Cato Unbound!

Gabriel Rossman and I lead off a discussion of exchange, obfuscation, and regulaton.

At "Cato Unbound."

VPC

So, shut up about "markets" already.  The key is voluntary private cooperation, and society.  We can do this...

My new piece in The Freeman.

Why Do People Exchange?

The newest, and last, of the Learn Liberty videos I did in March 2012.  I like the way this one turned out, because it captures something everybody cares about.  Free t-shirts!



UPDATE:  One of the comments, on Youtube, was this:  "This guy looks like Patrick!"  (Which is true.  I lost 40 pounds not long after filming this video.  Pretty strange to look back at...)

Big Bang and Gifts

So, Ruth Kappes added this video to the thread on the question of gifts and voluntary exchange over at EE.  Thanks, Ruth, nicely connected!




And the points about money being better than gifts, and just going back and forth until someone dies.... what a happy thought!

Morals and Markets

Detecting the Trustworthiness of Novel Partners in Economic Exchange

David DeSteno et al.
Psychological Science, forthcoming

Abstract:
Because trusting strangers can entail high risk, an ability to infer a potential partner's trustworthiness would be highly advantageous. To date, however, little evidence indicates that humans are able to accurately assess the cooperative intentions of novel partners by using nonverbal signals. In two studies involving human-human and human-robot interactions, we found that accuracy in judging the trustworthiness of novel partners is heightened through exposure to nonverbal cues and identified a specific set of cues that are predictive of economic behavior. Employing the precision offered by robotics technology to model and control humanlike movements, we demonstrated not only that experimental manipulation of the identified cues directly affects perceptions of trustworthiness and subsequent exchange behavior, but also that the human mind will utilize such cues to ascribe social intentions to technological entities.

An actual version of this experiment:  would YOU trust THIS man?

(The correct answer is "yes," btw.)

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Are social preferences related to market performance?

Andreas Leibbrandt
Experimental Economics, December 2012, Pages 589-603

Abstract:
This paper combines laboratory with field data from professional sellers to study whether social preferences are related to performance in open-air markets. The data show that sellers who are more pro-social in a laboratory experiment are also more successful in natural markets: They achieve higher prices for similar quality, have superior trade relations and better abilities to signal trustworthiness to buyers. These findings suggest that social preferences play a significant role for outcomes in natural markets.

(Interesting note for Mr. Overwater:  being pro-social is adaptive, even (especially) in a market setting.

Nod to Kevin Lewis
 

Off to the Great West....

Heading to Bloomington, IN for an LF conference on the Ostroms.  Sad, because they were both going to attend, but that didn't work out. 

Lin was actually planning grant proposals that would have started in Fall 2013.  She was pretty brave.

Then, to Portland, OR to visit my sister Kathy.  She is a veterinarian, and a big sailer.  May get out o the water a bit.

Then to Seattle, WA to give this talk, and to hang out with Tony Gill, Raoul, and of course the YYM. 

Then back on the redeye a week from Friday.  If you are in Seattle, it would be great to see you at the talk!

Room Assignment Puzzle

Question: Should Duke allow side payments in room assignment process?

Answer: why not?

Real answer: Nope, they do not allow it. And they are threateing "referrals." I don't know what that means, but it frightens me.

Los Repartimientos

The EYM writes an interesting piece on "los repartimientos" over at EE.  Check it out.

Are Markets Better Than Altruism?

One of the cool parts of the Radford's 1945 article, "The Economics of a POW Camp," is this observation:

Our supplies consisted of rations provided by the detaining power and (principally) the contents of Red Cross food parcels – tinned milk, jam, butter, biscuits, bully, chocolate, sugar, etc., and cigarettes. So far the supplies to each person were equal and regular. Private parcels of clothing, toilet requisites and cigarettes were also received, and here equality ceased owing to the different numbers despatched and the vagaries of the post. All these articles were the subject of trade and exchange.

Very soon after capture people realised that it was both undesirable and unnecessary, in view of the limited size and the equality of supplies, to give away or to accept gifts of cigarettes or food. “Goodwill” developed into trading as a more equitable means of maximising individual satisfaction.

Trading is more equitable than goodwill? Think about it. I notice you don't eat your beef ration, and I ask for it. You give it to me, because it will be wasted else. But then next month, and the next, and... at some point, the fact that the beef has value means that I should pay you something. YOU may not value the beef, but it has value in the market. I am taking value, and you get nothing. Altruism, if systematized and made permanent, is inequitable. If the state FORCES us to act as if we were altruistic, then it isn't altruism at all.

SMBC illustrates the same problem: Altruism is at best an emergency solution, because it quickly devastates those it is intended to help. If you love something, set it free to find a way to support itself by producing something someone else wants to buy.

(A nod to David D)

UPDATE: From the intrepid Pels-min: PJ O'Rourke nailed it in 1994, "All the Trouble in the World," when he was baffled by Somalia's fields filled with (unharvested) crops. "Somalia was being flooded with food aid… Rice was selling for ten cents a pound in Somalia, the cheapest rice in the world. But what, we thought, did that mean to the people with the fields of corn and sorghum and the herds of goats and cattle? Are those now worth nothing, too? Had we come to a Somalia where some people some- times starved only to leave a Somalia where everybody always would?"

Euvoluntary Exchange In NRO

Interesting NRO piece by Reihan Salam on Euvoluntary Exchange. Nice examples. And the question at the end is the right one. I just don't know the answer.

What are the sources of the disparities we care, or rather that we should care, about?

New Blog: Euvoluntary Exchange.

New Blog! All things "Euvoluntary."

It is really just for information, and to provide examples for folks who want to use the concept of euvoluntary exchange (either because you think it is useful, or stupid!) in teaching and writing.

At the upper right there are some resources and background information. I'll be adding to that as time goes by.

In the meantime, please do send examples, comments, or critiques, especially of things that happened in the world or the classroom.

And I'll post them, right away. If there is analysis to be done, it will still be back here on good ol' KPC. The new blog is really just an information source.

By Jove, I Think She's GOT it!

A friend who has been teaching about "euvoluntary exchange" got this from a student.

When he first explained the concept of BATNA and the situations in which BATNA is too low, I was all for changing those situations. However, we need to remember that if we're going to take away somebody's best option (even if it is a crappy one) then we're also going to have to give them a better alternative.

That is as good a concise summary as I could possibly imagine. Telling a poor guy in India who needs medicine for his daughter that he cannot sell his kidney is a rotten thing to do, unless you can also help him somehow. If you aren't going to help, give him access to the market!

And, we can't help everyone. But the market can.