Do Incentives Imply Ability to Pursue Them?

So, I was playing Bejeweled 2 this morning when I should probably have been sleeping, when something about the game play triggered an errant thought: Do I assume that because I am rewarded for doing something that I have some control over achieving that?

In particular, B2 gives you a special explosive gem for connecting 4 gems in a row instead of the usual 3. These are very useful, and get saved between levels, so they are the only way you can affect the future by your current actions outside the current level. So, obviously they are very important and valuable, especially since you have relatively little control over the game.
In fact, you have so little control, getting those special gems is nearly random. As you can only move gems if it results in a breaking combo (3+ gems in a line of the same color) you have to plan very far ahead. Sometimes you get lucky and are basically handed board set ups where you can make it happen easily, or it randomly occurs due to lucky set ups with falling blocks. In fact, usually when it happens, it is due to random blocks; planning is limited as you have no foresight of what gems you will get as you make room, and so even if you really work at it your success rate is not highly correlated with your effort. At best you can just break lots of gems and hope for the best.

So, ok, B2 rewards achievements that are largely random and not due to player behavior (at least in getting the gems; good players save those things forever.) But B2 is a pretty easy game to analyze. What about bigger games like the Total War series? What about school? Work? Are we assuming that we have control over good things happening simply because we get rewarded for them? Are we getting rewarded based on largely random, unpurposeful achievements?

I think yes. There is a fair bit of research pointing towards success being a matter largely of random interactions and associations (who you know, not what), as well as around stocks and investing (see Nassim Taleb). External rewards are often not as rules based as people would like, and often we care about the results as well as the effort and inputs. If you think Olivia Wilde is hot, you don't care how much is genetics and how much is lifestyle choices.

We can't control that too well, so perhaps it isn't worth worrying about too much. What we can, and probably should, worry about is how we approach such things ourselves. If we don't know that a certain incentive is tied to results we can not directly control, we can spend a huge amount chasing a state that we have little or no influence over. For example, cancer is bad, but whether or not we avoid seems to be largely random for most people. However, the belief that somehow we can avoid it if only we pick the optimal combination of eating only grapefruit and whole grains pounded by hand is likely to have costs far outweighing the benefits of influencing our likelihood of getting cancer. We can spend our lives doing all manner of silly things believing that if only we practice the 7 Habits of Highly Effective People we can become hugely successful.

It isn't clear to me that this is a subject we are very good at analyzing. Maybe future research is required.

Changing Minds

I want to put forward a somewhat pessimistic model of people's changing views. I will call it the Cost/Company model for now.

First, I am going to assert that there are two types of people: those who have arrived at a conclusion with regards to a situation or belief, and those who have not.

The first group has, as stated, decided that they know what is right in some context, having arrived there through careful thought, study, indoctrination, what have you. How they got there is not important. What is important is that they got there, and believe they are correct. In fact, they are so certain that nothing will change their mind short of a direct cost to themselves of exercising their belief. So for instance, they might believe that the minimum wage has dis-employment effects no matter the evidence you provide, but not believe that they can take a speeding cement truck to the chest.

The second group, on the other hand, has not. Usually through ambivalence, but perhaps through lack of awareness of the subject, they have no real belief attached to the matter.
Now, this would generally cause some consternation; others are always ready to lecture one on why they should think one way or the other when you admit that you don't know. As a result, members of this second group are likely to agree with whatever their current social group thinks on the matter, to a greater or lesser extent depending on the social stigma attached to disagreement.

To be clear, I suspect all humans belong to both groups simultaneously, depending on the subject and their interests in it.  However, on any one subject, everyone will fall into one of the two groups.

Now that we have these models of people, let us pose a scenario. Let us suppose that you meet a random person on the street, and while waiting for the bus, strike up a conversation about some event on the news that morning. He has a differing view regarding it, and since he is pleasant and the wait is long you decide to discuss it with him. Let us call the positions 1 and 2, 1 being yours.Over time you will come to one of four general outcomes:

1: He will agree with you and you will not change, ie. you will hold combination (1,1)
2: He will disagree with you and you will not change (1,2)
3: He will agree with you, and you will change your mind. (2,2)
4: He will disagree with you, and you will change your mind. (2,1)

So, we can agree that option 4 is highly unlikely; you would have be a really terrible interlocutor to convince someone of your position and at the same time abandon it yourself. So that leaves us with either you agree because one of you changed your mind, or you just disagree and decide to talk about the local sports franchise till the bus gets there.

However, even if you get results 1 and 3, there is the possibility that either you or he did not actually change your mind, but merely agreed with the other person because it was socially acceptable. That is to say you were each other's only group at the moment, and so you said what you thought would make the group happy, not what you thought, and vice versa.

