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The "problem" with the daycare is simply that they needed to either raise their prices or hire more employees willing to work a few extra hours to get overtime

The "problem" with the daycare is simply that they needed to either raise their prices or hire more employees willing to work a few extra hours to get overtime pay. This isn't a problem at all, they have actually found another source of revenue for their company with a service their customers value and are willing to pay for. Of all places where I would expect someone to be oblivious to this I find the fact that it's on a site focused on entrepreneurship and nurturing start ups to become profitable hilariously ironic.

sp332 12y ago
The fee wasn't supposed to be a price, it was supposed to be an additional incentive to show up on time. But instead it replaced the previous incentive instead of adding to it.
- gnarbarian 12y ago
  Then they simply need to increase the fee until leaving their kids there is not worth it to them. This stuff is economics 101. Raise the price and the demand for being late will decrease. They have literally blundered their way into a source of revenue, fail to see it as an opportunity and are resentful of it. If the fee wasn't supposed to be a price then they shouldn't have made it a price. If they really hate money as much as it sounds they could instead give tardy parents 3 strikes before banning them from the daycare altogether.
  - dllthomas 12y ago
    Strictly, economics 101 says that if you raise the price the quantity demanded will decrease. Demand is a curve.
    - gnarbarian 12y ago
      Yes, it has been about 13 years since I took econ. Since children are integers and are in daycare in quantities between 1 and 30ish per employee it's possible to increase the price to the point where it either covers the cost of the employee's OT or the quantity of demand is zero.
      - dllthomas 12y ago
        Certainly the case. I think you're missing the point of the example, though. It's not "OMG there is no solution for this daycare" - there is, as you say, an obvious economic solution. It's that it is interesting (and relevant) that the different kinds of incentive don't stack, which is contrary to the naive assumption. Therefore, if the proposed mechanism cannot come up with sufficient money, it might actually make the situation worse - this may not be a "every little bit helps" situation.
    - sp332 12y ago
      So... why did raising the price from $0 to $5 increase the demand?
      - dllthomas 12y ago
        It increased the quantity demanded because of a weird artifact of human psychology that isn't typically covered in economics 101. There is a discontinuity in the demand curve as the relevant norms change.
  - sp332 12y ago
    If the fee wasn't supposed to be a price then they shouldn't have made it a price. Yes, that's what I'm saying. If we replace the altruistic motivation with a monetary one, and we don't have enough money to incentivize people, they will just stop. They won't take the altruistic motivation plus the monetary one.
    - gnarbarian 12y ago
      A daycare is not a place where people take care of your kids for free because they empathize with your need for childcare, It's a business which provides a service customers pay for. The responsibility customers have to pick up their kids on time is directly tied to how much it's going to cost them "feeling bad about being late" can be thought of as a cost in this example. All this example shows is "not feeling bad" is worth more than $5 and all they need to do to "solve" this new source of revenue is to raise the late fee until fewer people are late to pick up their kids than when there was no price at all. But what they really ought to do is raise the price until they reach an optimal profit per late child. It's plain to see that altruism isn't enough to keep enough tor nodes going. I've never even considered running one until now because of the real costs and risk it incurs upon me. Now I'm actually considering it because it might be worth it. This is a good thing and there are more people willing do to something for money than people willing to do something out of the kindness of their heart to people they will never meet or interact with in any way.
      - sp332 12y ago
        OK I think you're missing what I said. The incentive is not altruistic impulse + money, it's altruistic impulse OR money. So far most of the Tor nodes really are run on charity!
        gnarbarian 12y ago
        Here's what I said up above "As it stands I wouldn't be surprised if the majority of nodes were operated by various national intelligence agencies simply because they have vastly more incentive to do so than anyone else. Potentially being able to profit from this changes things dramatically and gives people who wouldn't consider themselves stakeholders actual reason to 'sell' their bandwidth to the tor network." It's possible that most of the nodes aren't run for altruistic reasons at all. And are in fact run to datamine the network to discover the identity of people using it. Paying people won't affect the people who are doing it for altruistic reasons alone, their price is already met. It's just an added bonus for them. But it will have the affect of bringing in additional people who wouldn't have considered it before. The only problem with the daycare's solution is the fact they didn't charge enough to offset the "cost" of feeling bad about being late. To the customers it was a worthy exchange. Similarly, the tor coin needs to have a value that will offset the 'cost' of feeling bad about not contributing to the network which I know is extremely low.

