Futarchy: Vote Values, But Bet Beliefs

http://hanson.gmu.edu/futarchy.html

by mike_esspe • 13 years ago

67 65 13 years ago

hanson.gmu.edu

exratione• 13 years ago

The failure mode of all voting system with central control is that the elite take over the most important part of the system: what is actually voted on. This will happen in a futarchy just as it happens in democracy. The end result will be, I'd predict, indistinguishable.

Only societies without strong centralization and with incentives on the elites that stand opposed to collusion have the promise to evade what happens to democracies. An example is that which prevailed for a fair time in Medieval Iceland, but there are few others: the opening society of the US gave way to growing centralization pretty quickly, and the original vision didn't last much past two generations. There were not strong enough incentives to prevent collusion of the elites against the masses.

RobinHanson9• 13 years ago

It is quite possible to have a decentralized and open system for making proposals. For example, there can be a fee to make a proposal, which is paid back at a multiple of the proposal is approved.

eli_gottlieb• 13 years ago

Get this shit out of here. We already have rule-by-money.

jjsz• 13 years ago

I've searched your PDF and did not find the keywords from Voting Paradoxes and Combinatrics [0]. What are your thoughts on this subject?

[0] http://www.youtube.com/watch?v=LFjApWH8R9c

A speech by Noga Alon [1], Baumritter Professor of Mathematics and Computer Science, Tel Aviv University

[1] http://www.tau.ac.il/~nogaa/

gwern3• 13 years ago

Is there any reason to think those are worse for futarchy than for democracy?

DennisP5• 13 years ago

I like this idea, but I don't know how it would handle multiple conflicting goals. Hansen gives a sample goal of improving the economy, but what if you also want to protect the environment, take care of your old and sick, maintain a strong defense, educate your children, etc?

I suppose you could weight them by importance (based on score voting maybe), have people bet on each policy's effect on every goal, and apply an optimization algorithm to the whole thing to get policy decisions, but not many people would understand and trust the system.

pjscott• 13 years ago

Not many people understand and trust the system we use now. Would futarchy actually be more confusing, or just different?

gwern3• 13 years ago

Hansen gives a sample goal of improving the economy, but what if you also want to protect the environment, take care of your old and sick, maintain a strong defense, educate your children, etc?

This is where the 'vote on values, bet on beliefs' part comes in (did you read the paper?). The voters' job is to specify how much importance they place on various goals or metrics, and the prediction markets are asked how to achieve the goals.

DennisP5• 13 years ago

It had been a while so I looked through it again. Throughout he talks about deciding everything with a single measure of national welfare (which could include things besides GDP, weighted). I'm not convinced that's realistic. That one function would get enormously complex, its exact definition hard to decide but very influential on policy, and instead of debating specific policies we'd have vicious debates on the right formula to use, mostly driven by self-interested actors attempting to gain advantage, with even more obscurity than we have now.

In principle I like the idea, I'm just trying to figure out how to make it better.

1053r• 13 years ago

This system suffers from the same political economy problems that democracies have. For example, if I am a corn producer in the USA, I have a strong incentive to spend lots of money lobbying and contributing to political campaigns to ensure a strong protectionist policy for sugar. It ensures that my corn is purchased and used for corn syrup, and that Brazilian sugar cane doesn't destroy my market.

The good from this policy is concentrated on the corn producers, and the harm is spread diffusely across all people who consume sweets. If I am an average consumer of sweets, I see little benefit fighting this policy today, since it will only change the price of a soda by a few cents.

Under a "Futarchy", the corn lobby can spend lots of money to "predict" that a sugar tariff will make the country better. They might even believe it, but I will have little incentive to vote with my wallet against such a policy, since the harm will be diffuse and extremely difficult to conclusively pick out from the noise using econometric techniques. Result: a strong tariff, which almost all economists agree is a bad policy. [1]

Just because Futarchy is vulnerable to some of the same problems as democracy as practiced in the USA doesn't mean it is a bad system, but I fail to see how it is functionally different than a plutocracy. [2]

The problem with prediction markets is that they are only accurate in so much as one's incentive to "waste" money producing an incorrect prediction is smaller than the amount of money to be made by having that incorrect prediction.

Hanging all law off of the results of prediction markets creates HUGE incentives for me to game the prediction markets, then extract rents elsewhere in the economy to more than recoup my investment.