If that seems a little overly cynical, consider for a moment when the last time was when you had a debate with someone and one of you actually, really, deep down changed your mind. Not in the "Huh, I never really thought of that ever, but I guess that is true" sense of learning physics for the first time, but in the "Wow, that completely opened my mind" kind of way, where one or both of you really thought you were right, and then decided you were wrong. I am putting forth that after a point in someone's life, that NEVER happens, short direct, personal cost. Any seeming change in someone's opinion is only due to their being ambivalent and so speaking simply to please their current company.

Seem too extreme? Consider how easily most people ignore other people's points and evidence, while latching on to anything that supports their view, no matter how tenuous. Academics are (or should be) aware of this as Confirmation Bias, where you instantly accept anything that effectively tells you what you want to hear, and go out of your way to poke holes in what doesn't. Even being aware of it, it takes conscious effort to look for data that does not support your position, while data that doesn't can easily be explained away by mis-measurement or whatever.

Also, consider how often, and easily, we paint those who disagree with us as almost subhuman, being irrational, paranoid, or the like. It is difficult to acknowledge that those who disagree with us are real people, with real reasons for disagreeing, and just crazy outsiders we right minded folks should avoid.

Consider that, and now tell me that anyone's mind can be changed. Not with direct Costs; the rest is just posing for Company.

Money in Politics

I have sort of an odd theory of political fund raising bouncing around in my head, and I want to get it down on the internets before I forget, or I babble it to someone a little more desperate for a thesis topic and they write it and get it published and I get nothing. (The former is more likely...)

There is a fairly strong correlation between who has the most money to spend on campaigns and who wins that election. On average, winners get more money than losers (as compiled here.) Now, that alone doesn't mean a lot, as there are elections that buck the trend, but ok, those with more money win more elections. Just like how basketball players who get paid more win more games.

Wait... what? That's not true. In fact, it is pretty likely the opposite, winning more games leads to being paid more. Do we know that is not true with politics as well, that the candidates more likely to win get more money?

Well, there are a few stories that would make that make sense.

If you are a business or some other actor who has a stake in the rules politicians might enact upon you, it makes sense to spend some money to support (read: bribe) a politician even if you don't particularly like him. However, it does not make sense to bribe one you think has little chance of winning; they are not likely to pay off your investment. Likewise, it then makes sense to bribe both candidates or parties if they seem about equally likely to win, or at least  reasonably likely. That perhaps explains why so many with a lot of skin in the game support both parties, despite the fact they ostensibly will favor different policies.
This also explains why companies don't bother to throw cash at candidates like Ralph Nader. In a general probabilistic sort of way, even if Nader was very unlikely to succeed, if his policies were likely to be sufficiently anti-business (seems likely) it would still be worth a bit to bribe him a little if you thought it at all likely to matter. Turns out one of those probabilities is considered to be zero, and my guess is it was his chances of success.

Sort of an edge case, but this theory also explains why politicians generally are against betting markets for elections, even if they don't involve real money. Theoretically there is little reason to believe that betting on an election makes any difference at all, as terribly few are even close, and really the media probably has infinitely more effect anyway, as people who vote apparently don't care about whether their vote matters, but rather that they are supporting their team. All a betting market would do is inform those who happen to be paying attention as to what experts* think the outcome will be. Since voters can hardly be bothered to pay attention to anything more than a few weeks before the election, who cares? Only those who care enough about the election to spend money bribing potential winners. A betting market might go a long way towards lowering campaign donations to candidates who are less likely to win, taking money out of their pockets.**

Now, I don't think that most money is straight up bribes. I think a fair bit comes from organizations and especially individuals that support the stated beliefs of politicians. However, that isn't itself against the theory, and my little theory actually explains pretty well why people only donate to certain candidates and not every candidate who espouses similar beliefs: they only back the ones they think will win.***

I wouldn't be surprised to find that money does help get elected since at least you need a bit to get started and afford to run for office. However, I suspect most of the causality there is in fact the other way around, and getting more money implies those donating think you have a high chance of victory.



*Or at least those who are willing to put their money where their mouth is, which even at very small values is a powerful mental inducement to be honest.
** Literally. Most states (I think all in fact) allow candidates to keep the remainders of their election funds after the election. Ever wonder why Al Sharpton ran for office so many times despite the fact he had zero chance of success? Here's a hint: he is now a millionaire.
*** Or they push that decision to the party heads by donating to the DNC or RNC.

Interactions of Levels

Alright, so why is it useful to think of rules as existing on different, yet interacting, levels? Mostly because of which take precedence and how they influence each other, but also because of how we treat them.

