Date: Mon, 31 Jul 2000 10:09:10 -0700 (PDT)
To: altinst@cco.caltech.edu
Subject: Re: (Long) Re: AltInst: Vote on Values, But Bet on Beliefs
From: Tom Breton
In-Reply-To: Robin Hanson's message of "Sun, 30 Jul 2000 12:22:41 -0700 (PDT)"

Robin Hanson writes:

> Tom Breton wrote:
> 
> 
> > In that case, the profit
> > [insiders] get from creating policy affects the equilibrium price, so they
> > may win even tho 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.
> 
> I was arguing that they couldn't even move the price by taking a small loss.And it
> isn't taxpayers I'm counting on, its speculators.

OK, I see.  

> > "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.
> 
> If you write a sloppy contract, your prospective partner (eg customer)may balk.
> Similarly, speculators may not endorse your proposal if
> they don't know what exactly it is.

ISTM that in combination with insider trading, this could potentially
be a problem.  Ie, an insider with deep pockets or an accomplice
writes an unclear proposal.  He moves the price insincerely.  The
price seems kind of out of line, but most speculators don't dare
invest because the proposal is not clear to them.  So the stadium gets
built, and the profits pay for any losses the insider took in the
market.


> > 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.
> 
> I'd like to see this as well :-).Thanks again for your thoughtful consideration of
> the idea.

You're quite welcome.  I'd be glad to discuss this further, and feel
free to bounce ideas off me.

> [To drop AltInst, tell:  majordomo@cco.caltech.edu  to: unsubscribe altinst]
> 

-- 
Tom Breton, http://world.std.com/~tob
Not using "gh" since 1997. http://world.std.com/~tob/ugh-free.html

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