The other assumption is that they liar can make himself believed. Which means there is another assumption of imperfect information across the game.
I wish there was a better science of the economics of imperfect information, or if there is that I would know about it. It seems likely that a very important part of the trading on securities, investment, and derivative markets is completely driven by imperfect information, by information asymmetries or at minimum believe asymmetries.
And then what of lying in multiplayer games? I think of politics, where I get so frustrated that politicians can say the most blatantly untrue things, and I can see them as such, but those things gain them votes.
I wish there was a better science of the economics of imperfect information, or if there is that I would know about it.
Mechanism design? BTW, this is a special case of a mechanism design result known as the Myerson-Satterthwaite theorem. It’s not a novel result by any means. The Gibbard-Satterthwaite theorem has a similar flavor, though it is in fact a separate result—for one thing, it applies to voting systems with three or more agents.
It seems likely that a very important part of the trading on securities, investment, and derivative markets is completely driven by imperfect information, by information asymmetries or at minimum believe asymmetries.
Sure. Most people involved in the financial markets reasonably closely approximate utility-maximizing agents with utility defined in money. So with the exception of when someone has to raise cash to pay for some external expense, every trade in the financial markets is one where the seller thinks what he has is worth less than what he’s selling it for, and the buyer thinks it’s worth more than what he’s paying. (A trade itself has various transaction costs, so if you think it’s really an even swap, it’s automatically a loss of to trade.) So the vast majority of trading activity is directly a matter of belief asymmetries.
(One way Warren Buffet makes his money, by the way? Berkshire Hathaway has a pattern and practice of watching for profitable small businesses that have to be sold by the heirs to cover the external expense of estate taxes. This exploits the fact that small business heirs, unlike heirs of diversified stock portfolios, do not generally have access to efficient, highly-competitive markets for their inherited assets. It’s one of the few ways to make money on the financial markets without having to have consistently more-accurate beliefs about future prices than the other participants in the market; you instead buy assets for a price lower than both parties think they’re worth, but which the selling party cannot practically refuse to sell.)
I think of politics, where I get so frustrated that politicians can say the most blatantly untrue things, and I can see them as such, but those things gain them votes.
That’s only confusing if you are conflating professing and cheering. It’s not about convincing anyone of policy issues, it’s about convincing people that you’re on their team. I agree that it can certainly be frustrating that this is how people work...
The other assumption is that they liar can make himself believed. Which means there is another assumption of imperfect information across the game.
I wish there was a better science of the economics of imperfect information, or if there is that I would know about it. It seems likely that a very important part of the trading on securities, investment, and derivative markets is completely driven by imperfect information, by information asymmetries or at minimum believe asymmetries.
And then what of lying in multiplayer games? I think of politics, where I get so frustrated that politicians can say the most blatantly untrue things, and I can see them as such, but those things gain them votes.
I’d prefer to see it as “there is an incentive to lie, if they can get away with it”.
Mechanism design? BTW, this is a special case of a mechanism design result known as the Myerson-Satterthwaite theorem. It’s not a novel result by any means. The Gibbard-Satterthwaite theorem has a similar flavor, though it is in fact a separate result—for one thing, it applies to voting systems with three or more agents.
Sure. Most people involved in the financial markets reasonably closely approximate utility-maximizing agents with utility defined in money. So with the exception of when someone has to raise cash to pay for some external expense, every trade in the financial markets is one where the seller thinks what he has is worth less than what he’s selling it for, and the buyer thinks it’s worth more than what he’s paying. (A trade itself has various transaction costs, so if you think it’s really an even swap, it’s automatically a loss of to trade.) So the vast majority of trading activity is directly a matter of belief asymmetries.
(One way Warren Buffet makes his money, by the way? Berkshire Hathaway has a pattern and practice of watching for profitable small businesses that have to be sold by the heirs to cover the external expense of estate taxes. This exploits the fact that small business heirs, unlike heirs of diversified stock portfolios, do not generally have access to efficient, highly-competitive markets for their inherited assets. It’s one of the few ways to make money on the financial markets without having to have consistently more-accurate beliefs about future prices than the other participants in the market; you instead buy assets for a price lower than both parties think they’re worth, but which the selling party cannot practically refuse to sell.)
That’s only confusing if you are conflating professing and cheering. It’s not about convincing anyone of policy issues, it’s about convincing people that you’re on their team. I agree that it can certainly be frustrating that this is how people work...