Wednesday, March 9, 2016

Popular vs Valuable

Reply to story: towards an e-voting system that people can trust


You’re working on some technology that will help us figure out which option is more popular. While you’re at it… why not also develop some technology that will help us figure out which option is more valuable?

Should we choose the more popular option? Or should we choose the more valuable option?

I’m pretty sure that we should choose the more valuable option.

If you you need a bit more explanation… then maybe this will help… 

It’s an interesting idea, the problem that I see with value is that is too subjective, I don’t see an objective way to weight value. - Jorge Garcia

You would simply make it stupid easy and fast for people to spend their bitcoins/dollars on X or Y. If people spent more money on X… then…

X > Y

For example… 10 coworkers are trying to decide what kind of restaurant to go to after work…

X = Chinese
Y = Italian

With voting… people would simply raise their hands to indicate whether they prefer X or Y….

X = 6 votes
Y = 4 votes

The advantage of voting is that it’s stupid easy and fast. The disadvantage of voting is that it doesn’t communicate the intensity of people’s preferences.

In order to solve this problem you would develop the technology to make it stupid easy and fast for people to communicate the intensity of their preferences. The coworkers would open your app and spend their money on the option that they valued most. Maybe the results would look like this…

X = $4 dollars
Y = $8 dollars

Chinese is the more popular option but Italian is the more valuable option. In fact, Italian is twice as valuable as Chinese. This means that $4 dollars worth of value would be destroyed if the coworkers went to a Chinese restaurant rather than to an Italian restaurant.

Of course this can’t simply be hypothetical spending. The money actually has to be spent or else people would just enter bogus numbers.

In my example with the coworkers… the losers would get their $4 dollars back… and they would also get $8 dollars. The $8 dollars would not be evenly distributed among the losers… it would be proportionally distributed. For example… if Bob spent $2 dollars on X… this would be 50% of the total amount spent on X. Therefore… Bob would get his $2 dollars back… plus he would also get 50% of the $8 dollars… which would be $4 dollars.

Essentially… when Bob spent $2 dollars on X… he was basically saying… “I prefer to eat at a Chinese restaurant. But… for $2 dollars I wouldn’t mind eating at an Italian restaurant.”

As it turned out, Bob was more than fairly compensated to eat at an Italian restaurant. He obviously can’t complain that the compensation wasn’t fair! After all, he’s the one who decided what was fair in the first place!

In order for this to work fast… it’s gotta be a one shot deal. Everybody can only submit one valuation. When the last person submits their valuation… the results are displayed and the money is transferred accordingly.

Here’s the basic concept in a nutshell: When everybody’s valuations are far more accessible, everybody’s decisions will be far more valuable.

To be clear… given that I have to explain all of this… this really isn’t an obvious concept! I honestly really wish that it was an obvious concept. Then everybody would already be free to choose where their taxes go. Unfortunately, tax choice only has 83 likes on Facebook. So this concept is painfully non-obvious. Therefore… if you get filthy rich developing this type of app…. then I’m going to expect fair compensation! I think that 25% of the profit is pretty fair. :D The same goes for anybody else who happens to read this.

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