If you seem to disagree with someone about a factual statement, it's important to consider all four possible explanations:
1. The other person's conscious beliefs are incorrect.
2. Your conscious beliefs are incorrect.
3. The other person is deliberately deceiving you about his conscious beliefs.
4. You have the same conscious beliefs, but your understanding of what the other person is trying to say is incorrect, and you perceive a factual disagreement where none exists.
Obviously more than one of these can apply to a given situation.
Sunday, February 24, 2008
Sunday, February 10, 2008
Majoritarianism and the Efficient Market
Posit four cases where your opinion differs from the majority:
1a. You are considering what checkout counter to go to at the supermarket; there are no lines. You are about to go to counter A, where the cashier looks like he'd be faster, when you are told that 3/4 of the people who shop here use counter B instead when there are no lines.
1b. The checkout counters have long lines; counter B's line is three times as long as counter A. The line at counter B looks to be moving only twice a fast, so you feel inclined to use counter A.
2a. You are, bizarrely, forced to make a 50-50 bet on whether Sun Microsystems will make a profit this year. You are about to bet "yes", when you are informed that 3/4 of the people offered this bet said "no".
2b. You are forced to either sell short or buy long on Sun Microsystem's stock. You are about to buy long when you are informed that three times as many people have shorted the stock as have gone long on it.
Philosophical Majoritarianism suggests you consider changing your mind in cases 1a and 2a, but not 1b and 2b. The reason is that, to the degree that Majoritarianism is valid, it doesn't matter which you line you pick in 1b, or whether you buy or sell in case 2b; the majority decision, if wise, has washed out the difference, so Majoritarianism doesn't provide direct guidance on what to do.
1a. You are considering what checkout counter to go to at the supermarket; there are no lines. You are about to go to counter A, where the cashier looks like he'd be faster, when you are told that 3/4 of the people who shop here use counter B instead when there are no lines.
1b. The checkout counters have long lines; counter B's line is three times as long as counter A. The line at counter B looks to be moving only twice a fast, so you feel inclined to use counter A.
2a. You are, bizarrely, forced to make a 50-50 bet on whether Sun Microsystems will make a profit this year. You are about to bet "yes", when you are informed that 3/4 of the people offered this bet said "no".
2b. You are forced to either sell short or buy long on Sun Microsystem's stock. You are about to buy long when you are informed that three times as many people have shorted the stock as have gone long on it.
Philosophical Majoritarianism suggests you consider changing your mind in cases 1a and 2a, but not 1b and 2b. The reason is that, to the degree that Majoritarianism is valid, it doesn't matter which you line you pick in 1b, or whether you buy or sell in case 2b; the majority decision, if wise, has washed out the difference, so Majoritarianism doesn't provide direct guidance on what to do.
Sunday, January 27, 2008
Free will and future actions
Suppose I chose to make an altruistic decision today. That decision was my choice via "free will", by which I mean that I choose my own actions, and that I take responsibility for my own actions. However, it is also the case that that decision was determined by some process, either by deterministic processes or by random quantum-mechanical fluctuations that could easily have turned out some other way. There is some set of mechanical preconditions that had to be satisfied before I could make that altruistic decision.
I intend to make reasonably altruistic decisions in the future, as well. However, if these mechanical preconditions fail to hold true for some reason in the future, I must acknowledge that, despite my current intentions, I will not make altruistic decisions in the future. I should take responsibility for the consequences of my future actions, in addition to my present actions.
Therefore, I should keep in mind the following:
* Where my present actions can influence my future actions from the mechanical point of view, there is some utility in deciding to take present actions that are likely to lead to positive future actions.
* Whenever contemplating taking on positions of power, I should avoid "moral overconfidence", that is, when considering whether power would corrupt me, I should try to objectively weigh all the data available to me, rather than believe that "free will" means that the Rolf who exists in the year 2007 can magically and infallibly determine the actions and goals of the Rolf who exists in the year 2017.
Obviously this does not mean that I can shirk responsibility for maintaining past promises; quite the opposite. In addition, the intent is not to go to an extreme and "declare war on my future self"; instead the goal is to take responsibility for all of the causal consequences of my current actions, including the consequences caused by the influence my current actions have on my future actions.
I intend to make reasonably altruistic decisions in the future, as well. However, if these mechanical preconditions fail to hold true for some reason in the future, I must acknowledge that, despite my current intentions, I will not make altruistic decisions in the future. I should take responsibility for the consequences of my future actions, in addition to my present actions.
Therefore, I should keep in mind the following:
* Where my present actions can influence my future actions from the mechanical point of view, there is some utility in deciding to take present actions that are likely to lead to positive future actions.
