Wednesday, July 28, 2010

Anarchy and Efficient Law

Earlier this year I gave a talk in Brazil based on an old book chapter. The central argument is that the producers of law in a system such as that I described in The Machinery of Freedom, unlike the producers of law in a conventional political system, have an incentive to generate economically efficient law—for reasons similar but not identical to the reasons why other producers in private markets have an incentive to produce the products that consumers most value. In the talk I also discuss the reasons why the law generated will fall short of being perfectly efficient, due to imperfections of that particular market.

It has now been webbed.

Monday, July 26, 2010

Maybe He Really Is a Liberal: Part II

In a recent post, I raised the possibility that the leader of the Liberal Democrats in the U.K., now deputy Prime Minister, might in fact be a liberal in the old sense of the word, or at least something close. A recent news story provides one more bit of evidence in favor of that optimistic conjecture.

Saturday, July 24, 2010

The Furnace of Akhnai: Story and Puzzle

In studying Jewish law (for a course I teach on legal systems very different from ours), I came across the story of the furnace (or oven) of Akhnai. In brief:

Rabbi Eliezer disputed with the sages as to whether a clay oven that had become impure, had been broken up, and then reassembled with sand between the pieces, was still impure or, having been broken, was now pure. After he offered all of his arguments to show that the oven was now pure and they were all rejected, he called upon a carob tree to prove the truth of his position. The carob tree promptly uprooted itself and was flung a great distance away. The sages responded that a carob tree had nothing to say in the disputes of legal scholars.

The argument continues, Eliezer is supported by two more miracles, each of which the sages insist is irrelevant. Finally he asks heaven to support him, and a voice form heaven announces that in all matters of the law Eliezer is correct. To which one of the sages replies (to God) "It is not in heaven." Or in other words, "butt out."

To make sense of the story so far, one needs a little background. Jewish law, like any system based on divine revelation, has an inherent problem with maintaining consistency. If the law is what God said, and different judges have different interpretations of what that is, then the judges will give different rulings on the same question. What God said is not determined by majority vote.

Early on, the legal scholars came up with a solution to this problem, based on their interpretation of a passage in the Torah, the first five books of the Old Testament. What God said was something that each legal scholar could determine for himself. But if they disagreed, what the law was was determined by majority vote of the scholars. Better that they risk getting the law wrong than that they end up disagreeing in their judgments. A scholar who disagreed was free to argue for his position, but when functioning as a judge he had to decide according to the view that had been established by the majority.

The story is happening at the end of a period of several generations in which the legal scholars were divided into two schools, the school of Hillel and the school of Shamai, which disagreed about details of the law but continued to each treat the other as legitimate. Eliezer was a leading figure in the school of Shamai; the "sages" in the story are scholars of the school of Hillel, which at that point was the larger of the two. The point of the first part of the story is that, even if Eliezer was correct in his interpretation of the law, what the law was was determined not by what position was correct but by what position was supported by the majority—and the majority was against him. The law is no longer in heaven to be determined by God but on earth, having been given by God to the legal scholars to interpret for themselves and define by majority vote.

Having rejected divine authority as a basis for the law—a decision which, according to another bit of the story, God himself approved of—the sages went on to put Rabbi Eliezer under ban. After which:

Said they, 'Who shall go and inform him?' 'I will go,' answered R. Akiba, 'lest an unsuitable person go and inform him, and thus destroy the whole world.' What did R. Akiba do? He donned black garments and wrapped himself in black, and sat at a distance of four cubits from him. 'Akiba,' said R. Eliezer to him, 'what has particularly happened to-day?' 'Master,' he replied, 'it appears to me that thy companions hold aloof from thee.' Thereupon he too rent his garments, put off his shoes, removed [his seat] and sat on the earth, whilst tears streamed from his eyes. The world was then smitten: a third of the olive crop, a third of the wheat, and a third of the barley crop. Some say, the dough in women's hands swelled up.

