Friday, March 13, 2015

The Satt - Economic Coherence Test

Posted in various forums...

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Just how economically coherent are you?  If you'd like to find out, then here's a 10 question test.  First, some acronyms...

CS = current system
SI = shallow input (thumbs up/down, stars, etc)
VC = voluntary contribution
MMC = mandatory minimum contribution
CC = consumer choice (you decide where your contribution goes)
RC = representative choice (elected officials decide where your contribution goes)
FRP = free-rider problem (everybody wants a free lunch)
PRP = preference revelation problem (officials don't know how much you'd be willing to pay)


What is the best system for each of the following? Is it the current system (CS) or one of the other systems?


1. Youtube

A. CS = SI + FRP
B. VC + CC + FRP
C. MMC + CC (+ FRP?)
D. MMC + RC + PRP

2. Patreon

A. CS = VC + CC + FRP
B. MMC + CC (+ FRP?)
C. MMC + RC + PRP

3. Netflix

A. CS = MMC + SI
B. MMC + CC (+ FRP?)
C. MMC + RC + PRP

4. Non-profit sector

A. CS = VC + CC + FRP
B. MMC + CC (+ FRP?)
C. MMC + RC + PRP

5. Public sector

A. CS = MMC + RC + PRP
B.  MMC + CC (+FRP?)
C.  VC + CC + FRP

6. Wikipedia

A. CS = VC + CC + FRP
B. MMC + CC (+ FRP?)
C. MMC + RC + PRP

7. Reddit

A. CS = SI + FRP
B. VC + CC + FRP
C. MMC + CC (+ FRP?)
D. MMC + RC + PRP

8. Medium

A. CS = SI + FRP
B. VC + CC + FRP
C. MMC + CC (+ FRP?)
D. MMC + RC + PRP

9. Less wrong

A. CS = SI + FRP
B. VC + CC + FRP
C. MMC + CC (+ FRP?)
D. MMC + RC + PRP

10. NationStates (Forum)

A. CS = FRP
B. SI + FRP
C. VC + CC + FRP
D. MMC + CC (+ FRP?)
E. MMC + RC + PRP


If you need some help with the basic concepts and/or imaging the logistics for the websites... then I'll use this forum as an example...

A. The current system.  You can derive a ton of benefit/enjoyment from this thread without having to pay me even a single penny for all the time and effort it took me to create it.  This is known as the free-rider problem (FRP).
B. There would be some type of rating system to allow us to indicate whether we like or dislike a thread.  For example... you could give this thread a thumbs up or down.  The FRP would still be relevant.
C. Each one of us would have our own forum bank account (FBA).  You could use paypal to deposit any amount of money into your FBA.  If you did derive some benefit from this thread, then you could allocate any amount of money to this thread...even as little as a penny.  All the money allocated to this thread would go into my FBA.  Each thread would display how much money was allocated to it and we could sort threads by value.  The FRP would still be relevant.
D. Same as the previous system but every single one of us would have to spend a minimum amount of money on other people's threads.  Maybe something like $2/month.  But it would be entirely up to us which threads we spent our money on.  Do you want to argue that the FRP would still be relevant?  If so, do me a favor and come up with a new term.
E. Same as the previous system but rather than each of us deciding for ourselves which threads we allocated our $2/month to... we'd pool all our money together and elect some people to decide which threads to give it to.  The theory is that RC would solve the previous system's "FRP"... but then we'd have the preference revelation problem (PRP).  How would our representatives know how much each and every one of us truly valued each and every thread?

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Is it me or do MMC + CC type systems not have a name?

"Pragmatarianism" = (MMC + CC) * (public sector)

"Pragmatarianism" <> (MMC + CC) * Youtube

MMC + CC = ?

In the meantime, I'll use the word "linvoid" to refer to MMC + CC.

There is a name, more or less, for when people choose how much money they pay for something... Pay What You Want (PWYW).

Here are a couple of decent sources...

A Brief History of ‘Pay What You Want’ Businesses
Pay What You Want: A New Participative Pricing Mechanism

If Youtube switched over to a linvoid system, then people could pay what they want for each video... but each year they would have to spend a minimum amount of money in the Youtube "sector".  

If the government switched over to a linvoid system... aka "pragmatarianism"... then people could pay what they want for each public good... but each year they would have to spend a minimum amount of money in the public sector.

Personally, I've never even heard of a linvoid system being used anywhere.  Have you?  It's strange to imagine that nobody's thought to try it.  Somebody's got to try it eventually... right?

See also: Satt's Paradox

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