Date: Fri, 28 Jul 2000 23:39:11 -0700 (PDT) Message-Id: <200007290639.e6T6dBR16608@mindstalk.net> To: altinst@cco.caltech.edu Subject: (Long) Re: AltInst: Vote on Values, But Bet on Beliefs From: Tom Breton In-Reply-To: Robin Hanson's message of "Thu, 27 Jul 2000 11:42:03 -0700 (PDT)" Robin Hanson writes: > This non-technical paper proposes a new form of government. > Comments welcome, though no rush as I'll be on vacation for the next three > weeks. > > ----------------------------------------------------------------------------- > http://hanson.gmu.edu/futarchy.pdf or .ps > > Shall We Vote on Values, But Bet on Beliefs? > Robin Hanson, July 2000 Thank you for publishing that paper. I found it very interesting. I had been thinking along those lines myself for some time, although I came to different conclusions. I have some comments, which I mean in the most constructive way. Please don't take them as fault-finding. I'm skipping the first few of the 25 objections, because they speak more to people without experience with IF, FX etc. "Democracy might become unstable" seems overly theoretical in both objection and answer - I suppose that can't be helped. I notice that the answer does not consider the possibility of direct democracy, ie referendums instead of persons as candidates. Referendums may not always be possible, but ISTM that since you confine democracy to mostly defining the fitness function, referendums could and should be more heavily used. So ISTM there is a better answer. "Time-consistency might be a problem" seems one of the stronger objections, but as you point out, it's at least as bad for the status quo. There may possibly be a financial solution in the sense of issuing bonds to back up the commitment, perhaps a bond that pays double if the govt goes back on its promise. "Expressive voting could still cause problems". The answer isn't very convincing: If it's a problem, we might find solutions. It's hard to see what form of voting could alter people's underlying preferences. Also, I tend to think that the voting system would not allow the voting system to change, much as the US national elections will not switch to approval voting, though it's better and there is a clear appetite in the US for an alternative to the two ruling parties. But OTOH, it's not clear to me that expressive voting is the only or even major problem in democracy. I would have said the sort of special-interest voting that Libertarians like to call "4 wolves and a sheep voting on what to have for dinner". ISTM this would be just as much an issue in futarchy. "People could buy policy via betting markets". I notice your answer centers on a specific case, dealing with a stadium where insiders try to boy a "favorable impression" and then profit buy selling before the bubble bursts. ISTM this doesn't really address the case of what I call "short circuits" where the policy at issue illegitimately creates its own funding. One could imagine other cases whose effect on policy had the effect of funneling money to themselves, eg a defense contractor bidding on a re-armament policy. In that case, the profit they get from creating policy affects the equilibrium price, so they may win even though they take a small loss in the market. Whereas the tax money spent is spread over hundreds of millions, so no one taxpayer has strong incentive to move the price the other way. So ISTM you need to address a stronger case example. "You need a way to tell if a proposal was implemented". You appeal to contract law, but it's not clear that policy writers would have incentive to be as clear as possible, which contract writers do. Couldn't they potentially profit directly or indirectly from unclear policies, because they may later be called as expert witnesses on their own document and can adjust their testimony according to their investments or the investments of select others? "A policy might influence how welfare was measured". As you noticed, futarchy has to appeal to external rules and judgements to deal with this kind of "short circuit". "Welfare measurement might be corrupted". IMO it would surely happen unless a much stronger basis for preventing it can be found. "People could do harm to win bets". Good answer. "Policies might just be encoded in the welfare definition". I tend to think that would be the workaround of choice. Governments have often made policy by defining terms against the way they were clearly meant to be understood, as sure as ketchup is a vegetable in schoolchildren's lunches. "Most decisions cannot detectably impact welfare". I guess the answer works. But ISTM issues would become much less transparent, and would sometimes be gerrymandered, even if they were privately defined (eg, by mutual funds of some sort). I'd be more comfortable seeing some reason to expect that it's generally or always possible to aggregate small policies in a way that's transparent to the investor. "You must define when a market "Clearly" estimates". As you point out, this is a thorny problem. It's basically a free parameter in futarchy. "You might not catch buggy decisions quickly enough". The answer works, but again ISTM it would work better with referendums. That would eliminate the problem of legislators' insider trading. It could also be possible to condition a referendum on a derivative issue reaching a certain capitalization. I am skipping a couple of objections wrt the transition to futarchy. In fact the political resistance would be incredible, but ISTM right now we are still talking about whether and how it would work, not how to get there. "It seems hard to make one function encode all our values". Good answer. "So many things would have to go into a welfare definition". The difference between this and the last is very subtle. I think it had something to do with initialization vs steady state? In any case, good answer again. "You can not pay off bets if the earth is destroyed". The problem, I guess, is that policies that increase both the probability of destruction and of some lesser gain would be overvalued, and so the futarchy would chug mechanically on, using the irrational policy. I'm not sure whether the answer works. "But infinity never arrives". Good answer. "You have not guaranteed basic rights and freedoms". ISTM it would do at least as well as the status quo. "Risk premiums and excess volatility distort estimates" I wonder if the cure, adjustng the fitness metric to correct for it, isn't worse than the disease. ISTM it's one more opportunity for gerrymandering the fitness metric. At least ISTM futarchy should limit the correction parameter to a single overall risk-aversion curve. "There is a decision selection bias". Good answer. All in all, I'm very interested in the idea, and I'd like to see if we can find answers for the weaker points. -- Tom Breton, http://world.std.com/~tob Not using "gh" since 1997. http://world.std.com/~tob/ugh-free.html [To drop AltInst, tell: majordomo@cco.caltech.edu to: unsubscribe altinst]