Tag Archives: Social

Surplus splitting strategy

When negotiating over the price of a nice chair at a garage sale, it can be useful to demonstrate there is only twenty dollars in your wallet. When determining whether your friend will make you a separate meal or you will eat something less preferable, it can be useful to have a longterm commitment to vegetarianism. In all sorts of situations where a valuable trade is to be made, but the distribution of the net benefits between the traders is yet to be determined, it can be good to have your hands tied.

If you can’t have your hands tied, the next best thing is to have a salient place to split the benefits. The garage sale owner did this when he put a price tag on the chair. If you want to pay something other than the price on the tag, you have to come up with some kind of reason, such as a credible commitment to not paying over $20. Many buyers will just pay the asking price.

This means manipulating salient ways to split benefits could be pretty profitable. This means people should probably be doing it on purpose. I’m curious to know if and how they do.

Often the default is to keep the way the benefits naturally fall without money (or anything else ‘extra’) changing hands. For instance suppose you come to lunch at my place and we both enjoy this to some extent. The default here is to keep the happiness we got from this, rather than say me paying you $10 on top.

So in such cases manipulating the division of benefits should mostly be done by steering toward more personally favorable variations on the basic plan. e.g. my suggesting you come to my place before you suggest that I come to yours. A straightforward way to get gains here is to just race to be the first to suggest a favorable option, but this is hard because it looks domineering to try to manipulate things in your favor in such a way. Unless you have some particular advantage at suggesting things fast and smoothly, such a race seems costly in expectation.

If in general trying to manipulate a group’s choice seems like a status-move or dominance-move, subtle ways to do this are valuable. Instead of a race to suggest options, you can have a prior race to make the options that you might want to suggest seem more suggestible. For instance if you’d prefer others come to your place than you go to others’ places, you can put a pool at your place, so suggestions to go to your place seem like altruism. If you know a lot of details about another person, you can use one of them to justify assuming that a particular outcome will be better for them. e.g. ‘We all know how much John likes steak, so we could hardly not go to Sozzy’s steak sauna!’. None of this works unless it’s ambiguous which way your own preferences go.

On the other hand if your preferences are very unambiguous, you can also do well. This is because others know your preferences without your having to execute a dominance move to inform them. If their preferences are less clear, it’s hard for them to compete with yours without contesting your status themselves. So arranging for others to know your preferences some other way could be strategic. e.g. If you and I are choosing which dessert to split, and it is common knowledge that I consider chocolate cake to be the high point of human experience, it is unlikely that we will get the carrot cake, even if you prefer it quite strongly.

So, strategy: if it’s clear that you have a pretty strong preference, make it quite obvious but not explicit. If you have a less clear preference, make it look like you have no preference, then position to get the thing you want based on apparently irrelevant considerations.

Even if the default is to transfer no cash, there can be a range of options that are clearly incrementally better for you and worse for me, with no salient division. e.g. If I invite you over for lunch, there are a range of foods I could offer you, some better for you, some cheaper for me. This seems quite similar to determining how much money to pay, given that someone will pay something.

In the lunch case I get to decide how good what I offer you is, and you have to take it or leave it. You can retaliate by thinking better or worse of me. You can’t very explicitly tell me how much you will think better or worse of me though, and you probably have little control over it. Your interpretation of my level of generosity toward you (and thus your feelings) and my expectations of your feelings are both heavily influenced by relevant social norms. So it’s not clear that either of us has much influence over which point is chosen. You could try to seem unforgiving or I could try to seem unusually ascetic, but these have many other effects, so are extreme ways to procure better lunching deals. I suspect this equilibrium is unusually hard to influence personally because there’s basically no explicit communication.

There are then cases where money or peanut butter sandwiches or something does change hands naturally, so ‘no transfer’ is not a natural option. Sometimes there is another default, such as the cost of procuring whatever is being traded. By default businesses put prices on items rather than consumers doing it, which appears to be an issue of convenience. If it’s clear how much surplus is being split, a natural way is to split it evenly. For instance if you and I make $20 busking in the street, it would be strange for you to take more than $10, even if you are a better singer. This fairness norm is again hard to manipulate personally, except by making it more or less salient. But it’s a nice example of a large scale human project to alter default surplus division.

When there are different norms among different groups, you can potentially reap more of it by changing groups. e.g. if you are a poor woman, you might do better in circles where men are expected to pay for many things.

These are just a random bunch of considerations that spring to mind. Do you notice people trying to manipulate default surplus divisions? How?

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Disorganized collection growth

When I was a teenager, I lived in a nice house with my mother, stepfather and three younger brothers. The contents of the house were what you would expect if you took a normal house, multiplied the number of things in it by ten, then shook it very hard. Almost – a greater proportion of the things were in boxes or containers of some kind than you would expect by chance, and also there were narrow trails cleared along the important thoroughfares. For instance there was a clear path to the first few chairs in the living room, from which the more athletic members of the household could jump to most of the other chairs.

