I have a couple people with whom I can be totally open and honest. It makes life much nicer. In general though, radical honesty would, it seems to me, cut one off from truth. One would be intrinsically unable to keep a trust with a third party who was not of the same philosophy. In practice, it would also simply be impossible to meaningfully be “radically honest” with the vast majority of people who don’t even share my opinions about background knowledge such as what “belief” means. As is, I think a much greater than typical level of honest with epistemic peers is utility maximizing. It enables Aumann Agreement, if nothing else (but really much else). Expanding that circle would just be stupid. I am a bit inspired to test the psychologist from the article though. What would he be willing to sell his “services” for? It seems to me that trade creates overwhelming incentives to deception regarding one’s producer or consumer surplus and willingness to pay.
It seems to me that trade creates overwhelming incentives to deception regarding one’s producer or consumer surplus and willingness to pay.
This is something that some economist really ought to be focusing on. Is there a way for trade to take place that doesn’t create incentives for this sort of concealment? Aside from large-scale market pricing of commensurable goods? The downside of this sort of this deception is that many trades don’t take place!
When someone says they aren’t willing to pay so much or sell for so little, we understand it’s just haggling and don’t assign it much weight. I’m more concerned about stock markets and similar setups, like decision markets, where the incentives are to lie to the general public, including uninvolved third parties, rather than to a specific business partner. I was struck by this interview (starting at about 7:30), in which a hedge fund trader admits to spreading false rumors about companies in order to profit from the effect on their stocks. Some traders are very good at taking advantage of brief oscillations in price, so this strategy is viable even if the market quickly restores the stock price to its correct value.
(This is also why I don’t think decision markets and prediction markets are a good idea. The information provided by the market’s price is greatly outweighed by the lies traders could spread to make that price oscillate.)
Is there a way for trade to take place that doesn’t create incentives for this sort of concealment? Aside from large-scale market pricing of commensurable goods?
Isn’t that what mechanism design is about? eg, a second-price auction is supposed to produce bidder honesty by the seller promising to concede the game of bilateral monopoly. Aside from reducing the transaction costs so that the sale actually occurs, one hopes that the honesty is a positive externality.
I have a couple people with whom I can be totally open and honest. It makes life much nicer. In general though, radical honesty would, it seems to me, cut one off from truth. One would be intrinsically unable to keep a trust with a third party who was not of the same philosophy. In practice, it would also simply be impossible to meaningfully be “radically honest” with the vast majority of people who don’t even share my opinions about background knowledge such as what “belief” means. As is, I think a much greater than typical level of honest with epistemic peers is utility maximizing. It enables Aumann Agreement, if nothing else (but really much else). Expanding that circle would just be stupid. I am a bit inspired to test the psychologist from the article though. What would he be willing to sell his “services” for? It seems to me that trade creates overwhelming incentives to deception regarding one’s producer or consumer surplus and willingness to pay.
This is something that some economist really ought to be focusing on. Is there a way for trade to take place that doesn’t create incentives for this sort of concealment? Aside from large-scale market pricing of commensurable goods? The downside of this sort of this deception is that many trades don’t take place!
When someone says they aren’t willing to pay so much or sell for so little, we understand it’s just haggling and don’t assign it much weight. I’m more concerned about stock markets and similar setups, like decision markets, where the incentives are to lie to the general public, including uninvolved third parties, rather than to a specific business partner. I was struck by this interview (starting at about 7:30), in which a hedge fund trader admits to spreading false rumors about companies in order to profit from the effect on their stocks. Some traders are very good at taking advantage of brief oscillations in price, so this strategy is viable even if the market quickly restores the stock price to its correct value.
(This is also why I don’t think decision markets and prediction markets are a good idea. The information provided by the market’s price is greatly outweighed by the lies traders could spread to make that price oscillate.)
Isn’t that what mechanism design is about? eg, a second-price auction is supposed to produce bidder honesty by the seller promising to concede the game of bilateral monopoly. Aside from reducing the transaction costs so that the sale actually occurs, one hopes that the honesty is a positive externality.