A Tanna taught: Great was the calamity that befell that day, for everything at which R. Eliezer cast his eyes was burned up. R. Gamaliel too was travelling in a ship, when a huge wave arose to drown him. 'It appears to me,' he reflected, 'that this is on account of none other but R. Eliezer b. Hyrcanus.' Thereupon he arose and exclaimed, 'Sovereign of the Universe! Thou knowest full well that I have not acted for my honour, nor for the honour of my paternal house, but for Thine, so that strife may not multiply in Israel! 'At that the raging sea subsided.

Ima Shalom was R. Eliezer's wife, and sister to R. Gamaliel. From the time of this incident onwards she did not permit him to fall upon his face. Now a certain day happened to be New Moon, but she mistook a full month for a defective one. Others say, a poor man came and stood at the door, and she took out some bread to him. [On her return] she found him fallen on his face. 'Arise,' she cried out to him, 'thou hast slain my brother.' In the meanwhile an announcement was made from the house of Rabban Gamaliel that he had died.
(from the Babylonian Talmud)
The sages came to the correct decision about the law; the only puzzle in that part of the story is why, having been told by God that Eliezer had it right, the other scholars didn't all change their opinion accordingly, thus changing the majority vote.

What about the ban? That corresponds to what really happened in the conflict between the two schools—the school of Hillel won out and effectively suppressed the rival school. The story seems to imply that that outcome was wrong—or if right, catastrophically right, resulting in mass destruction. God threatened to drown the leader of the sages for his role in what happened, even if persuaded not to, and God did kill him the first time Eliezer prayed—at least I assume that's what "falling on his face" refers to.

Some versions I have seen say that Eliezer, having been outvoted, continued to tell his followers to decide cases according to their view of the law, which would at least explain the ban. I'm not sure if that is based on separate evidence, or someone's attempt to explain the story.

With any luck, one or more of the readers of the post will be more familiar with the subject than I am, and able to throw some light on the second half of the story.

Jewish law is not the only system to face the problem of establishing consistent law based on an authoritative source. The equivalent problem in U.S. law is constitutional interpretation, and the solution is rather like the Jewish solution. A judge or law professor is free to argue for his interpretation of the Constitution, but once the Supreme Court has voted on the subject a judge is required to rule according to its vote.

Sharia also claims to be deduced from religious sources rather than created by a ruler, legislator, or court. The split between the schools of Hillel and Shamai in Jewish law corresponds to the division among the four schools of Sunni Muslim law. In the Muslim case Shamai was never repressed. The four schools continued to regard each other as mutually orthodox for more than a thousand years—and still do.

Which suggests that legal uniformity may be less essential than one would expect.

Wednesday, July 21, 2010

Epithet Inflation: The Case of "Racism"

Reading news stories about the Shirley Sherrod case, I was struck, not for the first time, by the way in which current usage of the word "racism" demonstrates epithet inflation. Ms Sherrod's initial response to a white farmer who wanted her help, as she reported it, was to give him less help than she would have given to a black farmer. On further thought she decided that that was a mistake, did her best for him, and apparently ended up friends with him and his wife.

Suppose, however, that she had not changed her mind. What she would then have done could legitimately be labeled discrimination, although not (to my mind) a very serious example—most of us are more willing to help people we identify with than people we see as in some way different or alien. Racism is lynching, burning crosses, spitting on people—hating people because of their race. Helping people a little less than you would help them if they were of your race doesn't come close to qualifying.

Once a label is firmly identified as bad, it is always tempting to apply it a little more widely. And a little more widely still. And ... . In the case of "racist," the process has gone even further than this incident illustrates, to the point where it can mean nothing more than "someone whose views about race I disagree with."

Grading Math Exams

This summer my son and daughter have been taking calculus, and are not entirely happy with the instructor. One of their complaints is that he grades them down on exams when they get the right answer but don't show the step by step procedure for getting it that they have been taught.