Precedence should be obvious, but really people have a lot of trouble with this one. Consider Natural Rules: in all cases, they reign. No rules we humans try and create can trump them; there is no clause that says "Gravity always accelerates two masses towards each other, unless the legislature of a recognized state declares otherwise."* Humans can not ignore these rules if we don't like them, only work around them. So for instance, if we decide it gets too bloody cold in Virginia in November, we don't pass a law that says it does not, but rather build houses keeping the other rules of nature in mind as to how insulation and heating works. We could pass a law, of course, but it wouldn't do anything. Similarly, passing anti-gouging laws will not make more products available during an emergency, though they often can result in the opposite.

In the case of Social and Governmental Rules, the case is actually a bit more fuzzy. While neither can change Natural Rule, they both do affect each other. Generally this seems to happen in the direction of Social Rules dictating Governmental Rules, as tenants of the former become codified with enforcement procedures in the latter. In fact, many of the same tendencies between Natural Rules and the human rules apply within the types of human rules. Generally legislation that has no social analogue simply does not get enforced. Consider sales tax laws among those ordering from out of state, or the various sodomy laws in most states. Whether people are unaware of the laws or simply don't care, neither gets enforced often. In fact, generally when such cases of Governmental only rules get enforced it is in an uneven manner, directed against an individual or minority group that those in power wish to target for some unrelated punitive reason.**

However, unlike the one way effect of Natural Rules on human rules, Governmental Rules sometimes do affect the Social Rules they overlay. It is not unheard of to meet people who consider anything illegal to be wrong because it is illegal, with little regard as to whether that legislation itself is right or wrong. Even beyond that corner case, however, long durations with certain rules and systems in place tend to make people begin with the presumption of their rectitude. The US Drug War has been going on for decades, and while on a pure cost/benefit basis it is obviously a huge net negative on society it remains a popular point for politicians and ending the prohibition of even marijuana has been a long and arduous battle. Similarly, one finds many references to how in times past the idea of taking charity was abhorrent to many people, and those who needed to were ashamed to do so. Right or wrong, after many years of governmental welfare and unemployment programs it seems to be no more shameful than a traffic ticket.***

That's probably enough for now; anything I would add would take away from the mechanics to dynamics post, which is rapidly snowballing.



*Well, there might be, and we just don't know which definition of state is recognized...
** I will mention this later when talking of dynamics.
*** No doubt this is partially also due to the feeling among those that worked before receiving unemployment that they paid for the insurance aspect. However, those receiving SSI or other benefits probably can not make this argument, and in either case it is not entirely relevant to the argument that society's feelings toward the practice have shifted.

Rules in levels

One of my interests, and thus a recurring theme here, is the interactions between various types and layers of rules. I am constantly working out different models of how various rules affect behavior and our interactions. Much of my time here is going to be writing essays, in the classic "trying" sense, to figure out how different levels and layers work, as well as trying to come up with a better nomenclature than "rules levels."

What do I mean by rules levels? Surprisingly, it isn't in reference to game systems, though the inspiration came from there. I mean that there are different types of limitations on our actions that matter, and they come from different sources and behave in different ways. For example, let me get started with three:

1: Natural rules. (I like Natural Law, but that is already taken...) Basically the rules of the universe, of reality. They just are, and try as we might we can't change them. Yes, you can kill people, but no, you can't bring them back. Or go faster than the speed of light apparently. The key points about these rules are that they are absolute, no breaking or bending, we have to discover them, we can't create or destroy them, and generally society is indifferent to us figuring out ways to work around them. For example, we generally don't mind when someone figures out that the rules work differently than we thought, for instance that hearts can be restarted by electricity sometimes, though we might draw the line at straight up necromancy.

2: Social Rules (Often referred to as Natural Law.) These are the emergent rules we follow in our social behaviors, the unwritten rules (though they can be written down.) Rules like "if someone's stuff is on a chair, the chair is claimed and it is not ok to move the stuff and sit down," "don't wear white after Labor Day," or "murdering your neighbor and stealing his house is bad." These rules cover all human interaction and behaviors, because we socially care about such things. However, they can vary widely from culture to culture, group to group and even within groups between individuals. They also change and evolve over time to match the needs, situations and tastes of the people utilizing them. Some key points are that they are socially created, but not by any individual, and that they can be broken, but only at a greater or lesser social cost.

3: Governmental Rules (Often called laws, but better "legislation" I think.) These are the rules that governing bodies of people make to control those they govern. Sometimes they are simply codifications of Social Rules, such as the prohibition against murder, and usually define the process for punishment of such offenses. However, they also cover a large span of behaviors that the society is not actually against with their own rules, such as gambling, selling toilets that use more than one gallon per flush, etc. That is an important distinction, as it is entirely possible for Governmental Rules to be contrary to society's rules, and conflicts to emerge. Another key difference is that legislation is created by either an individual dictator or a relatively small group of legislators, instead of emerging from social norms of many individuals. They further also have more severe penalties than social norms, as the power of the state rests on lethal force, whereas societal punishments have a broader spectrum of punishments from simple social status loss, to the usual death.

