Libertarian Paternalist!
Great news for me ... I'm a Libertarian Paternalist! I've long "what" I am, but just not the name. I ESPECIALLY like the need of humans to direct money flow into different accounts. I support many gov't individual accounts: a forced savings retirement account (SMART or whatever)--the second pillar in 3-pillar pension reform schemes like Slovakia (first pillar is poverty income to all, almost irrespective of contribution; third pillar is optional tax-advantaged savings, like IRAs). Health care & catastrophic insurance would be good, too. I'd like an individual unemployment account; required to donate until it reaches enough to pay you half your last year's salary (or poverty income for year plus half the difference). I'd like automatically elligible educational tax-loans, where you pay back the loan by using some 50% of your tax payment; possibly plus a 5-10% surtax on income above poverty level. The point is to make voters have their own accounts, so they are mostly benefiting from their own money. Only then, I believe, will we be able to start making progress against the immorality of using gov't violence in order to claim "other people's money". And, maybe, even start reducing that corporate welfare that sucks up so many tax resources. NOT a libertarian socialist -- a paternalist. Tom now have a new address: [EMAIL PROTECTED]
Re: Marketing vs. Economics
On 2003-06-29, alypius skinner uttered to [EMAIL PROTECTED]: >But would this really give us economic models more useful than the >simplified ones currently used? Taking more factors into account may make >the models so hard to maximize that there is no net gain in predictive >accuracy. Thoughts, anyone? I think rules are already a large part of economic reasoning. I mean, what are game theory and institutional economics if not rule based econ? Also, there are plenty of mathematical tools which can be used to maximize even hugely complicated rule based models -- there's a lot of theory and software for finite automata, Markov models and the like. (Presuming maximization is a concept which fits easily with rules.) Even if solving such systems exactly is infeasible, numerical solutions would appear tractable across the board. So yes, I think rules might have their place. It's just that they probably won't be needed in "easy", more or less competitive markets with money, but in inconventional ones like the marriage or public choice ones. (My first post, so I should probably introduce myself. I'm a 24-year old Finnish student of math and computer science. Economics is more or less a hobby to me, largely thanks to my libertarian political background. Armchair economics describes my interests perfectly: institutional econ, black markets, voting theory, market failures, the complications with IP rights, transaction cost economics, and so on. I'm looking forward to some interesting discussions.) -- Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
Re: Marketing vs. Economics
On 6/25/2003, Fabio wrote: In economics, we are taught to think of people as utility maximizers. However, marketers tend to be much more "cognitive" in their approach to human behavior. People buy stuff as a result of a very contextual decision process. In the marketing world, decisions to buy stuff are triggered by cost and percieved benefits, what other people are buying and what people remember about a product ... it seems more simple to postulate that people have a set of rules that they apply to some classes of economic behavior. ... - Economists need to expand the repertoire of explanations. Economists should learn how to model rule-based behaviors and interactions with the same ease as they can calculate a Langrangian multiplier. Econ 101 should start with a speech saying how people sometimes apply rules to economic behavior and at other times they act like classical utility maximizers. Students will then learn marginal analysis and models that embody rules based behaviors. The usual response to "someone ought to do X" is "why not you?". Introductory classes must meet a lot of constraints. They must prepare those who will continue in the tools that are actually used at higher levels. And they must give the rest some tools they can actually use to understand some phenomena around them. Yes, some people are having some success in explaining some kinds of behavior with rules, but such papers have hardly taken over the journals. And I'm somewhat at a loss to think of what particular rules I would teach GMU undergraduates to take up half of an Econ 101 class. Of course one could just grab material from current marketing 101 classes. But is learning to market really that important? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Assistant Professor of Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Marketing vs. Economics
> I think rules are already a large part of economic reasoning. I mean, what
> are game theory and institutional economics if not rule based econ? Also,
Well, even these forms of reasoning, especially game theory are about
utility maximization. My point is that actors in games may say "screw
this! I'll use rules!" Consider chess. Even the very, very best chess
players don't search for maximial outcomes because they can't see what
will happen more than five moves ahead of the present move. Instead, they
seem to explore the next three or four moves and then apply some rules
developed from years of studying the game.
Now that I think about it, chess may be a great example of what I am
talking about. A traditional economic approach to chess would be to
delinieate all strategies and figure out the Nash eq of chess. This is
insane. Chess games seem to be a combination of rule behavior ("try top
control the center board," "castle early as you can") with a little bit of
search through a gigantic strategy space.