Thinking about the question, it seems to me that the instructor's policy is backwards. The ability to solve a problem by following a recipe, a step by step procedure that one has been taught for that kind of problem, is only weak evidence that the student understands what he is doing. Inventing a way of solving the problem that one has not been taught—and getting the right answer—is considerably better evidence.

I am now imagining that instructor as the schoolteacher who tried to keep a class of children—among them the young Gauss—quiet by having them add up the numbers from one to a hundred.


Tuesday, July 13, 2010

A Perceptive Essay About High School and Nerds

I came across a fascinating essay that starts with the question of why smart kids are, on average, low status in the high school environment. The short answer is that being popular in that environment is a full time job, and smart kids, even if they want to be popular, want to do other things as well. The author goes on to make quite a lot of interesting, perceptive, and disturbing points about how children are brought up. One sample:
What bothers me is not that the kids are kept in prisons, but that (a) they aren't told about it, and (b) the prisons are run mostly by the inmates. Kids are sent off to spend six years memorizing meaningless facts in a world ruled by a caste of giants who run after an oblong brown ball, as if this were the most natural thing in the world. And if they balk at this surreal cocktail, they're called misfits.
And another:
In my high school French class we were supposed to read Hugo's Les Miserables. I don't think any of us knew French well enough to make our way through this enormous book. Like the rest of the class, I just skimmed the Cliff's Notes. When we were given a test on the book, I noticed that the questions sounded odd. They were full of long words that our teacher wouldn't have used. Where had these questions come from? From the Cliff's Notes, it turned out. The teacher was using them too. We were all just pretending.

Sunday, July 11, 2010

Crossed Hierarchies: WoW, SCA, Age, Expertise, ...

In my Future Imperfect, I briefly discussed the problem of the inconsistency between hierarchies of age and of expertise—what happens, in a rapidly changing field, when the younger and lower ranked people correctly believe that they know more about what they are doing than the older and more senior. The same issues arise in other contexts.

The one that has struck me lately is the reaction I sometimes get when I mention that I play World of Warcraft. It may reflect the fact that I am a sixty-five year old law professor and author—what one of C.S. Lewis's characters referred to (when drunk) as a respectabiggle. People who don't play WoW think of it as populated mostly by juvenile geeks. And someone better informed about my online activities might wonder how I can regard as a leader I admire and follow, in that particular context, an undergraduate who is taking a long time to get his degree because he spends so much of his time leading raids and defending Alliance cities.

Such data as are available suggest that the stereotype is wrong, that players cover a broad age range—the average from one survey a few years back was 28—although I am clearly at the high end. Casual observation shows many of them to be married with children. But what is surely true is that the de facto hierarchy—who is seen as higher status, abler, more deserving of respect than whom—is largely independent of the corresponding hierarchy in the outside world. And of course, in the outside world, there are multiple and inconsistent hierarchies—the championship bridge player or chess master may or may not have a high status job, advanced education, other status related features. One difference is that, in those cases, really high levels of skill can to some extent be translated into more conventional forms of status, as when top bridge players make their living as paid partners of players who are slightly less skilled and much richer.

The same point struck me long ago in the SCA—as one of its virtues. I was getting to know, as rough equals, a range of people many of whom I would not have known socially in other contexts. One of them was a male nurse. Another a state cop. Several were school teachers. The effect is stronger in the virtual world, because the links to real world resources are weaker. Someone in the SCA with a good income can buy classy gear—clothes, tents, jewelry—from skilled craftsmen instead of having to make less classy versions for himself. He has the resources to fly to SCA events far from where he lives. High income and status in the outside world are neither necessary nor sufficient for success in the SCA, but both can help. That is much less true in World of Warcraft.

In both cases, there is also an effect in the opposite direction. Some high status, high income people get to be that way by spending a lot of time on their work—and both the SCA and WoW are time intensive activities. In WoW in particular, someone who is willing to spend most of his waking hours online has real advantages in acquiring gear, experience, reputation, skill.

