6 ms·

Plato knew a lot about behavioural economics

144 points by __ka 9y ago

samirillian 9y ago
One of my favorite rules of thumb came from the Nichomachean Ethics where Aristotle said that in considering how much you should pay for a service rendered, you should consider how much it was worth to you before it was accomplished. Not sure it's a documented bias, but it should be: the universal tendency to underappreciate what we already have.
- schoen 9y ago
  Related to https://en.wikipedia.org/wiki/Endowment_effect https://en.wikipedia.org/wiki/Endowment_effect (although that refers to being willing to pay more to avoid losing something than to acquire it in the first place). Edit: actually, I'm not clear on the difference between the endowment effect and loss aversion.
- ams6110 9y ago
  Colloquially, the call girl principle.
  - Ntrails 9y ago
    I don't understand - the implication being that post "service" people tend to feel it wasn't worth the price?
    - dazc 9y ago
      I think the implication is that people are 'less willing to pay' rather than they 'feel it wasn't worth the price'? I, honestly, have never used the services of a call-girl but I can relate to the concept.
    - mattmanser 9y ago
      You lose power, the service has already been rendered but you've not been paid yet. You can't negotiate for payment by threatening to withhold service. Same thing happens to freelance developers and why some add kill switches[1]. You deliver, the client then says "It's not quite what I asked for, I'll give you Nothing/10%/50%/80% of what we agreed". Obviously it's worse for call girls as they can't take you to court in most countries, hence why they always ask for money up front. Their post-service negotiating position is extremely weak. So no money up front, no service. [1] I personally think that as long as you make it clear to the client + part of the contract that they only have a temporary licence key until full-payment, kill switches are fine. Adding it on the sly is not.
mrxd 9y ago
This explains why Kahneman's book "Thinking, Fast and Slow" was such a hit. The easiest way to write a bestselling book is to tell people what they've heard a hundred times before. It does call into question the feasibility of the book's objective of correcting human biases and cognitive errors. We've been trying to do that for 2500 years.
- senthil_rajasek 9y ago
  Kahneman is a researcher known for his prospect theory [1]. He may have said what we've heard repeatedly but also backed it up with actual research. [1] https://en.m.wikipedia.org/wiki/Prospect_theory https://en.m.wikipedia.org/wiki/Prospect_theory
  - RodericDay 9y ago
    backing fairly common sense stuff with "actual research", like all things, can be done to excess > Think of it like this: the takeaway of Bartels’ post is that something like a 1% exists. (It’s actually more like a 10% for the purposes of the study he cites.) I refer back to Occupy’s figuration for two reasons. One, I imagine that Bartels would be rather sympathetic to the liberal-progressivist ends to which this slogan was put, or at least not hostile. Two, it’s a figure that drew upon pop economic knowledge, that attempted to derive from the latter the kind of epistemic aura that numbers hold for Serious People. It would have been utterly natural for Bartels to have referred to this figure, to the social movement that buoyed it, to the knowledges that sustained it. Instead, he directs us to “a flurry of commentary” surrounding McCutcheon v. FEC, a case adjudicated well, well after Occupy. If Occupy was a movement touting an idea whose time had come, Bartels refuses to validate forms of knowing that know too soon, forms of knowing that short circuit the positivist time of coming-to-know with the punctuality of a deeply plebeian “Shit’s fucked up and bullshit!” http://clrjames.blogspot.com/2014/04/ideas-whose-time-has-belatedly-come-or.html http://clrjames.blogspot.com/2014/04/ideas-whose-time-has-be...
- dredmorbius 9y ago
  If you look ahead to a future age, and consider the state of literature after the printing press, which never rests, has filled huge buildings with books, you will find again a twofold division of labor. Some will not do very much reading, but will instead devote themselves to investigations which will be new, or which they will believe to be new (for if we are even now ignorant of a part of what is contained in so many volumes published in all sorts of languages, they will know still less of what is contained in those same books, augmented as they will be by a hundred—a thousand—times as many more). -- Denis Diderot, 1755 http://www.historyofinformation.com/expanded.php?id=2877 http://www.historyofinformation.com/expanded.php?id=2877
deleted 9y ago
[deleted]
saturnian 9y ago
Plato was not doing 'behavioral economics.' This is so dumb. Academia is broken.
- lr4444lr 9y ago
  Not sure why you're getting downvoted. I have a huge respect for the enduring legacy of Greek philosophy, and I too thought links in this article were extremely tenuous, and smacked of whatever the fallacy of appealing to ancient wisdom is called. Anyone who's read Plato's dialogues will find that one of their enduring hallmarks is how even the most intelligent and formidable interlocutors are eventually compelled at least to admit the weakness of their arguments within the course of a conversation, if not change their mind to the more persuasive character's (often Socrates') point of view on some profound subjects. It's actually a beautiful and instructive aspect of the literature, but it's an idealized progression of thought among well-educated men - not a realistic portrayal of the average person's psychological progression.
  - mmmpop 9y ago
    For the same reason Ted Dzubia no longer writes blog posts--the internet can't handle cutting the crap and being blunt.
    - aninhumer 9y ago
      "This is so dumb. Academia is broken." is not simply "blunt" it's hostile, vague and adds almost nothing to the discussion. There's a reasonable argument to be made here, but they did not make it.
  - deleted 9y ago
    [deleted]
- Indy9000 9y ago
  Plato also knew Javascript and the rise of the robots. (I don't have to cite because ¯\_(ツ)_/¯
- ctlaltdefeat 9y ago
woodandsteel 9y ago
Yes, Kahneman and Tversky are repeating insights Plato had 2500 years ago. But what they added was experimental verification that is helping persuade economists who have long mistakenly believed that human beings are far more rational than they really are.