This state of affairs interested me. From what little I had seen of other families’ houses, it was pretty unusual. Yet looking at the details of of the processes which produced it, I couldn’t see what was unusual. I don’t remember my exact thoughts, but I figured it had to be something that affected the relative inflow and outflow of stuff from the house. But it wasn’t that we had way more spending power than other families, or that we kept a lot of garbage. Most of the things in the house were useful, or would be if you had a non-negligible chance of finding them. It seemed like my family bought usual kinds of things for usual kinds of reasons. A set of lego for the children to play with, a blender because sometimes we wanted to blend things, a box of second hand books or two because they were only 50c.

The last one there looks a bit problematic, but is not that unusual. People often buy marginally valuable items because they are cheap. There were a few other things like that that looked a bit problematic – a tendency to keep drawings, an inclination to buy several shirts if you found one that was good. But nothing that should obviously cause this massive phase transition into chaos.

In the end I’m still not sure what the dominant problem was, or if there was one. But I can tell you about one kind of failure that I think contributed, which I also notice in other places.

Suppose you have a collection of things, for instance household items. You want to use one, for instance a pair of scissors. Depending on the organization of your collection of household items, it can be more or less tricky to find the scissors. At a certain level of trickiness, it is cheaper to just buy some new scissors than to find the old ones. So you buy the new scissors.

Once you have the new scissors, you add them to your collection of things. This is both the obvious thing to do with items you possess, and the obvious solution to scissors having apparently been too rare amongst your possessions.

Unfortunately adding more scissors also decreases the density of every other kind of thing in the collection. So next time you are looking for a pen it is just a little bit harder to find. If pens are near the threshold where it’s easier to get new pens than find your old pens, you buy some more pens. Which pushes a couple of other items past the threshold. On it goes, and slowly it again becomes hard to find scissors.

In short, a given amount of organization can only support being able to cheaply find so much stuff. You can respond to this constraint by only keeping that much stuff, for instance borrowing or buying then discarding items if they are beyond what your system can keep track of. Or you can respond by continually trying to push the ratios of different things to something impossible, which leads to a huge disorganized pile of stuff.

Another place I notice this is in writing. Suppose you write a blog post. Sadly it is a bit too long for the average reader to remember a key point in the second paragraph. You suspect they will forget it and just fill in what they would expect, consequently missing the whole point. To avoid this, you emphasize the point again in the second last paragraph. But now the post is even longer, and it is not clear whether they will also remember another key part. So you add some more about that point in the conclusion. But now it’s so long the whole argument is probably too hard to piece together, so you add a bit of an outline. Perhaps this eventually reaches an equilibrium in which all the points have been repeated and emphasized and exemplified so much that nobody can fail to understand. Often it would nonetheless have been better to just quit early on.

I think I had a better list of such examples, in a half written post which I put in my collection of blog drafts. Unfortunately my collection is so sprawling and poorly organized that it seemed easier to just write the post again than to find the old one. So here you have it. It’s tempting to add this post too to my blog draft collection and look for it again when I find some more things to add, but no good lies in this direction.

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In Time Economics

Many praise the new movie In Time for its intriguing premise:

Time is money: Everyone is genetically engineered to stop aging at 25; … after that, people will live for only one more year unless they can gain access to more hours, days, weeks, etc. (more)

In its tone, the movie comes across as shrill class hatred, like They Live. Lazy snobbish aristocrats with inherited wealth live forever young, and conspire to “manipulate” prices so the poor die fast, to keep them motivated to work. Boo mean rich folks, rah poor rebels. Though some think it didn’t hit hard enough:

For a real dose of revolutionary fervor, you’d do better to head down to Occupy Wall Street. (more)

But if you study the movie a little closer, its moral looks rather different.

First, the “time is money” angle can be misleading, leading folks to think in nominal price terms. In real prices, the scenario is equivalent to:

  1. Physical immortality, with no body/mind aging, has been achieved.
  2. Everyone must periodically pay a head tax to the government. Each person pays their tax into a personal tax account, which the government continually drains.
  3. Everyone has a built-in bomb, which automatically kills them if their personal tax account ever gets empty. Most people die either from tax bombs or from murder by thieves, which authorities tolerate.
  4. If a situation arises where most people can reliably pay their taxes, authorities raise prices on widely-needed commodities until enough people die from tax bombs. In the movie, commodity prices are raised via “manipulation,” but that can’t work reliably unless authorities in effect raise taxes on those commodities.
  5. [Added 1p:] The government gives the tax revenue, and more, to favorites.

Now first of all it is extremely expensive to kill off most of your working class, just to motivate them to work. Surely they’d be motivated plenty just to eat and pay rent.

More important, this society’s main problem is being over-taxed, via a severely regressive tax system, with poor law enforcement aside from very well enforced and extreme penalties for failure to pay taxes. How can the outcome of such a terrible tax system be a critique of wealth inequality in our society, where the rich work hard, taxes are progressive, the poor pay few taxes, and penalties for non-payment of taxes are mild?

Yes, once physical immortality is possible, then how long any one person actually lives must depend on their ability to afford rent, food, etc. But this would be true no matter what the tax or economic system.

Added 10a: The main event that drives the plot is when a government detective, apparently without due process, takes all but a few hours from our hero’s tax account. Again, government, and those who profit from it, are the villains in this movie.

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