I want to draw out something Steve Waldman says in this interview (I’m really eluding a lot of interesting material here):
You can come up with very clever, fair schemes if you imagine people communicate only within your system. … I was entranced by the … story of how markets aggregate and communicate widely dispersed information….real markets differed … Real market institutions seem designed to hide information and shift consequences rather than reveal outcomes and allocate costs and rewards.
Markets do not work the way you think they do.
When those who suffer the delusion double down on the bet, as loyal followers of a philosophy are wont to do they sooner or later echo Margarert Thatcher: “… you know, there is no such thing as society…”.
Further I hadn’t quite internalized how this widespread delusion is synonymous with the open/closed world question in computer science, on many levels.
Real markets are multiplayer games! And like all MMOs there are the rules within the game, and the rules external to the game.
Yes indeed! But what’s particularly amusing about that is that if you go read the literature on how to design massively multiplayer games for fun and profit the advice doesn’t sound at all like economics! See for example Amy Jo Kim’s work – http://www.youtube.com/watch?v=ihUt-163gZI – or the stuff about assuring the players get an controlled emotional roller coaster ride.
The piece of economics you want to look at is “behavioral economics”, or the study of decision making in the presence of money.
here is a good start, from 2008
with thoughtful commentary beyond the sound bite
I’m unimpressed by behavioral economics. It is, apparently, a long and tedious effort to rediscover everything known to the rest of humanities while calling it economics. It’s fine as far as it goes, shrug.
Economics doesn’t consider itself a branch of the humanities; it thinks of itself as a natural science, or perhaps an offshoot of mathematics. So to break out of the world view of the weird automaton of the decision making of “homo economicus” into something even slightly informed by actual human behavior is a breakthrough.
Ha, interesting that I said humanities. Revealing. I think i meant to say social sciences. The rest of the social sciences have collected lots and lots of curious behavior patterns about humans, the behavioral economics guys seem to be doing nothing more than dusting a very select few of these off and running experiments with tokens so they can call it economics.
Groupware developers, or at least the successful ones, get smacked by closed world assumptions the moment they deploy. I’d like to think that we end up more skeptical about living in models as a result.
If you haven’t, you probably want to read _The Closed World_ by Paul N. Edwards.
Jay – Thanks for the recommendation! It’s amusing to draw the connection between ‘closed world’ and the computer room. I’ve written before about who disconcerting it is for 80’s computer people, who were centered on empowering the end user, to observe the rush back into big data centers. … hm.
There’s still plenty of end-user developed Excel and Access apps wandering around, annoying the “professionals”.
If SOA isn’t just short for SOAP, it’s a political movement to re-empower business units, parts of the organization chartered for operations, not running computers. “All data and services belong to central IT” has backlash.