[1] https://en.wikipedia.org/wiki/Tariff

[2] https://en.wikipedia.org/wiki/Plutocracy

(Edited for grammar, citations).

coffeemug• 13 years ago

But you're ignoring speculators. In a system like futarchy it's easy to imagine organizations whose sole purpose is to make money on information asymmetry. Wouldn't Goldman Sachs hop in to massively outbid the corn industry and make a lot of money in the process?

altoz• 13 years ago

There's Goldman Sachs, the Sugar Cane Lobby, non-profits that raise money against childhood obesity. It'll really be voting with wallets.

notahacker6• 13 years ago

That's one of the most frustrating elements of the paper: the actual speculating mechanism is too imprecisely defined to assess whether speculators actually have any interest in opposing policies which are marginally negative overall but massively enrich one group. From the rather vague description on page 22, a speculator who thought Policy X would reduce the MagicIndex effectively "shorts" the policy by placing a "conditional" bet that comes into play only if the policy is passed, in which the speculator earns money if the MagicIndex then falls.

Frustratingly, it doesn't specify what happens to outstanding "conditional" bets if the policy isn't passed, but a reasonable guess is that it's returned less transaction costs, which means that every time Goldman Sachs does the public the service of vetoing a bad policy it loses money. Even if speculators' transaction costs are zero it's irrational for them to bet against a market actor that will take a profit (from selling corn) even if they pay more than the market price to for their long position. Assuming the corn industry is really committed to supporting tariffs and that the tariffs won't harm speculators' ability to earn from other markets, the Nash equilibrium strategy for speculators is not to bet.

RobinHanson9• 13 years ago

You are talking about the issue of manipulating prices via trades. We have lots of evidence that this isn't much of a problem. Read my papers for details.

pfedor• 13 years ago

Under a "Futarchy", the corn lobby can spend lots of money to "predict" that a sugar tariff will make the country better.

To do that they would have to bet a lot of money that the tariff will make the country better (by an objective metric which is decided upon by the voters), and if that turned out wrong, they would lose a lot of money.

nairboon• 13 years ago

This leads to a system where people will vote only on the issues that affects them, which is a core principle of the panocracy system [1]. The problem with futarchy is that if the betting works with money, it will ultimately lead to a plutocracy. But this could be avoided if there would be some form of "voting credits", so that every citizen has a ceratin credits to bet per year/month/... The winning bets could then be paid out in money.

[1] http://en.panokratie.net/

darkmighty• 13 years ago

This would lead to non-expert masses (irrationally) giving a lot of credit to certain groups.

It's a delicate issue, because you need to provide a long term stake to force the decisions to be optimal (so future welfare is evaluated correctly and optimized), but at the same time paying off those stakes leads to an unstable plutocratic scenario.

Some kind clever compromise could probably be reached, I think, and this is one of those wonderful ideas that will never be implemented.

gathly• 13 years ago

blaming the poor countries for their poverty, because of "stupid policies" displays an overwhelming lack of historical knowledge.

baddox5• 13 years ago

This is similar to, although one step removed from, the anarcho-capitalist proposal in David Friedman's 1973 book The Machinery of Freedom [0]. In this proposed society, monopoly government is replaced completely by a market for everything that government currently does, including law production, law enforcement, arbitration (courts), roads and infrastructure, and even "national" defense. I'm admittedly a big fan of Friedman's proposal, and I wonder what supposed advantage this futarchy provides over Friedman's proposal. There's a decent 20 minutes illustrated summary video on YouTube [1].

[0] http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf

[1] http://www.youtube.com/watch?v=jTYkdEU_B4o

judk3• 13 years ago

How do opposing parties decide on a court to settle their differences?

baddox5• 13 years ago

In the complete system, most or all parties would already be contracted with a rights enforcement agency, and each rights enforcement agency will already be contracted with an arbiter (court).

ehmish• 13 years ago

One problem I can see with Friedman's private courts/Rights Enforcement Agencies, is that if you have bigger and smaller REAs, a sufficiently big REA would be able to compel smaller REAs to ignore violations by the customers of the big REA. Smaller REAs would go out of business, as the big REA would be a much better deal for anyone who doesn't want to get sued. Finally, you'd be left with one big REA, probably called "The Police" or something.