I am not sure I have anything particularly profound to say about the phenomenon of crossed hierarchies, but I find it interesting. Some time back I discovered that one of Obama's economic advisors had confessed to playing World of Warcraft too; corresponding with him by email I discovered that he was part of guild largely made up of fellow academics. It probably should not have been reassuring, but it was.

Friday, July 09, 2010

Governments, Private Organizations, and Sunk Costs

Over the last few days, I have become embroiled in a controversy within the Society for Creative Anachronism, a historical recreation group of which I have been a reasonably active part for about forty years; an earlier post mentioned it. The people running the SCA's largest event, a two week camping event with about ten thousand participants, announced without prior discussion a new rule for the event that many active participants, myself among them, saw as catastrophically bad. In response to an extensive online outcry they somewhat modified the rule, while making it clear that they were not willing either to explain and discuss their reasons or to suspend the rule for this year—the event starts in a few weeks—and discuss it for next. The controversy is still ongoing, and what the final outcome will be is as yet unclear.

Reading the news today, I noticed a story on the outcome of a similar case in a different context—one I am also involved in. Blizzard, which runs (among other things) World of Warcraft, had announced that in the future people posting to its online forums would have to provide their real names. That too set off a firestorm of negative reaction. In that case, it worked—Blizzard has just announced that it is canceling the change.

In each of these cases, one group of people—Pennsic staff or Blizzard—is making a decision which will have a large effect, arguably negative, on a very large number of other people. In each case, those affected have no formal right to a say in the decision. But in each case, the people affected have informal ways of both expressing their views and putting some pressure on those making the decision. Blizzard does not want to lose customers, and the people running Pennsic are long term SCA members who, if nothing else, do not want to be viewed by their fellow hobbyists as arrogant and incompetent. As one person in the discussion put it:
... in the Society, real wealth is the ability to say "I have an idea" and have people agree to work to support it. The rarest coin of the realm is when other people give you chunks of their leisure time.


Losing the confidence that others have in you, that you can make things fun for them, is SCA Bankruptcy.
The obvious analogy is to governments, which make decisions for other people on a much larger scale. In theory, democracy lets the people affected control things, but it is a very imperfect form of control for familiar reasons. Governments are in that position because they can use force to make people obey them. Blizzard and the Pennsic staff are in that position because the affected people have spent a lot of time and effort doing things within the framework of the game or the Society, and so cannot vote with their feet without, in effect, throwing away much of what that time and effort has bought them. In the jargon of economics, they have large sunk costs.

The analogy raises an obvious question. Would it be better if Blizzard and the SCA followed the democratic model, with participants voting to decide who was in a position to make decisions? It is an option that some people have proposed, and argued for, in both contexts.

On the whole, it does not strike me as a good idea. For a polity with a substantial population—tens of thousands for the SCA, millions for Blizzard—democracy works poorly, for reasons familiar in public choice theory. The alternative, a mix of social pressure and market pressure, is probably a less bad solution, even though the market pressure is seriously weakened by the sunk cost problem. One piece of evidence that it is a better solution in the view of those directly affected is that Blizzard does not have a successful competitor that attracts customers by giving them a vote over how the game is run.

In both cases there is a third alternative—moving the relevant parts of what people are doing out of the control of those who, in many people's view, are controlling them badly. Players of World of Warcraft can, and do, set up their own web sites with their own forums. If Blizzard had maintained its policy, more, perhaps in time most, of the online discussions would have moved to such forums. The Pennsic staff controls the classes they run. But if my objection to the new rule is sufficiently strong, I have the option of cancelling the classes I had planned to teach within the Pennsic University and reconstituting them elsewhere, ideally in a private encampment near the places where they were originally scheduled. It is an option that, at this point, I am seriously considering.