144 points by __ka 9y ago

One of my favorite rules of thumb came from the Nichomachean Ethics where Aristotle said that in considering how much you should pay for a service rendered, you should consider how much it was worth to you before it was accomplished. Not sure it's a documented bias, but it should be: the universal tendency to underappreciate what we already have.

schoen 9y ago
Related to https://en.wikipedia.org/wiki/Endowment_effect https://en.wikipedia.org/wiki/Endowment_effect (although that refers to being willing to pay more to avoid losing something than to acquire it in the first place). Edit: actually, I'm not clear on the difference between the endowment effect and loss aversion.
ams6110 9y ago
Colloquially, the call girl principle.
- Ntrails 9y ago
  I don't understand - the implication being that post "service" people tend to feel it wasn't worth the price?
  - dazc 9y ago
    I think the implication is that people are 'less willing to pay' rather than they 'feel it wasn't worth the price'? I, honestly, have never used the services of a call-girl but I can relate to the concept.
  - mattmanser 9y ago
    You lose power, the service has already been rendered but you've not been paid yet. You can't negotiate for payment by threatening to withhold service. Same thing happens to freelance developers and why some add kill switches[1]. You deliver, the client then says "It's not quite what I asked for, I'll give you Nothing/10%/50%/80% of what we agreed". Obviously it's worse for call girls as they can't take you to court in most countries, hence why they always ask for money up front. Their post-service negotiating position is extremely weak. So no money up front, no service. [1] I personally think that as long as you make it clear to the client + part of the contract that they only have a temporary licence key until full-payment, kill switches are fine. Adding it on the sly is not.

mrxd 9y ago

This explains why Kahneman's book "Thinking, Fast and Slow" was such a hit. The easiest way to write a bestselling book is to tell people what they've heard a hundred times before. It does call into question the feasibility of the book's objective of correcting human biases and cognitive errors. We've been trying to do that for 2500 years.

senthil_rajasek 9y ago
Kahneman is a researcher known for his prospect theory [1]. He may have said what we've heard repeatedly but also backed it up with actual research. [1] https://en.m.wikipedia.org/wiki/Prospect_theory https://en.m.wikipedia.org/wiki/Prospect_theory
- RodericDay 9y ago
  backing fairly common sense stuff with "actual research", like all things, can be done to excess > Think of it like this: the takeaway of Bartels’ post is that something like a 1% exists. (It’s actually more like a 10% for the purposes of the study he cites.) I refer back to Occupy’s figuration for two reasons. One, I imagine that Bartels would be rather sympathetic to the liberal-progressivist ends to which this slogan was put, or at least not hostile. Two, it’s a figure that drew upon pop economic knowledge, that attempted to derive from the latter the kind of epistemic aura that numbers hold for Serious People. It would have been utterly natural for Bartels to have referred to this figure, to the social movement that buoyed it, to the knowledges that sustained it. Instead, he directs us to “a flurry of commentary” surrounding McCutcheon v. FEC, a case adjudicated well, well after Occupy. If Occupy was a movement touting an idea whose time had come, Bartels refuses to validate forms of knowing that know too soon, forms of knowing that short circuit the positivist time of coming-to-know with the punctuality of a deeply plebeian “Shit’s fucked up and bullshit!” http://clrjames.blogspot.com/2014/04/ideas-whose-time-has-belatedly-come-or.html http://clrjames.blogspot.com/2014/04/ideas-whose-time-has-be...
dredmorbius 9y ago
If you look ahead to a future age, and consider the state of literature after the printing press, which never rests, has filled huge buildings with books, you will find again a twofold division of labor. Some will not do very much reading, but will instead devote themselves to investigations which will be new, or which they will believe to be new (for if we are even now ignorant of a part of what is contained in so many volumes published in all sorts of languages, they will know still less of what is contained in those same books, augmented as they will be by a hundred—a thousand—times as many more). -- Denis Diderot, 1755 http://www.historyofinformation.com/expanded.php?id=2877 http://www.historyofinformation.com/expanded.php?id=2877

deleted 9y ago

[deleted]

saturnian 9y ago

Plato was not doing 'behavioral economics.' This is so dumb. Academia is broken.

lr4444lr 9y ago
Not sure why you're getting downvoted. I have a huge respect for the enduring legacy of Greek philosophy, and I too thought links in this article were extremely tenuous, and smacked of whatever the fallacy of appealing to ancient wisdom is called. Anyone who's read Plato's dialogues will find that one of their enduring hallmarks is how even the most intelligent and formidable interlocutors are eventually compelled at least to admit the weakness of their arguments within the course of a conversation, if not change their mind to the more persuasive character's (often Socrates') point of view on some profound subjects. It's actually a beautiful and instructive aspect of the literature, but it's an idealized progression of thought among well-educated men - not a realistic portrayal of the average person's psychological progression.
- mmmpop 9y ago
  For the same reason Ted Dzubia no longer writes blog posts--the internet can't handle cutting the crap and being blunt.
  - aninhumer 9y ago
    "This is so dumb. Academia is broken." is not simply "blunt" it's hostile, vague and adds almost nothing to the discussion. There's a reasonable argument to be made here, but they did not make it.
- deleted 9y ago
  [deleted]
Indy9000 9y ago
Plato also knew Javascript and the rise of the robots. (I don't have to cite because ¯\_(ツ)_/¯
ctlaltdefeat 9y ago

woodandsteel 9y ago

Yes, Kahneman and Tversky are repeating insights Plato had 2500 years ago. But what they added was experimental verification that is helping persuade economists who have long mistakenly believed that human beings are far more rational than they really are.