Category Archives: pico economics

Darwin and Platform Tyranny

“Tyranny consists of the desire of universal power beyond its scope.”

One of the nice things about having a blog is that you can spit out those damn brainstorms before they do too much damage to your equilibrium or worse or are extinguished by your daily life.

I’d not noted before that the evolved animal is like a software platform.

One of the curious facts about software platforms is that they aren’t good for anything. You have to pile an application on to the platform before it solves real problem. That is a useful right first approximation. Of course platforms are good for something, they are good for solving some space of problems. They allow you to build things.

There is a gap between a platform and a problem solution. In platform system design, where we don’t solve problems we just design more platforms, we think of these as layers.

For example the end-to-end principle suggests that the layers should be thin, so that the lower layers are windowed down to a kernel of necessary function and no more. In business theory where platforms go by other names like toolkits, standards, rule sets, and are observed in numerous guises such as major commodities on supply chain, we know that a platform creates an options space of further commercial activity. There is always a lot of competitive to and fro about who gets to capture that value. Suppliers often covet value created down stream from them in the supply chain. That’s no different than how platform vendors often fold high value innovations back into their platform offering. A move that is contrary to the end-to-end principle but is quite rational in a commercial mindset. When we complain about a supplier, say Microsoft, overreaching, say by bundling the web browser with the operating system, we call that monopoly; but as the quote above suggests it’s a kind of tyranny.

Reading and thinking about “Breakdown of Will” has been triggering some very surprising connections to all that. Animals are wired to manage their attention in a way that is at odds what we believe to be the optimal way to manage the attention of a rational man. There is a gap between the platform, i.e. the animal, and the problem to be solved, i.e. to be a rational man. It is into this gap that we humans pour our clever rationalizing schemes. Applications on the platform.

So that was my brainstorm. What triggered it was some stuff at the beginning of a book from the anthropology library about trying to explain religion. The introduction was working it’s way through the necessary dross and was talking about Darwinian explanations for religion. My reaction was “The platform can only tell you so much about the applications that run on it.” Darwinian ideas are a major supplier in the explaination of animal systems, but there is a tendency for people to let these ideas overreach their natural scope. You see a similar overreaching by the ideas that come of economics. At this point in my thinking about the ideas in “Breakdown of Will” I’m more inclined to put religion in the application layer as part of our struggle to create useful solutions atop the worse is better legacy platform.

Control of Appetite

i’m enjoying reading “Breakdown of Will” by Ainslie. One name his work goes by is pico-economics. If that name is not intended to be sarcastic then it’s at least ironic given that Economics is currently king of the social sciences and Ainslie’s model underminds the king’s legitamacy. The market stalls of pico economics are set out inside your head. The market participants negotate for your attention, slices of your time. I recorded a bit of audio from the market floor in an old blog posting.

Re-negotiate your cable contract once a year. Oh, and your long distance service. Rebalance your investments annually. Keep an eye on your mortgage rate and refinance at appropriate times, but not too often. Consider having a health savings account. Clip coupons. Keep track of those rebates. Join frequent flyer programs as appropriate. Be sure you have a will. Check that your love ones know your end of life desires. Eat more vegetables. Take regular breaks to avoid typing injuries. Get plenty of sleep.

Here, let me quote a fragment from the book:

I have described a model of learned interests that compete freely on the basis of timeframes over which of their rewards will be prefered. … a person is a population of these roommates each clamoring for control of the room … to continue to exist each interest must be the highest bidder at some time or it will be extinquished …

But pico-economics is not like classical economics. Not at all! The math that governs in the attention marketplace of your head is taken straight out of bizzaro world. It might as well be non-linear. We don’t respect the future; even if you think you do. You don’t.

At the heart of this bizzaro math is deeply hardwired preference for immediate gratification over longer term goals. This evil math is time scale free so we will scratch an itch in preference to eating some ice cream, and eat ice cream that’s at hand in preference to a fine meal with friends in half hour, and that we will go off to long lunch rather than finish that deliverable the team needs to make progress next month, etc. etc.