P.S. The Pennsic staff, under pressure, withdrew the controversial rule, explaining that other SCA people had volunteered solutions to the problems that had required to it. The statement contained no suggestion that the rule had been a mistake. The policies that were supposed to substitute for it included one that had been effect for years, another targeted at a problem that had little to do with the original rule, and a third dealing with a rare problem for which there were easier solutions.

The classic definition of chutzpah is the man who, after killing his mother and father, asks the court for mercy on the grounds that he is an orphan. Publicly thanking people for offering solutions to a problem after publicly announcing your unwillingness to tell them what the problem is comes close.

Wednesday, July 07, 2010

Restricted Principles

Europe Seeks to Ban Food from Clones.

Despite the title, the attempt is for some reason limited to animals. Shouldn't the same principle apply to plants--for which cloning, in the form of grafting, is a very old and very common technology?

Of course, banning cloned plants pretty much means banning wine, aside from whatever can be produced from wild grapes. And apples. And most other fruit. But if it's a matter of principle ... .

Monday, July 05, 2010

Breaking the Walled Garden of Childhood

A very long time ago, I attended a conference at which one of the other participants was the late John Holt, a prominent and unconventional writer on education. The part of his talk I still remember was his description of the Victorian ideal of the walled garden of childhood—that children needed to have their innocence preserved by being walled away from the corrupting influence of the real world. As he put it then, some children want nothing more than to climb over that damned wall.

It is an attitude that is all too common in the modern world. The Internet is a wonderful educational tool—but a lot of parents assume that their children must be protected, by monitoring or filtering, from seeing too much of it. What psychological damage would be done to a six year old from seeing a picture of two humans engaged in sexual intercourse that was not done, over the centuries, to six year old farm children observing cattle engaged in the same activity for real has never been explained to me.

It goes along with the hostility to children working. The image of the boy with a newspaper route has been largely supplanted by Dickensian fantasies of juvenile slave labor in dark satanic mills. The prejudice is not even limited to paid employment. Libraries, at least the one my daughter briefly volunteered at, take it for granted that any teenager who volunteers is doing so to fulfill a requirement or get a box checked in a college application, and should be let go as soon as that objective is fulfilled. The idea that someone younger than eighteen might want to actually do something useful is ruled out ab initio.

Discussing this with my daughter, she mentioned how surprised she was as a young teenager to discover that something she did—playing harp—could actually be of use to people as an accompaniment to dancing. Later, as a college student, one of her complaints was that she was writing papers that nobody, aside from the professor who graded them, would ever read. Given the opportunity to do a winter term project of her own design, she chose to translate a renaissance Italian cookbook, a translation that is now up on my web page to be used by people interested in historical cooking. The walled garden is for playing in—what she wanted was to do things.

One exception used to be the Society for Creative Anachronism, a historical recreation organization that I have been involved with for a very long time. I was taught to use a sewing machine by a twelve year old girl; a few years later she was the moving spirit behind a puppet theater. But that has gradually changed. More and more over the years, children who come to SCA events are expected, not to help set up the hall or cook the dinner or run the event, but to attend "children's activities."

What set off this post was the discovery that at the Pennsic War, the SCA's largest gathering, a two week long camping event with something over ten thousand people and a Pennsic University with about a thousand classes (some of which I teach), there is now a new rule. Nobody under eighteen can attend a class unless accompanied by parent or legal guardian. When I complained to one of the people responsible, I was assured that they had made special provision to allow children to attend children's classes.

I have long held that there are two fundamental views of children: That they are pets who can talk, or that they are small people who do not yet know very much. The wrong one is winning.

Falling Into a Kipling Poem

Recently I've been doing minor repairs on the irrigation system that provides water to my lawn, bushes, and (most important) fruit trees. We used to have a fairly dense hedge along the fence in front of the house, much of which died back; the obvious explanation was lack of water. And, of plants I put not long ago, one blueberry bush was looking very dry, while , oddly enough, the little pomegranate next to it was quite healthy.

