From: Wei Dai (weidai@weidai.com)
Date: Wed Mar 12 2003 - 18:09:32 MST
Hal, thank you very much for this explanation. At one point in the paper
it said "Although the government G* defined in Section 3 is intuitively
easy to understand..." and I was thinking what kind of drugs are these
people on, because I really need to get some!
However it seems that the scheme you describe is not exactly what the
paper suggests, and the difference is an important one to understand.
On Wed, Mar 12, 2003 at 02:01:04PM -0800, Hal Finney wrote:
> Ideally, the social task of each person choosing M values happens
> collectively, with full information. Imagine that everyone gets a
> little controller with a dial they can turn to set their M value, which
> remember is the amount "extra" (positive or negative) they want spent on
> a particular public good. In real time, a computer is constantly adding
> up the total M values and is displaying two things to each person: the
> total amount which will be spent on the public good, and the amount of
> tax the person is going to have to pay based on his current dial setting.
> Turning the dial to the right slightly increases the total amount which
> will be spent (not much, though, if there are thousands or millions of
> voters), and also changes the amount of tax which that person will have
> to pay. The tax will be minimized when the dial is set at roughly the
> mean value of everyone else's choice, and will go up as the knob turns
> left or right from that position. Each person has to trade off their
> desire to influence the amount spent on the public good against their
> willingness to pay taxes to make their voice heard.
In the paper, the decision is just one-shot, without this dynamic feedback
process. Everyone is assumed to already know the average M before the
whole things starts. One might ask what's the purpose of the mechanism
then, if everyone already knows the outcome? Apparently the implicit
assumption is that everyone knows except the government, and the
government needs this mechanism to find out the answer. If my
interpretation is correct, this seems to make the Groves-Ledyard mechanism
useless in real world situations, where the real average M is unknown,
because people would be taxed less on how much their preferences differ
from the average, and more on their ability to guess the correct average.
This seems to be rather unjust and unlikely to be widely adopted. It also
means that you can't just ignore the public goods that you're not
interested in. You have to become an expert in every one so that you can
guess the correct average preference.
In your dynamic scheme, things don't quite work because everyone has an
incentive to lie until right before the end. Suppose you have a greater
than average preference for the public good. You would want to turn your
dial as high as possible to create the impression that the average
preference is higher than it really is. This gives an incentive to
everyone else to turn their dials higher (closer to the average) to reduce
the "non-conformity tax". You can then switch back to a lower setting one
second before the vote ends. If everyone knows this, of course, they'll
just disregard any display of the current average and this scheme becomes
equivalent to the original one-shot scheme.
Sorry to shoot your ideas down, Hal. I hope you don't give up!
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