sp332 12y ago

The fee wasn't supposed to be a price, it was supposed to be an additional incentive to show up on time. But instead it replaced the previous incentive instead of adding to it.

gnarbarian 12y ago
Then they simply need to increase the fee until leaving their kids there is not worth it to them. This stuff is economics 101. Raise the price and the demand for being late will decrease. They have literally blundered their way into a source of revenue, fail to see it as an opportunity and are resentful of it. If the fee wasn't supposed to be a price then they shouldn't have made it a price. If they really hate money as much as it sounds they could instead give tardy parents 3 strikes before banning them from the daycare altogether.
- dllthomas 12y ago
  Strictly, economics 101 says that if you raise the price the quantity demanded will decrease. Demand is a curve.
  - gnarbarian 12y ago
    Yes, it has been about 13 years since I took econ. Since children are integers and are in daycare in quantities between 1 and 30ish per employee it's possible to increase the price to the point where it either covers the cost of the employee's OT or the quantity of demand is zero.
    - dllthomas 12y ago
      Certainly the case. I think you're missing the point of the example, though. It's not "OMG there is no solution for this daycare" - there is, as you say, an obvious economic solution. It's that it is interesting (and relevant) that the different kinds of incentive don't stack, which is contrary to the naive assumption. Therefore, if the proposed mechanism cannot come up with sufficient money, it might actually make the situation worse - this may not be a "every little bit helps" situation.
  - sp332 12y ago
    So... why did raising the price from $0 to $5 increase the demand?
    - dllthomas 12y ago
      It increased the quantity demanded because of a weird artifact of human psychology that isn't typically covered in economics 101. There is a discontinuity in the demand curve as the relevant norms change.
- sp332 12y ago
  If the fee wasn't supposed to be a price then they shouldn't have made it a price. Yes, that's what I'm saying. If we replace the altruistic motivation with a monetary one, and we don't have enough money to incentivize people, they will just stop. They won't take the altruistic motivation plus the monetary one.
  - gnarbarian 12y ago
    A daycare is not a place where people take care of your kids for free because they empathize with your need for childcare, It's a business which provides a service customers pay for. The responsibility customers have to pick up their kids on time is directly tied to how much it's going to cost them "feeling bad about being late" can be thought of as a cost in this example. All this example shows is "not feeling bad" is worth more than $5 and all they need to do to "solve" this new source of revenue is to raise the late fee until fewer people are late to pick up their kids than when there was no price at all. But what they really ought to do is raise the price until they reach an optimal profit per late child. It's plain to see that altruism isn't enough to keep enough tor nodes going. I've never even considered running one until now because of the real costs and risk it incurs upon me. Now I'm actually considering it because it might be worth it. This is a good thing and there are more people willing do to something for money than people willing to do something out of the kindness of their heart to people they will never meet or interact with in any way.
    - sp332 12y ago
      OK I think you're missing what I said. The incentive is not altruistic impulse + money, it's altruistic impulse OR money. So far most of the Tor nodes really are run on charity!
      - gnarbarian 12y ago
        Here's what I said up above "As it stands I wouldn't be surprised if the majority of nodes were operated by various national intelligence agencies simply because they have vastly more incentive to do so than anyone else. Potentially being able to profit from this changes things dramatically and gives people who wouldn't consider themselves stakeholders actual reason to 'sell' their bandwidth to the tor network." It's possible that most of the nodes aren't run for altruistic reasons at all. And are in fact run to datamine the network to discover the identity of people using it. Paying people won't affect the people who are doing it for altruistic reasons alone, their price is already met. It's just an added bonus for them. But it will have the affect of bringing in additional people who wouldn't have considered it before. The only problem with the daycare's solution is the fact they didn't charge enough to offset the "cost" of feeling bad about being late. To the customers it was a worthy exchange. Similarly, the tor coin needs to have a value that will offset the 'cost' of feeling bad about not contributing to the network which I know is extremely low.