* Whenever contemplating taking on positions of power, I should avoid "moral overconfidence", that is, when considering whether power would corrupt me, I should try to objectively weigh all the data available to me, rather than believe that "free will" means that the Rolf who exists in the year 2007 can magically and infallibly determine the actions and goals of the Rolf who exists in the year 2017.
Obviously this does not mean that I can shirk responsibility for maintaining past promises; quite the opposite. In addition, the intent is not to go to an extreme and "declare war on my future self"; instead the goal is to take responsibility for all of the causal consequences of my current actions, including the consequences caused by the influence my current actions have on my future actions.
Saturday, January 5, 2008
Open letter on disenfranchisement in the Michigan Primary
To: the Democratic and Republican parties
In the past, I have considered myself independent. For example, I have voted for both Democratic and Republican candidates for President in the past, based on their individual merits. This may change soon, based on your actions.
You have until January 14, 2008 to resolve the threatened disenfranchisement of the Michigan primary voters. Satisfactory resolutions would include either of the following:
1. Your national party unambiguously withdraws the threat to punish the Michigan voters. Vague and unenforceable promises by the candidates to seat the Michigan delegates are not sufficient, since the candidates may break these promises if the convention vote ends up being close.
2. Your Michigan state party manages to move the primary back to February, thus making your threat moot.
On January 15th, if the Democrats have done a better job of resolving this crisis than the Republicans, I will vote a straight Democratic ticket for the next 20 years, at least in the usual case where there is no viable third-party candidate. If the Republicans have done a better job than the Democrats, I will vote a straight Republican ticket for the next 20 years, at least in the usual case where there is no viable third-party candidate.
Note that, if the current "status quo" continues, I will end up voting a straight Republican ticket, as the current Republican Party compromise of cutting the delegate count in half is marginally superior to the current Democratic Party threat of total disenfranchisement.
Sincerely,
Rolf Nelson
In the past, I have considered myself independent. For example, I have voted for both Democratic and Republican candidates for President in the past, based on their individual merits. This may change soon, based on your actions.
You have until January 14, 2008 to resolve the threatened disenfranchisement of the Michigan primary voters. Satisfactory resolutions would include either of the following:
1. Your national party unambiguously withdraws the threat to punish the Michigan voters. Vague and unenforceable promises by the candidates to seat the Michigan delegates are not sufficient, since the candidates may break these promises if the convention vote ends up being close.
2. Your Michigan state party manages to move the primary back to February, thus making your threat moot.
On January 15th, if the Democrats have done a better job of resolving this crisis than the Republicans, I will vote a straight Democratic ticket for the next 20 years, at least in the usual case where there is no viable third-party candidate. If the Republicans have done a better job than the Democrats, I will vote a straight Republican ticket for the next 20 years, at least in the usual case where there is no viable third-party candidate.
Note that, if the current "status quo" continues, I will end up voting a straight Republican ticket, as the current Republican Party compromise of cutting the delegate count in half is marginally superior to the current Democratic Party threat of total disenfranchisement.
Sincerely,
Rolf Nelson
Saturday, December 29, 2007
Foresight Exchange
I opened a Foresight Exchange account today (rolf.h.d.nelson). The main purpose is to challenge myself to become a better thinker by forcing myself to think through both the sides of why future events may or may not happen. My initial plan was to buy or sell one share in each of the "U.S. News" categories. I got through about six of the items before I gave into the temptation to put all the rest of my money down on "No" for the mispriced USAGeo.
The presence of mispriced items in this play-money exchange didn't surprise me, especially for "X will happen by the year Y." Presumably people put down "Buy if it goes down to price Z" orders, and as year Y comes closer and the price drops naturally well past Z, they have little incentive to log back in and rescind their now-insane orders (especially if they've abandoned their accounts.)
What did surprise me was how *boring* the brief experience was. Most of the decisions revolved, not around profound questions of philosophy or ideology, but around peering at graphs and trying to extrapolate probabilities of non-controversial events. The poor user interface added to the boredom factor as well.
The presence of mispriced items in this play-money exchange didn't surprise me, especially for "X will happen by the year Y." Presumably people put down "Buy if it goes down to price Z" orders, and as year Y comes closer and the price drops naturally well past Z, they have little incentive to log back in and rescind their now-insane orders (especially if they've abandoned their accounts.)
What did surprise me was how *boring* the brief experience was. Most of the decisions revolved, not around profound questions of philosophy or ideology, but around peering at graphs and trying to extrapolate probabilities of non-controversial events. The poor user interface added to the boredom factor as well.