Fabio
Re: Marketing vs. Economics
> The usual response to "someone ought to do X" is "why not you?". Introductory > classes must meet a lot of constraints. They must prepare those who will > continue in the tools that are actually used at higher levels. And they > must give the rest some tools they can actually use to understand some > phenomena around them. Well, first, I am not an economist. Nothing much I say will be taken seriuosly by economists (aside from my friends who have to listen!). I do produce models of rule base behavior, but since they aren't published in econ journals, they'll probably have zero impact in economics. That's ok. That's just the nature of academia. But second, rule based modeling can easily be taught to undergraduates. For example, the Schelling model, as I pointed out in another post, could easily be taught and yeilds simple but important results. > Yes, some people are having some success in explaining some kinds of behavior > with rules, but such papers have hardly taken over the journals. And I'm > somewhat at a loss to think of what particular rules I would teach GMU > undergraduates to take up half of an Econ 101 class. Of course one could > just grab material from current marketing 101 classes. But is learning to > market really that important? I brought up marketing to make a slightly different point. I wasn't arguing that econ classes should become marketing classes. I was arguing that people whose profession is to predict economic behavior seem to do perfectly well without utility maximization theory. A lot of economic behavior seems to be well described by rules rather than searches for optimal behaviors. Couldn't this be a sign that we should consider a fundamental shift in the construction of economic theory? Could it be the case that economic behavior is a continuum? Some large classes of behaviors are probably rule based while others are the result of searching to optimal outcomes. I think the most interesting possibility is to think of some situations as combinations of rules based and classical economic actors (my example was voting - politicians= rational, voters = rule based). Or how about stock markets? Professional investors are probably closer to the rational actor than mom&pop investors. Small time investors seem to go on gut reaction rules, at leas many of the ones I talked to. How would our understanding of stock markets change if we thought that there was always a mix of rational and rule based actors? Fabio > > > Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu > Assistant Professor of Economics, George Mason University > MSN 1D3, Carow Hall, Fairfax VA 22030- > 703-993-2326 FAX: 703-993-2323 > >
Re: Marketing vs. Economics
On 2003-06-30, fabio guillermo rojas uttered to [EMAIL PROTECTED]:
>Chess games seem to be a combination of rule behavior ("try top control
>the center board," "castle early as you can") with a little bit of search
>through a gigantic strategy space.
True, but how are those rules generated? They are generated as local
heuristics conducive to maximum utility at the end of the game. Why isn't
the conventional, full solution being used? Because of computational
constraints -- we can't search through the whole game tree. So this would
suggest the problem is indeed a one of utility maximization, only this
time with resource bounded rationality.
Still it's an interesting example, because there is a tradeoff between
payoffs from computation and its cost. You wouldn't want to ruin the
utility you get from the game by planning each move for 10 years. It
becomes still more interesting when you go to speed chess. The first
interesting thing is that, generally, the computational cost in
combinatorial problems rises exponentially with lookahead, so there might
actually be a way to sort-of quantify the utility in this case. (Aye, that
becomes perilously close to cardinal utility.) Second, I think we would
also expect less experienced players to prefer speed chess -- ceteris
paribus, knowing the right heuristics is less important in speed chess
because the other player's actions can always stall a long strategy.
That means everybody's constrained to simpler play, and so the
considerable intuition and long-term strategic talent of a grandmaster
would be wasted. (The argument isn't watertight, of course.)
--
Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111
student/math+cs/helsinki university, http://www.iki.fi/~decoy/front
openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
Re: Marketing vs. Economics
Your points are very well taken - there is most certainly a trade off in
computation and pay off. But let's ask ourselves: how do real world people
make this trade-off? Having just done some consulting work, I know that
organizations routinely make such computations. Before hiring a consultant
or devoting resources to solving a problem, managers frequently ask: will
the cost of finding the solution get me a pay-off? The managers have the
collective intelligence of the organization (other workers, books,
reports, corporate archives, etc) that will help them answer this
question.
But in other cases, framing the issue as a computational cost issue is
misleading because it assumes that actors will engage in an even harder
computation. Most beginning chess players seem to learn in a fashion
similar to a nueral net. For example, they aim to acheive a state
("win") by doing certain actions ("control the center"). If they fail to
control the center, they loose a bunch and then shape up. In a broad
sense, they are utility maximizers, but in a narrow sense they are not
doing anything resembling the actors depicted in, say, Krep's
Microeconomics text. They are in a feed back loop with their environment,
not engaged in an utility maximization computation.
Fabio
Re: Libertarian Paternalist!
Who would manage these accounts? The person himself? If he is not competent enough not to save what makes you think they can invest? Now the question is how much money do you give to the basic poverty fund? If you make it to low then people will not get enough basic benefits . If you make it to high then you risk the problem of losing work incentive. "Great news for me ... I'm a Libertarian Paternalist! I've long "what" I am, but just not the name. I ESPECIALLY like the need of humans to direct money flow into different accounts. I support many gov't individual accounts: a forced savings retirement account (SMART or whatever)--the second pillar in 3-pillar pension reform schemes like Slovakia (first pillar is poverty income to all, almost irrespective of contribution; third pillar is optional tax-advantaged savings, like IRAs). Health care & catastrophic insurance would be good, too. I'd like an individual unemployment account; required to donate until it reaches enough to pay you half your last year's salary (or poverty income for year plus half the difference). I'd like automatically elligible educational tax-loans, where you pay back the loan by using some 50% of your tax payment; possibly plus a 5-10% surtax on income above poverty level. The point is to make voters have their own accounts, so they are mostly benefiting from their own money. Only then, I believe, will we be able to start making progress against the immorality of using gov't violence in order to claim "other people's money". And, maybe, even start reducing that corporate welfare that sucks up so many tax resources. NOT a libertarian socialist -- a paternalist. Tom now have a new address: [EMAIL PROTECTED]" The best thing to hit the internet in years - Juno SpeedBand! Surf the web up to FIVE TIMES FASTER! Only $14.95/ month - visit www.juno.com to sign up today!