The problem, I concluded, was that there was no irrigation along the fence. The nearest line—black rubber hose of the sort popular for do-it-yourself drip irrigation—provided water to plants nearer the house at both ends of the relevant line and presumably ran, slightly underground, across the lawn about fifteen feet housewards from where the hedge used to be and, with luck, would be again.

The nice thing about do-it-yourself irrigation is that you can do it yourself. If I just put in a T junction at one end, connected a length of 1/2" black rubber hose, ran it along just inside the fence, added some drip units and a few little sprayers, ... .

The soil at the end where I started is largely accumulated pine needles. Digging through that I discovered, to my surprise, a 1/4" tube leading to a drip unit near the healthy pomegranate. Tracing that back, I came to a 1/2" black rubber hose, buried a few inches below the surface. Tracing that, I discovered that some previous owner—we've had the house for about fifteen years—had done almost exactly what I was planning to do. The hose ran along just inside the fence and had presumably, at one time, done an adequate job of watering the hedge.

I added some new drip and spray units, experimented with turning on various parts of the irrigation system—the hose didn't connect to the part where I had planned to connect it—and remembered ...

When I was a king and a mason, a master proven and skilled,
I cleared me ground for a Palace, such as a King should build.
I decreed and dug down to my levels; presently, under the silt,
I came on the wreck of a Palace, such as a King had built.

There was no worth in the fashion; there was no wit in the plan;
Hither and thither, aimless, the ruined footings ran.
Masonry, brute, mishandled, but carven on every stone,
"After me cometh a Builder; tell him I, too, have known."

Swift to my use in my trenches, where my well-planned groundworks grew,
I tumbled his quoins and his ashlars, and cut and rest them anew.
Lime I milled of his marbles; burned it, slaked it, and spread;
Taking and leaving at pleasure the gifts of the humble dead.

Yet I despised not nor gloried, yet, as we wrenched them apart,
I read in the razed foundation the heart of that Builder's heart.
As he had risen and pleaded, so did I understand
The form of the dream he had followed in the face of the thing he had planned.

When I was a King and a Mason, in the open noon of my pride,
They sent me a Word from the Darkness; they whispered and called me aside.
They said, "The end is forbidden." They said, "Thy use is fulfilled.
Thy Palace shall stand as that other's, the spoil of a King who shall build."

I called my men from my trenches, my quarries, my wharves, and my sheers;
All I had wrought I abandoned to the faith of the faithless years.
Only I cut on the timber; only I carved on the stone:
"After me cometh a Builder; tell him I, too, have known."

(The Palace, Rudyard Kipling)

Friday, July 02, 2010

EBay and Second Price Auctions

In a second price auction, the winner pays, not his bid, but the second highest bid, or an amount just above it—the lowest price that would have won. In theory, this makes it in each bidder's interest to bid the highest amount he is willing to pay. Bidding less than that changes the outcome for him only if it puts him below what would otherwise have been the second bid, in which case it results in his losing an auction that he would rather have won,.

EBay uses a second price auction, and as far as I can tell by a little casual observation it fails to work in practice according to the theory, which is an interesting puzzle. There is probably published worked attempting to solve it, but I like puzzles and it isn't really my field, so I have been trying to think about this one.

My interest was spurred this morning when I lost an auction. The item was a kard, an indo-persian knife. I used to collect such things, although it's been years since I added to my collection. I happened across this one on ebay, it was a very attractive piece at a very reasonable (current second high bid) price, so I put in a bid on it. When I went to sleep last night mine was the high bid. When I got up this morning someone else had bought it for very slightly above my bid. My impression is that that is a not uncommon pattern—the winning bid coming in at the last minute. I have a bid currently up for a similar piece, in an auction that (unlike the first) terminates at an hour I am likely to be up, and I plan to watch the final minutes and see what happens.

