4 ms·

Yes, except that if you spend your money to vote irrationally, smaller players can use this as a profit opportunity to extract money from the "rich"... irration

by drcode 12y ago

Yes, except that if you spend your money to vote irrationally, smaller players can use this as a profit opportunity to extract money from the "rich"... irrational/biased voting is penalized.

tunesmith 12y ago
So, honest rich people get more voting power than honest poor people?
- roryokane 12y ago
  No, smart, effective rich people get more voting power than smart, effective poor people. Which is not so bad, since if they are smart and effective, they will usually vote for the better policy anyway.
  - angersock 12y ago
    Smart and effective doesn't necessarily imply better policy. Better policy for them, perhaps, but not for everyone else.
    - cbr 12y ago
      In this system there's an agreed-on concept of "better", and this is standard one-person-one-vote with no money involved. If these "smart, effective rich people" then bet that certain policies will be better, but in fact these policies turn out to only be better for them and are worse for everyone else, they will lose lots of money for betting wrong.
      - notahacker 12y ago
        You seem to assume the incentives are always correctly aligned, and agreed on concepts of "better" are immutable. They're not. Simple example: Country X decides to do something dastardly against the interests of Futarchy Y. Confidence in the economic outlook wavers, as happens in any country where there's an anticipated reduction in trade and maybe even war. Country X, could have made a lot of money shorting "future GDP per capita" on the Futarchy prediction exchange prior to their dastardly act though. It gets worse because not only is Country X able to directly profit from making the lives of Futarchy Y worse, but the futarchic system actually makes retaliation impossible. Much as the government of Futarchy Y talks tough, and would like to take action, like sanctions, but when they actually put their sanction policy to the test, these proposed sanctions probably have a negative impact on "future GDP per capita", which is one of a perfectly reasonable set of metrics Futarchy Y has chosen. Despite the man on the street tending to agree that sanctions would be a just and moral cause of action Futarchy Y is forced into retreat because a priori metrics matter more than what the government and the public actually want to happen, and there's no way the market agrees that sanctions are going to help them achieve the given goal of growing GDP. Smart people outwit crude algorithms in simple games like Go if they have an infinitude of possible outcomes. Now imagine that crude algorithm is calibrated by simpletons voting on parameters they don't really understand
        cbr 12y ago
        You seem to assume the incentives are always correctly aligned, and agreed on concepts of "better" are immutable. They're not. No, I agree with you. I'm not very confident futarchy would work out in practice. I can theorize about how you need to set up your metrics so your country doesn't get exploited by others, but getting the metrics right is very important and they're going to be constantly under attacks to separate them from what they're actually trying to measure.
    - baddox 12y ago
      > Better policy for them, perhaps, but not for everyone else. That's precisely what the prediction market purports to solve.
  - bcoates 12y ago
    That's the one thing this proposal gets right -- the returns to betting marginally better than everyone else are exponential, so they are mostly insensitive to initial conditions. In a world where everything is decided by cointoss, it's better to be born poor and lucky than rich and unlucky.
- deleted 12y ago
  [deleted]
- baddox 12y ago