DennisP5• 13 years ago

Friedman addressed that. It's been a while but I think he expected the small REAs to be smart enough to band together to resist the big one.

pdonis9• 13 years ago

I think you're misinterpreting what futarchy actually is. It is not replacing our current system of government with a "market". Hanson's description in the article is this:

When a betting market clearly estimates that a proposed policy would increase expected national welfare, that proposal becomes law.

This is not how a normal market works. In a normal market, everyone gets to choose their own strategy for how they are going to act. The market only conveys information to them, through prices, about how good (or bad) their current strategy is.

In futarchy, the "market" would determine a strategy that everyone would then have to follow, because it's the law. In other words, it still retains the key feature that makes our current system of government broken: whatever is considered "a good policy idea" is imposed on everyone, instead of being tested by allowing people who think it's a good idea to try it out individually.

To really fix the current system, we need to really look hard at all the things we currently think have to be decided by a single policy for everyone. There may be some things (like national defense) that actually do need to be decided that way. But a lot of things don't, yet our current system forces us to adopt a one-size-fits-all policy for them. Futarchy does not fix that: in fact it is likely, if anything, to make it worse by making it easier for special interests to simply buy the policy they want, by eliminating the middleman (instead of having to buy politicians and elections, just buy into the betting market).

RobinHanson9• 13 years ago

A futarchy could approve a private law anarchy of the sort that Friedman suggests, if market speculators thought it would do better to achieve national welfare as voters have defined it.

qwerty9999• 13 years ago

If we did this, 4chan would rig the votes and take over the world. ;-)

davexunit• 13 years ago

There's already a futarchy on /d/.

judk3• 13 years ago

Elected representatives would formally define and manage an after-the-fact measurement of national welfare

The paper scuttles itself in the first paragraph.

harshreality• 13 years ago

That national welfare metric could be a legally required and binding part of the platforms they run on.

amalcon• 13 years ago

Instead, much of the difference seems to be that the poor nations (many of which are democracies) are those that more often adopted dumb policies, policies which hurt most everyone in the nation.

This is taken as obvious, but I don't find it so. There are many things that are not attributable to tangible national assets, but that can nonetheless change its course: things such as historical accident of where a particular thing was invented, actions of other nations, natural disasters, etc. I see every reason to think that this sort of thing is responsible for wealth disparity, moreso than repeated adoption of "dumb" policies.

jayfuerstenberg• 13 years ago

How is GDP a measure of wealth?

It's a measure of how much money is spent back and forth and not much else.

Some consider this money moving to be "progress" but it actually only highlights how many problems a society's people are willing to pay in order to solve.

The medical industry is a classic example of this. People are suffering and paying an arm and a leg for cures and treatment. GDP reflects the money aspect of this while ignoring the human aspect.

RobinHanson9• 13 years ago

GDP is only an initial starting point for developing a measure of national welfare. Using GDP in this system might well be better than our current system, and improvements should make it even better.

pdonis9• 13 years ago

Quote from the article:

Futarchy seems promising if we accept the following three assumptions:

Democracies fail largely by not aggregating available information.

And we don't even need to go any further, because assumption #1 is wrong in two ways:

(1) Democracies fail because people have conflicting goals, not just conflicting beliefs about how to reach goals. Even people who have all the same factual beliefs can still have inconsistent goals. That is a problem in any system that requires everyone to adopt common goals in order to set policy.

(2) The "information" that would need to be aggregated doesn't exist anyway. Hanson assumes that there is some policy that, if imposed on everyone, would work; he never considers the possibility that the real problem is that assumption--that the root problem is the very act of imposing policies on everyone, not the particular policies that get imposed.

RobinHanson9• 13 years ago

But if there is no reason to think that problem is worse in this proposal, and the info aggregation problem would get better, you might still want to support this proposal.

pdonis9• 13 years ago

If the information that would need to be aggregated doesn't exist, then the "info aggregation problem" as you've defined it doesn't exist either, so it's meaningless to ask whether it gets "better".

As for the problem of imposing policies on everyone, doing it by a mechanical procedure based on a betting market actually does strike me as worse than doing it the way we do it now, for a couple of reasons. But I'll respond further to that in the other subthread where we are having that discussion.

Futarchy: Vote Values, But Bet Beliefs

Related Stories