Thinking about it this morning—I had not yet checked the outcome, but I thought it quite likely that I would be outbid—I came up with one theory, then discarded it. That theory started from the fact that, in a second price auction, there is a final bid—a bid made just before the auction closes, late enough so that other bidders cannot use the information provided by that bid to alter their own. Perhaps the optimal strategy involves putting in a low bid, or no bid, early, so that other bidders will think they are winning and so not realize they need to make relatively high bids to get the item, then put in a higher bid at the last minute.

The problem with that theory is that the same logic I started with implies that the last minute bid ought to represent your true value for the item—the highest price at which you would rather win the auction than lose it. If all bidders act that way, we are back with the original situation. And if each bidder expects the others to act that way, he might as well put in his high bid at the beginning, thus saving himself the trouble of getting up early in the morning, or staying up late at night, in order to cast a high bid at the last minute.

There is, however, a fancier version of the theory that might work. Up to this point, I have been assuming that each bidder knows what the item is worth to him. Perhaps that is the assumption that needs to be modified.

Suppose I would rather pay a hundred dollars for a kard like this than not have one, and further suppose I only want one for my collection. If there were only one kard in the world, it would be worth a hundred dollars to me. But if there is more than one, how much this one is worth to me today depends in part on what price, if I don't get it, I would be able to buy one of the others for tomorrow. That in turn depends in part on how much other buyers value such items at. It follows that observing that someone else has made a high bid for the item is a reason for me to reevaluate upward its value to me. A further reason is that high bids on this item signal that it will have a high resale value; since it is possible that I (or my heirs) will some day want to sell it, that also increases its current value to me. The argument is stronger still if I am, not a collector, but a reseller or a speculator, buying the item in order to later sell it.

This argument brings us back to the last minute strategy. Making a high bid early will drive up the auction price, either to the previous bidder's bid (if I am now the high bidder) or to just above my bid (if I am now the second highest bidder). That will provide information that will lead all other bidders to reevaluate the item up, increasing their (current or last minute) bid accordingly. So I postpone my high bid until the last minute of the auction, when it is too late for other bidders to react to the additional information.

This is, I think, a possible explanation of my initial puzzle, but I am not sure it is correct, or even that it explains all the available data. I have not looked carefully enough to be sure, but my impression is that the spread of prices for such items on ebay—antique indo-persian edged weapons—is larger than I would have expected, with prices for similar items ranging over an order of magnitude or so. That is based on a comparison of prices things are currently up for—a lower bound of their selling price in the case of auctions—with the price that the particular item I bid on actually sold for. I have not watched ebay long enough to be sure that is correct, and different items are not of course identical, but it is at least my impression.

That raises a second possibility for what is happening. Suppose the market for any single item of this sort is very thin. Suppose there are lots of people who value it at a hundred dollars, and a small and unknown number—say between zero and five—of enthusiasts who value it at a thousand. On our original model of how a second price auction works, the item would usually go for a thousand dollars—when at least two enthusiasts were bidding. But occasionally there would be one or zero enthusiasts bidding for the item, and it would go for a hundred dollars.

Now suppose you are the seller, and further suppose that you believe that if there is only one or zero enthusiasts in the market for your item today, you can probably do better next month or next year. You might decide to put in a bid yourself at, say, nine hundred and ninety dollars—either explicitly as a reservation price or covertly by pretending to be an independent bidder. The latter option isn't free, since you will have to pay EBay a commission if you end up buying the item from yourself, but it might still be worth doing.

Further suppose that, even for enthusiasts, watching auctions and bidding on them is costly, so that they will only do so if they think they have a good chance of getting the item they bid on for well under its value to them. The seller now has an incentive to use the covert bid strategy—at the last minute—thus enticing people to follow his auctions. And if you suspect, on the basis of bids made prior to the last minute, that there are no enthusiasts out there this time, you might put in your last minute bid at a hundred and one dollars. That not only reduces the commission you will have to pay to EBay, it also signals buyers looking at the auction after the fact that they have a chance of getting a very good deal on your auctions.