some people are optimizers
http://www.weeklystandard.com/Content/Public/Articles/000/000/002/852lodkv.asp This fascinating article shows pretty conclusively that at least some people are optimizers, although maybe they're the exception. BTW, if you ever need to have an A+ grade removed from your academic record, read the article because it shows you how. On a different note, I have some comments on why many people seem to be rule followers rather than optimizers. Consider evolution as an AI designer. Any AI designer faces two major problems: 1. Design a decision algorithm that improves utility, taking into account the costs of computation. 2. Prevent misinterpretation and random drift of the utility function. Problem 1 obviously implies using simpler subroutines when stakes are low, and more complex resource-intensive subroutines when stakes are high. The traditional justification for modeling people as perfect optimizers is that the model will match reality when stakes are high enough, and who cares about the low stakes situations? But if you think about problem 2, you'll realize that there may be a net advantage to following rules blindly even when the stakes are high. A perfect optimizer who behaves according to decision theory (or some bounded-rationality version of it) is very vulnerable to small changes in its utility function definition or the module responsible for interpreting the meaning of terms in the utility function definition. Such a change, say a bit flip caused by cosmic radiation, or the introduction of a new philosophical idea, could cause the agent to behave completely counter to the designer's intentions. In the rule-based agent, on the other hand, the utility function definition and its interpretation are effectively dispersed throughout the set of rules. If the rules are designed with appropriate redundancy, it should be much less likely for a catastrophic change in behavior to occur.
Re: some people are optimizers
On 6/30/2003, Wei Dai wrote: A perfect optimizer who behaves according to decision theory (or some bounded-rationality version of it) is very vulnerable to small changes in its utility function definition or the module responsible for interpreting the meaning of terms in the utility function definition. Such a change, say a bit flip caused by cosmic radiation, or the introduction of a new philosophical idea, could cause the agent to behave completely counter to the designer's intentions. In the rule-based agent, on the other hand, the utility function definition and its interpretation are effectively dispersed throughout the set of rules. If the rules are designed with appropriate redundancy, it should be much less likely for a catastrophic change in behavior to occur. This seems to me to confuse the decision with how the decision is represented and implemented. There are presumably many ways to disperse a decision process and make it robust to random errors, and some of those ways may be compatible with pretty optimal behavior. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Assistant Professor of Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Libertarian Paternalist!
So for this "libertarian paternalist" viewpoint, is the goal of these plans to force people to do certain things, or make certain behaviors "default" in the sense that they are the status quo unless people voluntarily decide to do otherwise? Otherwise, I don't see how forced saving differs except in degree from the operations of the Fed or various tax provisions, or in fact wealth transfers that are otherwise market based, and I think many "libertarians" would object -- clarification?. Also, does anyone know of any research along the lines of changing the "default" behavior in an institution (not meaning psychological bias literature or survey data, but rather tweaking a scenario but not changing the info set or options available to actors and seeing different results -- I seem to remember a paper critiquing regret theory, but that is it). In other words, is there any empirical evidence in an actual institution with incentives that shows how behavior is altered by changing the "default" option affects behavior? At 10:17 PM 6/30/2003 +, you wrote: Who would manage these accounts? The person himself? If he is not competent enough not to save what makes you think they can invest? Now the question is how much money do you give to the basic poverty fund? If you make it to low then people will not get enough basic benefits . If you make it to high then you risk the problem of losing work incentive. "Great news for me ... I'm a Libertarian Paternalist! I've long "what" I am, but just not the name. I ESPECIALLY like the need of humans to direct money flow into different accounts. I support many gov't individual accounts: a forced savings retirement account (SMART or whatever)--the second pillar in 3-pillar pension reform schemes like Slovakia (first pillar is poverty income to all, almost irrespective of contribution; third pillar is optional tax-advantaged savings, like IRAs). Health care & catastrophic insurance would be good, too. I'd like an individual unemployment account; required to donate until it reaches enough to pay you half your last year's salary (or poverty income for year plus half the difference). I'd like automatically elligible educational tax-loans, where you pay back the loan by using some 50% of your tax payment; possibly plus a 5-10% surtax on income above poverty level. The point is to make voters have their own accounts, so they are mostly benefiting from their own money. Only then, I believe, will we be able to start making progress against the immorality of using gov't violence in order to claim "other people's money". And, maybe, even start reducing that corporate welfare that sucks up so many tax resources. NOT a libertarian socialist -- a paternalist. Tom now have a new address: [EMAIL PROTECTED]" The best thing to hit the internet in years - Juno SpeedBand! Surf the web up to FIVE TIMES FASTER! Only $14.95/ month - visit www.juno.com to sign up today!
