Responsicle to Robin Hanson’s Overcoming Bias post, “Excess Turbulence”

Responsicle to Robin Hanson’s Overcoming Bias post, “Excess Turbulence”

http://www.overcomingbias.com/2015/08/excess-turbulence.html/trackback

In his post “Excess Turbulence” Robin Hanson discusses the 14th-century French practice of shepherds changing farms every year. Reasons offered for this change included rest times, indulging a preference for variety, and emulating ancestral behaviors of roaming single males.

I’d offer a market structures explanation for why these wholesale changes happened so frequently. To illustrate how these structures play out even in modern times, I’ll use observations of two different ‘markets’ anecdotally observed in New York City.

The structural features I believe are at play are:

  1. High numbers on both sides of the market: e.g. ‘buyers and sellers’ or ‘shepherds and masters’ with low switching costs. This frothiness enables frequent switching.
  2. Low trust
  3. One-way or mutual exploitation

1. High numbers of close (enough) counterparties are needed for frequent switching or else the switching costs become too high, e.g. more than a week’s worth of traveling might cut into a shepherd’s wages. Also, the high numbers create the perception of near-unlimited possibilities. In a bit of mass-coordination, the knowledge that every farm was hiring at the beginning of the season virtually guaranteed employment for a roving shepherd.

2. A low trust environment suggests that each party feels the other cannot be trusted for long, so cooperation is bound to break down at some point. This belief makes partnerships weak, unstable, and short-term. For a fixed-term engagment such as the shepherding season, you’d expect trust to be higher in the beginning than the end.  This might explain the vigor and enthusiasm shepherds display at the start of the season.

3. Given the low trust and the perception of unlimited alternatives, cheating and exploitation becomes rife. Depending on the economic and power dynamics of the market itself (e.g. whether a worker can be blacklisted or imprisoned for misbehavior), the cheating can go both ways and a system of mutual exploitation results. In practice, this looks like masters not paying shepherds’ wages on time or in full, physical or sexual abuse, or withholding food and other necessities. On the other side, shepherd cheating would look like stealing sheep or wool, stealing food, laziness, or animal abuse or negligence. Faced with a declining flock of neglected animals at the end of the year, the master would be highly motivated to replace the entire shepard cohort. Add to it relative anonymity, low communication and the inability of either side to punish bad actors, and you have a system that accomodates mutual exploitation.

These conditions would encourage frequent switching at the minimal viable interval – perhaps a year for sheep or a growing season for crops. As a result, farms switch out shepherds yearly.

These structural dynamics are also at play in two markets in New York City (where I lived for some time):  the entry-level glamor job market and the dating market. Each have similar high-switching behaviors.

Recent college grads who want jobs in the glamor fields of fashion, advertising, and media head to NYC. As the national (and sometimes global) hub for these fields, the industry giants are there and benefit from a large and vulnerable talent pool. Entry-level pay is exceptionally low, sometimes half that of other industries. Young workers often must work long hours under stressful conditions, and compete fiercely for a scarce number of promotions. For their part, workers try to make the most of expense accounts, industry events, parties, and freebies such as gift baskets and sample products. Switching is common, as they improve their resumes by increasing the number of past employers. Once they secure the desired promotions, switching is less frequent.

The heterosexual dating market functions similarly. With a population of c. 10m and high numbers of new people every year, the NYC dating market is exceptionally frothy. Dating culture is often described as being predatory or transactional: men are seen as commitment-phobic and monogamy-averse, whereas women are painted as highly-discriminating and uber-demanding. Romantic relationships form and disintegrate quickly, and layered on top of this is the common practice of dating several people at once. Partner-switching is very common, as was immortalized on the show Seinfeld with Jerry ending relationships for the most laughably trivial reasons.

Both New York markets have the same characteristics outlined above: high numbers of counterparties, low trust, and mutual exploitation. As a result, frequent switching is common and even beneficial, allowing both sides to maximize their benefit under the conditions.

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Responsicle to John Cassidy’s New Yorker article “The Financial Times and the Future Of Journalism”

Responsicle to John Cassidy’s New Yorker article “The Financial Times and the Future Of Journalism”

http://www.newyorker.com/news/john-cassidy/the-financial-times-and-the-future-of-journalism?mbid=social_facebook

A New Yorker article by John Cassidy profiled the triumph of the FT to find a successful business model, reviewing its steps along the way, recent sale to Japanese group Nikkei, and how it may offer a glimmer of hope for the future of journalism.

Kudos to the article and to CEO Ridding’s awareness that the business model must be aligned to customer behaviors you want to encourage. In FT’s case, early missteps included limiting article access, which didn’t foster the regular readership they needed.

But I think one aspect that got a bit overlooked is demographics. The FT targets business executives, financial services workers, and literal high-fliers that are among the most affluent globally. They’re also the most reliant on information and communication, as the success of expensive messaging and information systems such as Bloomberg and Symphony have proved. In short, these executives are hungry for information, and they have the money for it. For professional necessities, this group is probably has minimal price sensitivity.

While the FT has done well to find a business model that works while also sustaining journalistic integrity and a healthy journalism staff, its market is naturally going to be quite supportive. The options for more mass-market publications such as the New York Times or local papers are quite different. Music paper NME and events magazine Time Out recently took the opposite tack of free distribution in order to bolster ad revenues amidst declining subscription income. Their markets would never support an expensive paywall or high subscription price.