  I guess it depends on what exactly you mean by "honest." Rich people would have more voting power, but also the incentive to vote "correctly." Right now, in the real world, rich people have much more political influence than poor people, and very little incentive to vote "correctly."
  - tunesmith 12y ago
    Is it a truism that "correctly" has the same definition for a smart, effective, honest rich person as it does for a smart, effective, honest poor person?
    - baddox 12y ago
      The reason I put it in quotation marks is because it's not a very well-defined concept, and it assumes that there is objectively a correct society, when in reality, people have different preferences. One way to formalize it would be in terms of Pareto improvements, which are theoretical but useful for analysis. Imagine a referendum where voting yes results in rich people receiving a benefit at the expense of the poor and voting no results in no benefit or expense to anyone. One example of this might be introduction of a regressive tax. Most of us would agree that, according to standard Western civil values, the "correct" vote is no. But obviously rich people in our current system are incentivized to vote yes, and perhaps also to spend money campaigning in support of this referendum.
      - Qworg 12y ago
        And rich people in this new system are incentivized to not vote yes? They gain a benefit. The poor people, who don't have any market power, do not. Why would they vote any other way?
        baddox 12y ago
        If I understand futarchy (I haven't studied it extensively, so I may be wrong), you need over 50% of the money in the system to be voting yes in order for it to be profitable to vote yes. If, say, 75% of the money was voting no (the "correct" decision), then the rich people voting no with 25% of the money would be losing money. In our current system, rich people are incentived to vote yes, even if they will be vastly outnumbered by the people voting no, because there is very little cost to voting for the "incorrect" option (if we're ignoring the cost of educating yourself about the effect of each vote, which we assumed away previously). In this system, rich people are incentivized to vote for the "correct" option, because voting for the "incorrect" option is costly.
- logfromblammo 12y ago
  The poor people get to decide what is important. The rich people decide how to optimize for the important things. For instance, if the one-person-one-vote decided, for whatever reason, that a metric of importance was grams of marijuana sold in a year to people older than 18, minus (18-age)^2*grams for any weed consumed by minors, then rich people would decide the best way to repeal marijuana prohibition while keeping it away from kids. The prediction market would decide the policy. But this is where I get confused about the payouts. The predictions have to be tied to reality in some way to have any value. So the backers of a given policy choice have a financial incentive to see it exceed predictions, while the opposition has incentive to see it fail completely. They could game the metric to avoid paying out as much, and do something like pass out pot brownies to kids in day care. They have an ongoing incentive to influence the metric. But if you remove the influence incentive, you also remove the motive to predict accurately. I feel like I'm missing something here. It seems like if you tried this with government, you're making renegade behavior potentially profitable. In the article example, it seems that if banker wanted a bailout, he would go long on bailout and short on no-bailout. If the no-bailout policy won, he then has a giant incentive to do anything in his power to crash the economy and keep GDP down. Can anyone explain what I'm missing, if anything?
micahwayne 12y ago
If the voting is secret and instantaneous, instead of via a market over a period time, those who control enough of the market won't be able to push the market in one direction, without exposing themselves to significant losses.

