You really wouldn’t take a free additional pint of milk?

No — I really have no use for it. As you say, even if the reason why you stop buying X is that marginal value < marginal cost, at some point the opportunity cost of acquiring it > marginal value and you simply have enough. More stuff is worse.

The problem we seem to be skirting around is that the market price, which is a trigger to suppliers, is an aggregate and complex function of the demand of a whole population. Consumers don’t treat the price they are paying as a direct signal to prospective or actual suppliers — for them it’s simply an expression of their preferences given the bundle of goods and services they already possess, and the market price of prospective additional purchases. For suppliers it’s a signal — if they can supply profitably at that market price, they get an incentive to do so.

I may be willing to pay £20k for a new car, but I have no use at all for a second car. My WTP tells the supplier very little, and certainly it should not be interpreted as if I require more cars.

but you kinda didn’t recognize or discuss the relevance of sacrifice as communication…

I didn’t think that needed discussing, as I thought it was clear from the title and the introductory paragraphs: others see us through the sacrifices we make or don’t make — actions are the ultimate way of communicating what you think is important.

But I think there is an important observation to be made here: our sacrifices are a reflection of the past — we have sacrificed something (time, money, effort, security,…), but that doesn’t mean we will sacrifice more. If I buy my wife flowers for her birthday, I am not signalling that I will buy more flowers the day after — neither to the florist, nor to her.

We can’t accurately know how much our behavior truly affects others unless they broadcast this information through their willingness to sacrifice.

Not sure I agree with that. At one level, you could argue that all human behaviour is sacrifice, and affecting someone else means affecting their behaviour, which means affecting how they make sacrifices.

But not all humanity is behaviour: it is also thought. Through my actions I may affect what someone else thinks about me, and that knowledge will affect my thinking, without anyone else’s behaviour being affected at all.

But if we want to know what they think is important to them, then sure, it is only through their sacrifices that we can tell. (Unfortunately, as I hope my article shows, that is not necessarily a very reliable signal because we are fallible and “irrational”). (I put it between scare quotes because I don’t buy the mainstream definition of that term. Much of what is called irrational is actually a-rational, i.e. not driven or guided by reasoning — and less still is it emotional.)

But if partial freedom to sacrifice is better than no freedom to sacrifice… then isn’t full freedom to sacrifice better than partial freedom to sacrifice? If so, then vote buying/selling must be better than quadratic voting.

I’ve brought up this issue several times with Glen Weyl but he’s never addressed it. Here’s the only answer that I’ve found…

(I decided not to read the latter part of your response until I’d finished my post — published today — lest I was influenced or thrown off-beam :-))

I am with Tyler Cowen. I don’t think the fact that the price of a vote goes up quadratically detracts from the fundamental principle of buying votes to indicate the willingness to sacrifice. Making it quadratic emphasizes the effect (i.e. you really need to mean it) and makes the outcome more stable. It also acts as a defence against people rigging the system.

I think it works well, provided you accept that fundamentally people should have more or less the same ‘voting budget’. Remember, the idea is to gauge people’s strength of opinion on an issue, not how rich they are. So you need some way to calibrate the system so that a rich person buying lots of votes is not overshadowing a poor person. In a sufficiently large population, the ability of a rich person to procure a sufficiently high number of votes quickly dwindles away. A typical constituency in the UK has an electorate of about 70,000. If a vote cost £1, buying 0.1% of the vote would cost nearly £120,000; 0.2% almost 1 million, and 0.5% 14 million. To affect the national vote would be impossibly expensive for one person.

Yet in a sufficiently close election on a per capita basis, a relatively small section of the people (still thousands of voters) has strong enough feelings to buy a 2nd or a 3rd vote, they can easily tip the balance despite being numerically in a minority.

As I understand it, I don’t think the Lalley/Weyl idea is that we’d be selling votes to each other — we would just buy additional votes with something we value (money) to signal the sacrifice and hence the importance to us. You could easily achieve a similar effect by giving voters a budget expressed in a hypothetical, non-monetary unit.

All that’s necessary is for the winners to compensate the losers.

That is definitely an interesting idea (in theory at least), that I’ve also been toying with especially after the Brexit vote here in the UK.

If you’re interested… here’s a broad overview… Standing On The Right Shoulders and here’s a 4th grade class using coasianism.

Hoping to be able to read this over the weekend.

if Amazon Kindle Unlimited (AKU) gave me the option to choose where my monthly fees go… then I’d definitely allocate a lot more fees to the WON than to Brown’s books.

Sure, but in the big picture of the overall demand, there’d still be a lot of people offering pennies for Dan Brown stuff, and only a handful of people offering dollars for WON stuff. I think you’d need to recognize that in some way — in the same way that there is an Adult Rock chart, a Country & Western Chart, an R&B chart, an Opera chart etc. In the same way that roughly similar items are compared in charts, you’d need to divide stuff like books, soy milk etc. What matters is the marginal substitution between goods. Of course, at some level buying more soy milk means less money for books, but most people don’t act in that way — they use mental accounting to some degree. As long as you reflect that in your signalling mechanism, it can work well.

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius