciary to judge if rules are followed. Merkle instead allows this basic bet process to change all the rules, and all the judges, which seems to me to risk self-supporting rule changes:

How the survey is conducted, and what instructions are provided, and the surrounding publicity and environment, will all have a great impact on the answer. .. The integrity of the annual polls would be protected only if, as a consequence, it threatened the lives or the well-being of the citizens. .. The simplest approach would be to appoint, as President, that person the prediction market said had the highest positive impact on the collective welfare if appointed as President. .. Similar methods could be adopted to appoint the members of the Supreme Court.

Finally, I said explicitly that when the value formula changes then all the previous definitions must continue to be calculated to pay off past bets. It isn’t clear to me that Merkle adopts this, or if he allows the bet process to change value definitions, which also seems to me to risk self-supporting changes:

We leave the policy with respect to new members, and to births, to our prediction market. .. difficult to see how we could justify refusing to adopt a policy that accepts some person, or a new born child, as a member, if the prediction market says the collective welfare of existing members will be improved by adopting such a policy. .. Of greater concern are changes to the Democratic Collective Welfare metric. Yet even here, if the conclusion reached by the prediction market is that some modification of the metric will better maximize the original metric, then it is difficult to make a case that such a change should be banned.

I’m happy to see the new interest in futarchy, but I’m also worried that sloppy design may cause failures that are blamed on the overall concept instead of on implementation details. As recently happened to the DAO concept.

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  • TGGP

    Retroactively evaluating the goodness of a year and its policies sounds a bit like predictocracy.

    • erikbjareholt

      That link seems broken.

      • TGGP

        Thanks, it should be fixed now.

  • lump1

    Is the role of voting simply to make the content of our values evident, or is it a sort of politically sacred ritual whose value goes beyond its information-revealing power? I have no doubt that in the Athens of Pericles, you couldn’t beat voting as a mechanism for revealing hoi polloi preferences. But we now know just how much votes and genuine preferences can diverge. Imagine (plausibly) that we develop a way of gauging the strength and direction of people’s values, and that it was demonstrably more accurate than simple voting. In addition to voting, we constantly say and do things that reveal our values, so if we want our actual values to guide policy, it’s irresponsible to just discard all this extra information about what we value, and simply count votes.

    Imagine our democracy were such that we could vote for values at our leisure, even on topics that don’t appear on ballots. One way to do so would be by simply making a post about what we value on Facebook or Reddit. Of course, there would be much more to the value-signal than just such posts, All of our value-revealings would count as mini-votes, and some algorithm would find the true value-signal in the noisy data we generate. It would make a best overall guess what we want, distinguishing that from what we’re merely signaling we want, what we’re only devils-advocating, what we’re blurting out when hot-headed, and what we want to want but don’t actually want. Messages sent directly to the value-estimating system that explicitly describe our values – if we choose to send these – would probably be an important part of the signal, but not the entirety. But the point is that everyone would be participating in the democracy, even those who don’t explicitly take deliberate action to shape policy..

    If this kind of “voting” were coupled with prediction-market policy generation, the whole sphere of politics would become so transparent it would effectively disappear. When I first imagined this I thought this would be a gross dystopia, but now i’m only 80% confident of that. Any thoughts on why this wouldn’t be the logical upgrade to futarchy?

    • Two McMillion

      Sometimes people will vote for things that are better than their values, though. I bet if you scanned the brained of the US congress that passed the Civil Rights act, the majority of them would have values that made racism make sense- but many of those same people voted for the Civil Rights act all the same.

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  • Vitalik Buterin

    Personally, if we are talking about getting futarchy actually implemented on political scales, I would be more comfortable with systems that approach futarchy itself incrementally, rather than trying their best to implement a form of futarchy that we think is safe right from the start (the DAO itself being a good example of why this is a good idea). So proposals that I would favor include things like making a constitutional amendment that says that a referendum needs 67% to pass instead of 50% if the markets say that major economic indicators will go down if the referendum goes through, and go from there. This way the markets themselves cannot fail in some unexpected spectacular way as the older systems still exist as a backstop.

    • RobinHanson

      Yes of course, incremental implementation usually works best.

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  • free_agent

    It seems to me the way to test futarchy is to implement it in some organization. Right now, a handful of armchair theorists are speculating about how it might work. Much better is to put hundreds or thousands of people under its sway and set them to work using, exploiting, and finding loopholes in it.

    • RobinHanson

      Yes of course, but such volunteers have yet to be found.

      • erikbjareholt

        I have hopes to try and implement one in practice, just need to develop a webapp to do it (will be open source if I find the time).