My last post outlined how to make a better “sport” wherein people compete on, and are ranked by, their ability to persuade audiences of claims. Which might be a nice way to find/make sales-folk. But what I’d really like is to find/make people good at informative discussion. That is, we the audience want to listen to people who are good at taking the floor of our attention and talking so as to more rapidly move our estimates toward higher-confidence values. And we want this more for the case where we are a reasonable rational audience, relative to our being easily swayed by demagoguery. We want to listen to people who will more rapidly change our reasonable minds.
Yes, absolutely. I don't know the bubble literature well, but it may offer market design ideas. I was about to suggest that individuals not be allowed to resell or offset their bets, but apparently bubbles (i.e. departures from fundamental values) can still emerge in that setting - https://authors.library.cal....Another approach might be to improve speakers' incentives. For example, reward them only for changes to the price that turn out to be in the right direction, rather than just any change, so as not to reward volatility generation.
I am having trouble imagining examples of topics, suited to a laboratory experiment, for which we would later have some ex post objective measure of truth. I am presuming both (A) that the rounds will be brief and (B) that the truth measurement would occur within a short time of the conclusion of the rounds. Maybe both presumptions are unnecessary.
The claim isn't at all that most traders focus on fundamentals, but instead that the market price is our best consensus estimate. We want to reward speakers for moving reasonable estimates, not for merely persuading folks via emotion to adopt biased beliefs. What better estimate can you suggest for reasonable beliefs?
This works perfectly if you assume that market participants trade only based on fundamentals - that is, their assessment of likelihood of the event under discussion. But that would be irrational! Knowing that others’ trading affects market prices, a rational profit maximizing trader would trade based on what they expect other traders to do, which in turn is affected by those other traders’ expectations of what others will do. This is called a Keynesian beauty contest. It’s difficult to measure how strong this effect is e.g. in stock markets. But to the extent that it matters, the fundamentals can actually become pretty irrelevant for short term price movements.
In such a setting, traders have incentives to pay close attention to coordinating signals, eg Fed announcements for stock traders - anything they know others are paying attention to. In a discussion contest, the speaker is the coordinating signal. Consider what happens if you incentivize the speaker to generate price movements, in an environment where fundamentals matter little. One profitable strategy for speakers might be to tap into fear and greed, or otherwise use emotive means to argue against the status quo. They are incentivized to say whatever might make listeners think that other listeners will agree with them. It might attract speakers most willing to put aside their own actual views and make an eloquent, persuasive case for why everyone is currently wrong. They might even collude - a pair of speakers may organise for the first to argue for one side, then the second for the other, thereby both reaping rewards for supposedly contributing information, when they only really contribute volatility.
Of course, a lot of this depends on the audience. A “true believer” audience might focus more on fundamentals (prediction accuracy) than a general or trader audience. Nevertheless it is an intriguing idea, and it would certainly be interesting and worthwhile to run the experiment.
I don't know if it's quite the same skill but one skill that I think would be really interesting to measure in the kind of debate competition you suggested would be the ability to increase the audience members ability to persuade others.
I figure that if listening has made you better able to persuade others of a claim you've been informed in some fashion. And, at least if you limit this to audience members who were initially skeptical, I figure that being able to persuasively convey an argument that you didn't/don't find compelling is a pretty good indication that you've taken it pretty seriously (something that's unusual for most people so pretty closely related to informative persuasion).
That's an interesting idea but it's not really optimizing for ability to persuade. After all, the people trading are self-selected to be those who think they can make money by trading (in a lab you could avoid this but the amounts will have to be small enough that the votes will likely be performative) so what your testing isn't really the ability to persuade the unconvinced but something more like: provide evidence to an expert audience in a compact, easily verified format. Rather than optimizing for people who can persuade in the normal sense of the term, you'll optimize for people who can dig out some aspect of a situation that sophisticated traders haven't considered but will quickly recognize as a valid reason to update their estimates.