What the article really shows, is that a paper – or any media brand – should work hard to find a business model tailored for its market and structured for growth.

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Responsicle to David McRaney’s interview of David Dunning on You Are Not So Smart podcast

Responsicle to David McRaney’s interview of David Dunning on You Are Not So Smart podcast

http://youarenotsosmart.com/2014/11/10/yanss-podcast-036-why-we-are-unaware-that-we-lack-the-skill-to-tell-how-how-unskilled-and-unaware-we-are/

I recently listened to the You Are Not So Smart podcast with David Dunning of the Dunning-Kruger effect (DKE), which is the paradox showing that the incompetent don’t know they’re incompetent. The interview outlined the effect, how it happens, and finishes with some thoughts on why it might be a staple of human psychology.

One thing that was not discussed explicitly was feedback. At its heart, DKE is likely driven by the absence of quality feedback, which in turn is driven by whether someone actively seeks and integrates it. Therefore, DKE is probably a feedback deficiency in the same way that anemia is an iron deficiency. People who actively seek quality feedback (e.g. from domain experts), and believe the resulting feedback, would not have DKE. For DKE to happen, the incompetent might be avoiding negative feedback, or might simply refuse to believe it. Narcissism could be one explanation: at some point the tone-deaf American Idol hopeful probably did hear that she sounds nothing like Madonna. Similarly, it’s unlikely that even the public humiliation suffered at the hands of Simon Cowell is enough to dampen her over-inflated belief in her talent.

Second, context is highly important for DKE. Some of the podcast’s examples mentioned being competent in one context (e.g. a small group of friends) but incompetent in another context (e.g. a national competition). Arguably, the resulting DKE is not truly a deficiency, but is merely context-inappropriate. If you never left your hometown, you really would be a chess star. Put another way based on a story I heard: if a hyena has bitten your head in the middle of the night, the drunken village doctor nearby is equivalent to an internationally-recognized trauma surgeon in New York.

The podcast concluded with some speculation as to why DKE exists from an evolution perspective, and how or whether it has aided survival. I think it’s absolutely evolutionarily advantageous, but not because of natural selection. Rather, I think it’s adaptive via sexual selection because it allows people to attempt challenges that should seem insurmountable. In this way, DKE is necessary for success. If every aspiring artist, writer, or entrepreneur had an inkling of how hard it was make it big, they’d never enter the field. Therefore it’s an adaptive phenomenon and as such, is indirectly sexually selected for, evolutionarily speaking. My blog Harmony From Discord (https://harmonyfromdiscord.wordpress.com) goes into detail on sexually selected traits so I keep an eye out for them.

Overall, a great exploration of the effect. I’d be curious to get Dunning’s take on the role of feedback.

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Responsicle to Stephen Hsu’s Foresight posts, Information Processing blog

Responsicle to Stephen Hsu’s Information Processing blog

The posts by Stephen Hsu on prediction and foresight are excellent posts, and give some great shading to the phenomenon of foresight. My takeaway is that for specialized fields and defined answers, specialists are required. No surprise there. But for non-specialized fields and probabalistic answers, well-read, highly-intelligent (above a minimum) laypeople are at an advantage. I’m writing a series of blog posts on what these behavioral characteristics might be. (https://harmonyfromdiscord.wordpress.com)

The next question is why. My hypothesis is that information processing, specifically understanding WHICH information is the most relevant, is typically not very good in most people. Most people assume that more information is better, when in fact there is an art to getting just the right amount and nothing more.

With regard to academics and experts, they have incentives to amass and distribute as much knowledge as possible. No university says ‘publish the bare minimum number of papers needed to contribute meaningfully’. As a result, they build an ivory tower of publications and research, perhaps confusing what is necessary with what is available.

Another element is that most academics and experts are expected to take sides: political pundits get onto TV based on how charismatically they can call an election, not how thoughtfully they weigh candidates. Academics build a following from a central theory and may overstate the importance of it. Researchers publish findings and may spend the rest of their careers defending them.

That leaves laypeople. With no professional reputation to guard, no ego to soothe, no position to defend, they can be neutral. Add to it intelligence and consuming large amounts of unbiased and/or highly-diverse information, and they’re well-suited for general-knowledge challenges.

The takeaway for all of us? Not that being an expert is bad. But that judicious consumption of information and remaining neutral puts us at a major advantage for foresight.

What do you think Stephen?

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Welcome to Responsicles

Hello and welcome to Responsicles!

So…..what is Responsicles? In-depth responses to great content. There is a lot of great content out there: from articles to blogs, podcasts, videos, interviews and much much more. Comments sections and Quora aside, sometimes a great article deserves a thoughtful, in-depth response, many times longer than 140 characters. Here at Responsicles you’ll find that that response.

If you’re here because I tweeted you a link to a Responsicle, have a look and tell me what you think!  If you’d like me to respond to a piece of content, tweet it at me at @kiardavis.

About me: I’m a writer, blogger, armchair intellectual and idea junkie. I have a strong interest in psychology, human evolution, economics, business, technology, and futurology, but I cover just about any interesting topic that’s not too specialized. My educational background is business and psychology, and my professional background includes corporates, small businesses, and startups around the world and across different sectors. Recently I self-published the book ‘Flashpoint 100: Double profit and create lasting business success in 100 days’ for small business owners who want to grow their business rapidly and cost-efficiently.

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