The preference for short term ones v.s. long term is so pervasive that we tend to gloss over how odd it is. Would you like to stop what your doing and have some ice cream? How do you decide that turning your attention to the fun of a bowl of ice cream is worth it? The utilitarian answer is that you weigh the alternative and if it’s better than what your doing then you switch. What’s curious about living in the bizzaro world of pico-economics is that this calculation is radically different depending on how close at hand that ice cream is. Going out to get it? Going into the kitchen? Plucking it off the desert cart? Dipping your spoon the bowl? Each step closer and in the competition for your attention the ice cream becomes vastly more likely to seize control of your scarce attention. So much so that it makes no economic sense at all.

From animal experiments they know exactly how out of wack your internal calculator is. If the pleasure of ice cream is 2, 20, or 200 seconds away for the spoon, the desert cart, and the kitchen respectively then you will treat see the fun of ice cream as 66 units, 8, or 1 unit respectively. If we replaced ice cream with a financial reward this implies that people have to struggle to avoid accepting a dime in two seconds v.s. $6.60 in few minutes later. Rationally this makes no sense; since I could make a mint moving ice cream closer to my customers.

That our attention is so badly behaved creates a problem what we struggle with continually. For example we all know not to buy the ice cream and bring it home; i.e. to avoid the temptation. Ainslie reports a delightful experiment involving pigions. Pigeons have the same bizzaro internal marketplace. So if you put them in a cage and give them some buttons to peck you can show that they will peck a button that gives smaller rewards sooner over a button that delivers significantly larger rewards later. Amazingly this setup annoys the pigion. He knows that he is making bad choices. Apparently there is a rational market regulating pigion in there scolding the his irrational free market animal pigion. How do we know? Well they can augement the experiment to add a third button pecking that will disabled the short term reward button. The pigeon will use that third button to lock in his commitment to the longer term reward.

Avoiding temptation and using external devices to make binding commitments are both means to force your internal bizzaro attention economy to behave better. We don’t trust ourselves anymore than we trust other parties. We engage in lots of these strategic games in an attempt to keep the bizzaro internal economy from doing more harm. Most of these work by reducing our options. We lock in our savings in long term investments, we don’t buy the ice cream, and the pigeon pecks that third button.

A Gang of One

Here’s a fun variant of the repeated prisoner’s dilemma game.

Picture a lecture audience. I announce that I’ll go along every row, starting at the front, and give each member a chance to say “cooperate” or “defect.” Each time someone says “cooperate” I’ll award ten cents to her and to everyone else in the audience. Each time someone says “defect” I’ll award a dollar only to her. And I ask that they play this game solely to maximize their individual total income, without worrying about friendship, politeness, the common good, etc. I say that I will stop at an unpredictable point after at least twenty players have played, at which time each member can collect her earnings.

You gotta love the instruction not to be “worrying about friendship, politeness, the common good, etc.” The game creates a group out of the audience with all the group dynamics in play particularly because there is no privacy. In the original prisoner’s dilemma that players are part of a gang, here we make the audience into a gang; while instructing them not to act like one.

That framing is from an interesting synopsis of a set of some ideas that apparently were first formalized by George Ainslie, e.g. that we all prefer short term pleasures and we tend to severely discount long term benefits as we make our choices in life. Given the choice between a chocolate bar right now and a chocolate cake tomorrow we tend to take the chocolate bar. This behavioral default is apparently well documented in man and other animals.

Formally we ought to discount future rewards by some reasonably uniform rate. So if we are offered a $100 tomorrow and $10 in an hour we ought to just compute the option value of each discounting by some interest rate based on the risk we percieve the future payoff to have. This kind of discounting is expediential; and it isn’t biased about things that are closer vs. farther away. It will cough up the same answer for 5 today vs. 10 tomorrow no matter what units (days, weeks, years) you use when you ask.

We animals don’t do that. Another way of saying that we like short-term benefits is that we discount things in small time units very sharply. A cookie in 30 seconds vs. a nice lunch in an hour? The cookie wins. It’s not rational but it’s how we are wired.

This leads to all kinds of common but irrational behaviors. Breaking the diet, staying up to late, having a few too many beers, failing to hold our tongue, etc. etc.

But most interestingly it puts us into a game just like the one above with ourselves. We are the audience. At each step in the game we have a choice to defect and take the dollar; but if we can manage not to defect then we can capture the long-term gains. We are caught in a gang of one our loyalty to our future selves continually tested against a hardwired setting that tempts us into short term defections.