Sunday, December 9, 2007
Am I corruptible?
Lord Acton said that "power corrupts." Others say that corrupt people in power were already corruptible to begin with; we just don't notice that people are prone to corruption before they gain power, because they never had the opportunity to benefit from corruption.
As a thought experiment, let's use the following model. 80% of the people are corruptible: that is, they will act corrupt if they become the King; there is no way of determining whether someone is corrupt before they become the King. Everyone publicly denies that they are corruptible. Two worlds exist, identical in every respect except:
In the "Self-Deceptive World", everyone has a self-image of themselves as incorruptible before they gain power.
In the "Self-Aware World", everyone is fully aware of whether they are corruptible; the corruptible people merely lie and claim that they are incorruptible.
These are the only two worlds that exist; to put it another way, the a priori odds that you live in one world rather than the other is 50%.
You have the self-image of yourself as someone who is incorruptible, but you have never been the King, and are unsure of which of the two worlds you live in. In this case, I would reason as follows:
Pick ten people at random, maybe five will be from the Self-Deceptive World, and five will be from the Self-Aware World. On average, there will be five self-deceptive people from the Self-Deceptive World with an incorruptible self-image, and one self-aware person from the Self-Aware World with an incorruptible self-image. Therefore, the odds are 5:1 that you live in the Self-Deceptive World, and are corruptible.
As a thought experiment, let's use the following model. 80% of the people are corruptible: that is, they will act corrupt if they become the King; there is no way of determining whether someone is corrupt before they become the King. Everyone publicly denies that they are corruptible. Two worlds exist, identical in every respect except:
In the "Self-Deceptive World", everyone has a self-image of themselves as incorruptible before they gain power.
In the "Self-Aware World", everyone is fully aware of whether they are corruptible; the corruptible people merely lie and claim that they are incorruptible.
These are the only two worlds that exist; to put it another way, the a priori odds that you live in one world rather than the other is 50%.
You have the self-image of yourself as someone who is incorruptible, but you have never been the King, and are unsure of which of the two worlds you live in. In this case, I would reason as follows:
Pick ten people at random, maybe five will be from the Self-Deceptive World, and five will be from the Self-Aware World. On average, there will be five self-deceptive people from the Self-Deceptive World with an incorruptible self-image, and one self-aware person from the Self-Aware World with an incorruptible self-image. Therefore, the odds are 5:1 that you live in the Self-Deceptive World, and are corruptible.
Sunday, November 25, 2007
Efficient Market Hypothesis
Suppose that you have a logical argument, which seems compelling to you, that publicly available information has not been reflected in an asset's price. (One example might be here, otherwise I'm sure you can pick out a different argument that has occurred to you at some point.) If you have funds to invest, should you focus investment funds in that area? I would argue, generally no, because of Copernican (majoritarian) considerations, including various forms of the Efficient Market Hypothesis.
If, instead, you have a partially Ptolemaic viewpoint, and are logically consistent, you would probably come to the conclusion that, any time you see everyone else make what seems to you like a logical mistake, you should spend significant effort in determining how you can profit from the mistake.
For example, suppose you believe that, with probability p, you are now in a 'privileged epistemological position' that will increase your expected annual returns, from 1.06 to 1.10, if you actively (rather than passively) manage you portfolio. (But with probability 1-p, there is no such thing as a privileged epistemological position. If you actively manage, but there is no such thing as a privileged position, your expected returns go down to 1.05 because of transaction costs.) If your probability p is above 0.2, you would want to actively manage rather than passively manage.
The problem with active management, of course, is that in the existing market, for every winner there must be a loser. So there's a "meta-level" where the above must be, on average, bad advice. It's not clear to me how to consistently avoid these types of traps without recourse to a Copernican Epistemology.
If, instead, you have a partially Ptolemaic viewpoint, and are logically consistent, you would probably come to the conclusion that, any time you see everyone else make what seems to you like a logical mistake, you should spend significant effort in determining how you can profit from the mistake.
For example, suppose you believe that, with probability p, you are now in a 'privileged epistemological position' that will increase your expected annual returns, from 1.06 to 1.10, if you actively (rather than passively) manage you portfolio. (But with probability 1-p, there is no such thing as a privileged epistemological position. If you actively manage, but there is no such thing as a privileged position, your expected returns go down to 1.05 because of transaction costs.) If your probability p is above 0.2, you would want to actively manage rather than passively manage.
The problem with active management, of course, is that in the existing market, for every winner there must be a loser. So there's a "meta-level" where the above must be, on average, bad advice. It's not clear to me how to consistently avoid these types of traps without recourse to a Copernican Epistemology.
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