David_J_Balan

Karma: 275

David_J_Balan Feb 13, 2010, 10:00 PM
2 points
in reply to: Eliezer Yudkowsky’s comment on: How Much Should We Care What the Founding Fathers Thought About Anything?
Just for the record, this was not an instance of intentionally burning karma on a post that I knew people weren’t going to like. I’m not saying I would never do that, but I have never done it and have no immediate plans to.

David_J_Balan Feb 11, 2010, 8:20 AM
0 points
in reply to: Morendil’s comment on: How Much Should We Care What the Founding Fathers Thought About Anything?
Good point on the Americocentrism. I’ll keep that in mind.

I appreciate your appreciation of my attempt to make my point better in the above comment. I don’t know if it caused Eliezer or any other readers to now agree that it is a point that belongs on LW, but either way I think it improved matters at least somewhat. But I don’t think I agree that it would be a good thing if everybody started editing top-level posts, because then the comments made before the revisions would no longer make sense. And I also suspect that a bunch of edits in response to comments would often make the final product worse and not better. I think the way to handle situations like this is in the comments as was the case here, and hopefully those will guide future top-level posts that as a result will have fewer problems to begin with.

David_J_Balan Feb 11, 2010, 8:05 AM
0 points
in reply to: Sticky’s comment on: How Much Should We Care What the Founding Fathers Thought About Anything?
Part of the reason for having a Constitution in the first place is supposed to be that there are some things that are so fundamental that they ought not be subjected to ordinary democratic decision-making. If you don’t buy that premise, then we don’t need a Constitution at all (or at least a Bill of Rights). If you do buy that premise, then the question becomes whether and when that set of things that is above the ordinary law ought to change over time. One defensible position is that it ought never to change unless the change can make it through the very difficult amendment process. But the way that position is usually advanced is by incorrectly claiming that the only alternative to it is judicial tyranny and then daring your opponent to come out on the side of the tyrants, and that is not defensible. And that was the main point of the post.

The “Wise Elders” point is merely that if you take a position other than the “no change except for amendments” one and so allow for some additional (though still limited!) changes over time, then the question becomes who should have the power to make those changes. Presumably they should be people who are in some sense above the political fray, because by assumption we are talking about things that should not be left to ordinary politics. And I can see no reason why the people who are given that power ought to be primarily legal experts.

David_J_Balan Feb 11, 2010, 3:55 AM
9 points
in reply to: Eliezer Yudkowsky’s comment on: How Much Should We Care What the Founding Fathers Thought About Anything?
It’s not totally clear to me how narrow or broad the ambit of LW posts should be in terms of how far they can stray from core questions of rationality. This post seems no farther from that core than other posts that appear here, but then maybe some of those shouldn’t be here either.

In any case, the thing that I think gives this an LW-type flavor is that it’s an example of how you can use a certain kind of argument to bully your opponents. One side in the argument takes a legitimate value that no one can dispute (unlimited power by judges is bad) and then, by what pretty much amounts to a rhetorical trick, sets things up so that anyone who attempts to reasonably trade that value off against other values stands accused of abandoning the value entirely. This leads to a situation where the guy on the other side of the argument comes out sounding unpersuasive, but only because he’s got to conduct the argument within the unfavorable constraints set up by the first guy.

Maybe you still don’t buy this as being close enough to core LW topics to belong here, or maybe I didn’t make the link explicit enough in the post.

David_J_Balan Jan 18, 2010, 6:34 AM
10 points
0
on: Sorting Out Sticky Brains
Very nice.

David_J_Balan Jan 4, 2010, 6:47 PM
5 points
in reply to: Larks’s comment on: Disclosure vs. Bans: Reply to Robin Hanson
Economists are very fond of the argument of the following form:

“if Thing X that you think is bad in a particular market was really bad, some firm have an incentive to enter and offer a product without thing X and get tons of customers. Therefore, Thing X must not really be bad.”

