More freedom makes signaling of what you’ll actually do more difficult.
Yes, this is something that I worry about. You can try to force your signal to be accurate by entering a contract, but even if you signed a contract in the past, how can anybody enforce the contract now without impinging on your present freedom? The best that I’ve come up with so far is to use trust metrics, like a credit rating. (Payment of debts is pretty much unenforceable in the modern First World, which is why they invented credit reports.)
Thomas Schelling gives many examples of incentivising agreements instead of enforcing them. Here’s one: you and I want to spend 1 million dollars each on producing a nonexcludable common good that will give each of us 1.5 million in revenue. (So each dollar spent on the good creates 1.5 dollars in revenue that have to be evenly split among us both, no matter who spent the initial dollar.) Individually, it’s better for me if you spend the million and I don’t, because this way I end up with 1.75 million instead of 1.5. Schelling’s answer is spreading the investment out in time: you invest a penny, I see it and invest a penny in turn, and so on. This way it costs almost nothing for us both to establish mutual trust from the start, and it becomes rational to keep cooperating every step of the way.
The paradoxical decision theorist would still say, ‘You fool! Don’t put in a penny; your rational opponent won’t reciprocate, and you’ll be out a farthing.’. Fortunately nobody behaves this way, and it wouldn’t be rational to predict it.
I would probably put in half a million right away, if I don’t know you at all other than knowing that you value the good like I do. I’m sure that you can find a way to manipulate me to my detriment if you know that, since it’s based on nothing more than a hunch; and actually this is the sort of place where I would expect to see a lecture as to exactly how you would do so, so please fire away! (Of course, any actual calculation as to how fast to proceed depends on the time discounting and the overhead of it all, so there is no single right answer.)
I agree, slowly building up trust over time is an excellent tactic. Looking up somebody’s trust metric is only for strangers.
You are never free to change what you actually are and what you actually want, so these invariants can be used to force a choice on you by making it the best one available.
That’s the reason bad things happen. Before the added capacity, drivers’ actions are restricted by problem statement, so signaling isn’t needed, its role is filled. If all drivers decide to ignore the addition, and effectively signal to each other that they actually will, they end up with the old plan, better than otherwise, and so would choose to precommit to that restriction. More freedom made signaling the same plan more difficult, by reducing information. But of course, with new capacity they could in principle find an even better plan, if only they could precommit to it (coordinate their actions).
More freedom makes signaling of what you’ll actually do more difficult. All else equal, freedom is good.
Yes, this is something that I worry about. You can try to force your signal to be accurate by entering a contract, but even if you signed a contract in the past, how can anybody enforce the contract now without impinging on your present freedom? The best that I’ve come up with so far is to use trust metrics, like a credit rating. (Payment of debts is pretty much unenforceable in the modern First World, which is why they invented credit reports.)
What Nesov said.
Thomas Schelling gives many examples of incentivising agreements instead of enforcing them. Here’s one: you and I want to spend 1 million dollars each on producing a nonexcludable common good that will give each of us 1.5 million in revenue. (So each dollar spent on the good creates 1.5 dollars in revenue that have to be evenly split among us both, no matter who spent the initial dollar.) Individually, it’s better for me if you spend the million and I don’t, because this way I end up with 1.75 million instead of 1.5. Schelling’s answer is spreading the investment out in time: you invest a penny, I see it and invest a penny in turn, and so on. This way it costs almost nothing for us both to establish mutual trust from the start, and it becomes rational to keep cooperating every step of the way.
The paradoxical decision theorist would still say, ‘You fool! Don’t put in a penny; your rational opponent won’t reciprocate, and you’ll be out a farthing.’. Fortunately nobody behaves this way, and it wouldn’t be rational to predict it.
I would probably put in half a million right away, if I don’t know you at all other than knowing that you value the good like I do. I’m sure that you can find a way to manipulate me to my detriment if you know that, since it’s based on nothing more than a hunch; and actually this is the sort of place where I would expect to see a lecture as to exactly how you would do so, so please fire away! (Of course, any actual calculation as to how fast to proceed depends on the time discounting and the overhead of it all, so there is no single right answer.)
I agree, slowly building up trust over time is an excellent tactic. Looking up somebody’s trust metric is only for strangers.
You are never free to change what you actually are and what you actually want, so these invariants can be used to force a choice on you by making it the best one available.
Um, Braess’s paradox doesn’t involve signaling.
That’s the reason bad things happen. Before the added capacity, drivers’ actions are restricted by problem statement, so signaling isn’t needed, its role is filled. If all drivers decide to ignore the addition, and effectively signal to each other that they actually will, they end up with the old plan, better than otherwise, and so would choose to precommit to that restriction. More freedom made signaling the same plan more difficult, by reducing information. But of course, with new capacity they could in principle find an even better plan, if only they could precommit to it (coordinate their actions).