That's also an interesting skill but, personally, I'm much more interested in the skill of convincing people to take arguments/considerations seriously they'd previously been inclined to reject out of hand. Unfortunately, most people are pretty unwilling to take bets on their positions (partly irrationally but partly out of the rational recognition that winning bets is often as much about anticipating edge cases).
Yes, absolutely. I don't know the bubble literature well, but it may offer market design ideas. I was about to suggest that individuals not be allowed to resell or offset their bets, but apparently bubbles (i.e. departures from fundamental values) can still emerge in that setting - https://authors.library.cal....Another approach might be to improve speakers' incentives. For example, reward them only for changes to the price that turn out to be in the right direction, rather than just any change, so as not to reward volatility generation.
Imagine the group is given a description of some features of a person, and are trying to guess some other feature of that person.
I am having trouble imagining examples of topics, suited to a laboratory experiment, for which we would later have some ex post objective measure of truth. I am presuming both (A) that the rounds will be brief and (B) that the truth measurement would occur within a short time of the conclusion of the rounds. Maybe both presumptions are unnecessary.
The claim isn't at all that most traders focus on fundamentals, but instead that the market price is our best consensus estimate. We want to reward speakers for moving reasonable estimates, not for merely persuading folks via emotion to adopt biased beliefs. What better estimate can you suggest for reasonable beliefs?
This works perfectly if you assume that market participants trade only based on fundamentals - that is, their assessment of likelihood of the event under discussion. But that would be irrational! Knowing that others’ trading affects market prices, a rational profit maximizing trader would trade based on what they expect other traders to do, which in turn is affected by those other traders’ expectations of what others will do. This is called a Keynesian beauty contest. It’s difficult to measure how strong this effect is e.g. in stock markets. But to the extent that it matters, the fundamentals can actually become pretty irrelevant for short term price movements.
In such a setting, traders have incentives to pay close attention to coordinating signals, eg Fed announcements for stock traders - anything they know others are paying attention to. In a discussion contest, the speaker is the coordinating signal. Consider what happens if you incentivize the speaker to generate price movements, in an environment where fundamentals matter little. One profitable strategy for speakers might be to tap into fear and greed, or otherwise use emotive means to argue against the status quo. They are incentivized to say whatever might make listeners think that other listeners will agree with them. It might attract speakers most willing to put aside their own actual views and make an eloquent, persuasive case for why everyone is currently wrong. They might even collude - a pair of speakers may organise for the first to argue for one side, then the second for the other, thereby both reaping rewards for supposedly contributing information, when they only really contribute volatility.
Of course, a lot of this depends on the audience. A “true believer” audience might focus more on fundamentals (prediction accuracy) than a general or trader audience. Nevertheless it is an intriguing idea, and it would certainly be interesting and worthwhile to run the experiment.
I don't know if it's quite the same skill but one skill that I think would be really interesting to measure in the kind of debate competition you suggested would be the ability to increase the audience members ability to persuade others.
I figure that if listening has made you better able to persuade others of a claim you've been informed in some fashion. And, at least if you limit this to audience members who were initially skeptical, I figure that being able to persuasively convey an argument that you didn't/don't find compelling is a pretty good indication that you've taken it pretty seriously (something that's unusual for most people so pretty closely related to informative persuasion).
That's an interesting idea but it's not really optimizing for ability to persuade. After all, the people trading are self-selected to be those who think they can make money by trading (in a lab you could avoid this but the amounts will have to be small enough that the votes will likely be performative) so what your testing isn't really the ability to persuade the unconvinced but something more like: provide evidence to an expert audience in a compact, easily verified format. Rather than optimizing for people who can persuade in the normal sense of the term, you'll optimize for people who can dig out some aspect of a situation that sophisticated traders haven't considered but will quickly recognize as a valid reason to update their estimates.
That's also an interesting skill but, personally, I'm much more interested in the skill of convincing people to take arguments/considerations seriously they'd previously been inclined to reject out of hand. Unfortunately, most people are pretty unwilling to take bets on their positions (partly irrationally but partly out of the rational recognition that winning bets is often as much about anticipating edge cases).