That's it for now; I will save some of the interesting interactions for a later set of posts.

What am I doing?

So, I am finally getting my bleg together. I have been knocking around the idea to write down the excess of things in my head for a while now, but past the post there about cats and economics written in early June or so I hadn't gotten anything done. Thanks and blame go to Josh Wojnilower for having his own blog and giving me someone to talk to at length about stuff before and after class. Go read some of his stuff if you like macro and finance. He is teaching me a lot, at least.

So yea, general plan here, posted after the the first post (*sigh*) is to write down some of the stuff that pulls my brain in different directions, mostly econ, cats and general "why do people do stuff?"

Things loved, but unwanted

So I had a dream the other night, in which I was given great insight into our lives. Granted, the insight came about as a function of teaching Lt. Data glass blowing instead of being handed down by a nebulous god head, but still. Just because watching a lot of ST: TNG on Netflix and eating chorizo before bed dictates my auguries doesn't mean they are less relevant. I hope. (Note to self: No more spicy sausage before bed.)

At any rate, the key point of this half remembered dream was that just as many things are the results of human action but not human intention, so too are many of the things we care most about beyond our ability to plan for their aquisition. We have a pretty vague idea about what will make us happy, or what we want. There is a quote I can not find at the moment, roughly how every dog can be loved, so long as he is not too ordinary. It is the little quirks that make him special and lovable. 

That's all well and good, we all know that we are supposed to love things for what's wrong with them (or something.) So, obviously, when we went to adopt a new kitten, we asked for a Siamese that had a chronic sinus infection, short, stubby legs, a love of sleeping with his balls in the air, a whining cry and the mental capacity of a lamb with fetal alcohol syndrome. Wait... no, that's what we received. Our list of wants was essentially "Siamese, female, friendly, not dead and OOOOOH THIS ONE HAS WHITE FEET!" Turns out female was not so important, nor was friendly seeing as how we adopted him sight unseen, and it took little High Chancellor Pudding Cup about five months to recognize us after we changed pants. 

So, why did we keep him? I am left with the conclusion that although he fulfills only 2.5 of our 5 criteria (he is very friendly for about 10-20 minutes a day, or when you are in the kitchen or holding a bag that might contain treats) it is all the things we didn't intend that make him special to us. Even though his little snot explosions are kind of gross to find splattered on the walls, they are pretty funny otherwise. Likewise, his exploits in not understanding how things like "walls" work make for amusing stories. (At least to crazy cat people like us.) Even his "good" points are surprising, such as how he curls his feet up when he sleeps on his back, and how the fact he is actually a little standoffish is a bit refreshing, considering our previous complement of cats had to be on top of you at all times. We now are very attached to a little cat that is very different from what our initial list of requirements suggested.

So, is this just an extended cat story, or is there an economics point here? The economics point is this: economics often assume that they can get at the true preferences of people in their models. In fact, everyone sort of assumes they know what other people really want. In truth though, we only have a vague notion of what we want ourselves, much less any sort of mathematical certainty about what would maximize anyone else's utility. As another example, no one really knew they wanted an iPad until it was released. At best they want something that does X,Y and Z and maybe looks like something out of Star Trek, but not an iPad until it actually existed. For me, this suggests a few implications:

1: Utility is constantly being updated in our subconscious, not only with regard to deciding whether we like things we are aware of or not, but also factoring in things we were not aware of.

2: We can not come up with even rankings of wants or desires that are meaningful for anything but the extreme short term. We can only guess at how much various things will make us happy, and only based on existence as we know it at the time of the list. 

3: Planning, let alone optimizing, our choices long term is largely impossible. At best, we can plan for broad categories of actions and wants, and then leave space for changes within each category.

In effect, our knowledge even of ourselves is so limited that our best plan is to not plan, but rather to simply ensure we have the flexibility to react to our wants in the future.What seems like a complete list, or even a good idea, now is very likely to seem terrible weeks, months or years from now. Raise your hand if you bought a house between 2000 and 2008, if you wish you had bought Microsoft in the '80's, or graduated with a degree in IT in 2003. I hope you didn't invest heavily in a life time supply of clothes in the '90's. 

This is in part why free markets are so important. We have very little idea what is a good idea now, much less what will be. The best idea seems to be to keep open the most possibilities. Markets do this by allowing people to find and invent others desires by creating new products and services, and letting people pick as they come up. Planning is involved, but it is a multitude of small plans, not a huge overarching plan about how much of everything to dedicate resources to. It can take a while before the actual attributes of something are even known, much less assessed for their relative value by people, and that will doom any economic plan to failure.

Come to think of it, maybe sausage before bed is not so bad after all...