And it is a powerful argument. But not nearly as powerful as it’s sometimes made out to be. The economics literature is full of stories in which bad things happen in stable equilibria. And I suspect that there are many more such stories that have not yet been written down. On the credit card thing in particular, there is the Laibson & Gabaix (2006) paper that I cited in the earlier post. The practices are bad and there is no incentive for an entrant to enter and offer a product that doesn’t use them.

David_J_Balan Jan 4, 2010, 6:41 PM
2 points
in reply to: RobinHanson’s comment on: Disclosure vs. Bans: Reply to Robin Hanson
The models I have in mind are the standard “lemons” adverse selection model and other models in which one side doesn’t know something important about the other side’s attributes, for example a government purchaser who doesn’t know if a particular contractor has high costs or low costs. In the lemons model, the market unravels partially or entirely. In the other models, the agent that knows its attributes can earn some “information rents,” which are necessary to get the low-cost agents to reveal the fact that they are low cost. In these models, the uninformed agent does not simply proceed as if it didn’t know it was uninformed, the equilibrium outcome is a product of the fact that both sides know that one side is uninformed. When these models apply, remedying the information asymmetry solves the problem directly. I don’t see how they apply to credit card contracts and other similar examples. Are you saying that they do?

David_J_Balan Jan 4, 2010, 6:33 PM
3 points
in reply to: Bo102010’s comment on: Disclosure vs. Bans: Reply to Robin Hanson
There’s a nice paper by Bengt Holmstrom (Review of Economic Studies, 1999) that has a story about inefficienty high (but still voluntary) work effort in the absence of a policy that limits effort, such as a maximum hours restriction. The idea is that no one worker can cut back effort to the efficient level without appearing to be of low ability, and this is true even though employers know that all the workers aren’t as good as they appear (their high output is largely due to the fact that they work too hard, not to how good they are).

David_J_Balan Jan 4, 2010, 6:26 PM
1 point
in reply to: JRMayne’s comment on: Disclosure vs. Bans: Reply to Robin Hanson
You’re right that I made it sound like it was the restaraunt itself admitting the trickery, which it wasn’t. My mistake. And I certainly am not suggesting that the government should regulate the placement of prices on menus. I linked that article simply as a nice illustration of the fact that sellers are always and forever manipulating buyers, rather than simply informing them. Even something as straightforward as a menu is seen not simply as an opportunity to let patrons know what is available and at what price, but to push their buttons.

David_J_Balan Jan 4, 2010, 6:22 PM
0 points
in reply to: Jayson_Virissimo’s comment on: Disclosure vs. Bans: Reply to Robin Hanson
This is the primary problem with paternalism, and a good reason why it should be limited.

David_J_Balan Dec 22, 2009, 9:37 PM
1 point
in reply to: RobinHanson’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
I think clarifying this disagreement is worth a seperate post, which I’ll write up in the next few days.

David_J_Balan Dec 21, 2009, 9:18 PM
3 points
in reply to: RobinHanson’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
But ignorance in rational agent models of asymmetric information don’t cause people to be tricked, so it’s can’t be ignorance of that sort.

It seems perfectly plausible to me that people understand that the deck is stacked against them, while at the same time not knowing exactly how to protect themselves and so falling for some of the tricks, and would be perfectly happy to have a government they trusted simply remove the bad stuff from the menu. I know that’s how I see it.

David_J_Balan Dec 21, 2009, 6:43 PM
0 points
in reply to: luispedro’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
If credit markets worked the way they were supposed to, the terms on which you could get credit would indeed depend on objective measures of your credit-worthiness. Any adverse event would appropriately cause the credit markets to downgrade their opinion of you, and worsen the terms on which you get credit. But I have never heard anyone seriously suggest that the data bear out a conclusion that being a day late with a payment indicates that you are a credit risk so massive that a 29.99% interest rate is appropriate.

David_J_Balan Dec 21, 2009, 6:38 PM
1 point
in reply to: RobinHanson’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
As you know, there are limited instances in which I would support the government protecting people against their will. But I suspect that a lot of legal protections against predatory conduct are popular, even among the people whose conduct is restricted. One possible reason for this is that they don’t understand that the policy restricts their freedom (but then they also don’t understand that the lack of the policy will get them exploited, and I’d rather have them helped for reasons they don’t understand than harmed for reasons they don’t understand).