by drcode 12y ago

Yes, except that if you spend your money to vote irrationally, smaller players can use this as a profit opportunity to extract money from the "rich"... irrational/biased voting is penalized.

tunesmith 12y ago

So, honest rich people get more voting power than honest poor people?

roryokane 12y ago
No, smart, effective rich people get more voting power than smart, effective poor people. Which is not so bad, since if they are smart and effective, they will usually vote for the better policy anyway.
- angersock 12y ago
  Smart and effective doesn't necessarily imply better policy. Better policy for them, perhaps, but not for everyone else.
  - cbr 12y ago
    In this system there's an agreed-on concept of "better", and this is standard one-person-one-vote with no money involved. If these "smart, effective rich people" then bet that certain policies will be better, but in fact these policies turn out to only be better for them and are worse for everyone else, they will lose lots of money for betting wrong.
    - notahacker 12y ago
      You seem to assume the incentives are always correctly aligned, and agreed on concepts of "better" are immutable. They're not. Simple example: Country X decides to do something dastardly against the interests of Futarchy Y. Confidence in the economic outlook wavers, as happens in any country where there's an anticipated reduction in trade and maybe even war. Country X, could have made a lot of money shorting "future GDP per capita" on the Futarchy prediction exchange prior to their dastardly act though. It gets worse because not only is Country X able to directly profit from making the lives of Futarchy Y worse, but the futarchic system actually makes retaliation impossible. Much as the government of Futarchy Y talks tough, and would like to take action, like sanctions, but when they actually put their sanction policy to the test, these proposed sanctions probably have a negative impact on "future GDP per capita", which is one of a perfectly reasonable set of metrics Futarchy Y has chosen. Despite the man on the street tending to agree that sanctions would be a just and moral cause of action Futarchy Y is forced into retreat because a priori metrics matter more than what the government and the public actually want to happen, and there's no way the market agrees that sanctions are going to help them achieve the given goal of growing GDP. Smart people outwit crude algorithms in simple games like Go if they have an infinitude of possible outcomes. Now imagine that crude algorithm is calibrated by simpletons voting on parameters they don't really understand
      - cbr 12y ago
        You seem to assume the incentives are always correctly aligned, and agreed on concepts of "better" are immutable. They're not. No, I agree with you. I'm not very confident futarchy would work out in practice. I can theorize about how you need to set up your metrics so your country doesn't get exploited by others, but getting the metrics right is very important and they're going to be constantly under attacks to separate them from what they're actually trying to measure.
  - baddox 12y ago
    > Better policy for them, perhaps, but not for everyone else. That's precisely what the prediction market purports to solve.
- bcoates 12y ago
  That's the one thing this proposal gets right -- the returns to betting marginally better than everyone else are exponential, so they are mostly insensitive to initial conditions. In a world where everything is decided by cointoss, it's better to be born poor and lucky than rich and unlucky.
deleted 12y ago
[deleted]
baddox 12y ago
I guess it depends on what exactly you mean by "honest." Rich people would have more voting power, but also the incentive to vote "correctly." Right now, in the real world, rich people have much more political influence than poor people, and very little incentive to vote "correctly."
- tunesmith 12y ago
  Is it a truism that "correctly" has the same definition for a smart, effective, honest rich person as it does for a smart, effective, honest poor person?
  - baddox 12y ago
    The reason I put it in quotation marks is because it's not a very well-defined concept, and it assumes that there is objectively a correct society, when in reality, people have different preferences. One way to formalize it would be in terms of Pareto improvements, which are theoretical but useful for analysis. Imagine a referendum where voting yes results in rich people receiving a benefit at the expense of the poor and voting no results in no benefit or expense to anyone. One example of this might be introduction of a regressive tax. Most of us would agree that, according to standard Western civil values, the "correct" vote is no. But obviously rich people in our current system are incentivized to vote yes, and perhaps also to spend money campaigning in support of this referendum.
    - Qworg 12y ago
      And rich people in this new system are incentivized to not vote yes? They gain a benefit. The poor people, who don't have any market power, do not. Why would they vote any other way?
      - baddox 12y ago
        If I understand futarchy (I haven't studied it extensively, so I may be wrong), you need over 50% of the money in the system to be voting yes in order for it to be profitable to vote yes. If, say, 75% of the money was voting no (the "correct" decision), then the rich people voting no with 25% of the money would be losing money. In our current system, rich people are incentived to vote yes, even if they will be vastly outnumbered by the people voting no, because there is very little cost to voting for the "incorrect" option (if we're ignoring the cost of educating yourself about the effect of each vote, which we assumed away previously). In this system, rich people are incentivized to vote for the "correct" option, because voting for the "incorrect" option is costly.
logfromblammo 12y ago
The poor people get to decide what is important. The rich people decide how to optimize for the important things. For instance, if the one-person-one-vote decided, for whatever reason, that a metric of importance was grams of marijuana sold in a year to people older than 18, minus (18-age)^2*grams for any weed consumed by minors, then rich people would decide the best way to repeal marijuana prohibition while keeping it away from kids. The prediction market would decide the policy. But this is where I get confused about the payouts. The predictions have to be tied to reality in some way to have any value. So the backers of a given policy choice have a financial incentive to see it exceed predictions, while the opposition has incentive to see it fail completely. They could game the metric to avoid paying out as much, and do something like pass out pot brownies to kids in day care. They have an ongoing incentive to influence the metric. But if you remove the influence incentive, you also remove the motive to predict accurately. I feel like I'm missing something here. It seems like if you tried this with government, you're making renegade behavior potentially profitable. In the article example, it seems that if banker wanted a bailout, he would go long on bailout and short on no-bailout. If the no-bailout policy won, he then has a giant incentive to do anything in his power to crash the economy and keep GDP down. Can anyone explain what I'm missing, if anything?

micahwayne 12y ago

If the voting is secret and instantaneous, instead of via a market over a period time, those who control enough of the market won't be able to push the market in one direction, without exposing themselves to significant losses.