Do any of my readers know of published work exploring such theories or offering other and perhaps better ones? Empirical work? EBay provides, after all, a vast volume of real world data on the working of second price auctions, most of which (I presume) could be mined with suitable software at a relatively low cost.

Thursday, July 01, 2010

A World of Search

"having written a book it is always tempting to explain it, a project usually more interesting to the author than to his audience."

After writing that sentence in my previous post, it occurred to me that there probably is an audience, although not a large one, that would be interested in the explanations—while the book was not a success, some readers clearly liked it a lot. Unfortunately, most of them don't read my blog, so if I had let myself go on at greater length it would have been to the wrong readers. That is unfortunate, since it prevents a conversation that both sides would have enjoyed, an exchange in our mutual advantage.

There is a solution, and it is one that may be very gradually taking form. I routinely do searches of both Usenet and the Web, using search strings designed to spot references to me while filtering out at least some of the references to other people with the same name. The current term for the practice is egosurfing, the older term, named after an early Usenet practitioner, "kibozing." With the search already set up it takes only a single click, although I then have to spend a minute or so looking through the results to find the ones that are actually worth looking at.

There is no reason why the practice could not be extended. I am a fan of various writers, including Heinlein, Kipling, G.K. Chesterton, Tolkien, Orwell, and others. I could have a search string that spotted any online reference to any of them. Extending it further, one could imagine a (very long and complicated) search string designed to spot any reference online to anything of interest to me—for example, an author going on at length about a book I read and liked.

There is, however, a practical problem. The string "economist OR anarchist OR harald OR libertarian "David Friedman" -rec-arts-sf-* -concerned-scientists" turns up some hits irrelevant to me, but filtering them out takes only a minute or so. A string designed to locate everything of possible interest to me would produce an enormous volume of hits, and looking through them each day for the tiny fraction I actually wanted to read would be a more than full time occupation.

Which means that we need smarter searches, procedures that will do almost all of the filtering in advance, providing me each day with links to the ten or twenty new online items that it is actually likely I will want to read.

Google, are you listening?

Two Novels

I recently reread my one published novel; I still like it a lot. This raises an interesting puzzle. The book was not a complete flop—I think it earned out about two-thirds of its advance—but pretty close. If it is as good as it seems to me, why didn't it sell?

It is tempting to blame its sales on the poor taste of readers or inadequate publicity by my publisher, but I think there is a more interesting answer, and one that applies to many other books as well: The book the author reads is not the same as the one other people read.

At the beginning of the novel, two strangers find themselves crossing a high mountain pass together. In the course of their conversation, one of them mentions a lady who is an important leader in her organization, the other mentions his sister. What he knows and she doesn't is that they are the same person. The reader only discovers that much later in the book, so unless he rereads it that particular element of the conversation is never going to reach him. The author, on the other hand, does know it, and can be at least mildly amused by the light it casts on the interaction between the two.

Harald is divided into five sections, labelled "book I," "Book II," and so on. The title of Book II is "Payment of Debts." Given how the protagonist has been treated in Book I, a reader is likely to interpret that as a sarcastic reference to getting revenge against the young and arrogant king responsible, at that point in the plot, for the current problems. In fact it is a reference to paying back Harald's perceived debts to his two closest friends, one of them—the king's father—now dead. That particular debt is going to be paid, over the course of Book II, by providing James—forcibly—with the education needed to do the job he has inherited, something that his father, for reasons implied but not explained in the text, was unable to do. The fact that my protagonist views matter that way—sees his objective as reforming the king not defeating him—casts an important light on his personality. But it is not a point that I can expect many readers to get.

I could go on at considerable length—having written a book it is always tempting to explain it, a project usually more interesting to the author than to his audience. But the basic point is simple. I know more about my world and my characters than even a perceptive reader can be expected to get from what I wrote, and much more than most readers will get. That knowledge colors my reading of the book, making it a richer and more enjoyable experience than anyone else's reading.

Which may explain why it did not sell nearly as well as, from my point of view, it deserved to.