But another possible reason is that they correctly understand that right now credit cards without those exploitative terms are mostly unavailable (the primary exception that I know of are employee credit unions). They “voluntarily” choose them because there’s no way to get a credit card otherwise. They might perfectly rationally support regulations that will improve the menu of options from which they will make their voluntary choice.

David_J_Balan Dec 21, 2009, 3:39 AM
0 points
in reply to: 110phil’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
Either those terms represent an efficient contract or they don’t. The most obvious way that they wouldn’t would be if they tricked you, and as a practical matter that is where most of the action is. Originally it sounded like you agreed that you were being tricked also, but in a milder sense. If you positively prefer those terms, then in your case they are efficient. But I rather doubt that these are really terms that you would have chosen.

As for the issue of competition, that’s not how it works. When Laibson presented the paper I referred to in the main post, my recollection is that he said that, while the credit card industry is quite competitive, the way that competition happens is that the companies use expensive promotions to identify myopic consumers. So competition doesn’t benefit consumers, and in the end it doesn’t even benefit the credit card companies! It’s pure social waste.

David_J_Balan Dec 21, 2009, 3:31 AM
4 points
in reply to: RobinHanson’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
Robin, as you know from our paternalism debate, I do support a limited paternalistic agenda in what I would describe as “well functioning” societies. But as a practical matter, it is often simply not the case that the kinds of prohibitions that I’m talking about would have to be shoved down the throats of the people they are intended to protect. If you had to guess, would you think that the Fed’s recent action referred to in the post would be popular or unpopular with the general public? Or with credit card customers?

David_J_Balan Dec 21, 2009, 1:10 AM
3 points
in reply to: 110phil’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
You’re right that not every case is equally severe. But even in your relatively mild case, it’s still a “gotcha.” The term is there because the credit card company knows that people will sometimes not understand or will forget. It’s got nothing to do with efficiently matching people who want to lend money with people who want to borrow money (which is one of the primary legitimate function of credit markets), it’s got to do with figuring out how best to screw people over. Since there is no reason to believe that that contract got to be that way for any efficient purpose, there’s no reason for any great reluctance to interfere with it through policy.

David_J_Balan Dec 20, 2009, 11:54 PM
0 points
in reply to: [deleted]’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
The possibility that well-intentioned regulations will be evaded is indeed a problem, and in some cases it limits what is possible. But other regulations are relatively clear and well-enforced, particularly when they have the necessary political support.

David_J_Balan Dec 20, 2009, 11:51 PM
3 points
in reply to: Scott Alexander’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
I’m not aware of any general standards for distinguishing between abusive contracts and beneficial ones and I’m not sure there could be any. But the question “would anyone who really understood what was going on ever want this contract?” must be a relevant one. You could argue about how much humility should be applied: after all, just because I can’t see any reason why a rational person would sign this contract doesn’t mean there isn’t one. So as is often the case, the optimal policy is not obvious. But make no mistake. The libertarian policy will result on a whole bunch of vulnerable people (almost none of whom will be libertarians by the way) getting screwed over and over and over again. You could (barely) argue that the libertarian policy has benefits that overbalances these costs, but there is no denying that the costs are real and big.

David_J_Balan Dec 20, 2009, 11:41 PM
6 points
in reply to: mattnewport’s comment on: Mandating Information Disclosure vs. Banning Deceptive Contract Terms
This story wasn’t the main point of the post, but its purpose was to illustrate that it’s pretty easy to imagine something in between purely voluntary and coerced at gunpoint. People can be manipulated into “voluntarily” doing things that hurt them, even if they are not tricked or lied to. This merely raises the possibility of beneficial paternalistic intervention; it certainly doesn’t establish that the benefits of such intervention outweigh the costs. Here are some old posts on that subject, for whatever interest it may have.

http://www.overcomingbias.com/2007/03/heres_my_openin.html http://www.overcomingbias.com/2007/03/disagreement_ca_2.html