{"id":2315,"date":"2020-04-26T05:10:44","date_gmt":"2020-04-26T13:10:44","guid":{"rendered":"https:\/\/enfascination.com\/weblog\/?p=2315"},"modified":"2020-04-30T13:58:59","modified_gmt":"2020-04-30T21:58:59","slug":"subjective-utility-paradox-in-a-classic-gift-economy-cycle-with-loss-aversion","status":"publish","type":"post","link":"https:\/\/enfascination.com\/weblog\/post\/2315","title":{"rendered":"Subjective utility paradox in a classic gift economy cycle with loss aversion"},"content":{"rendered":"<figure id=\"attachment_2330\" aria-describedby=\"caption-attachment-2330\" style=\"width: 600px\" class=\"wp-caption alignnone\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/enfascination.com\/weblog\/wp-content\/uploads\/2020\/04\/cookie-monster-e1365989116779.jpg\" alt=\"\" width=\"600\" height=\"400\" class=\"size-full wp-image-2330\" \/><figcaption id=\"caption-attachment-2330\" class=\"wp-caption-text\">&nbsp;<\/figcaption><\/figure>\n<p>Decision research is full of fun paradoxes.\u00a0 Here&#8217;s one I came up with the other day. I&#8217;d love to know if it&#8217;s already been explored.<\/p>\n<ol>\n<li>Imagine a group of people trading Kahneman&#8217;s coffee cup amongst themselves.<\/li>\n<li>If you can require that it will keep being traded, loss aversion predicts that it&#8217;ll become more valuable over time, as everyone sells it for more than they got it.<\/li>\n<li>Connect those people in a ring and as the cup gets traded around its value will diverge. It will become invaluable.<\/li>\n<\/ol>\n<figure style=\"width: 1536px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/en.wikipedia.org\/wiki\/Kula_ring\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full\" src=\"https:\/\/upload.wikimedia.org\/wikipedia\/commons\/7\/75\/Kula_bracelet.jpg\" alt=\"Kula bracelet\" width=\"1536\" height=\"1167\" \/><\/a><figcaption class=\"wp-caption-text\">&nbsp;<\/figcaption><\/figure>\n<p>Thoughts<\/p>\n<ul>\n<li>This could be a mechanism for things transitioning from having economic to cultural value, a\u00a0counter-trend to the cultural-&gt;economic trend of <a href=\"https:\/\/en.wikipedia.org\/wiki\/Motivation_crowding_theory\">Israeli-daycare-style crowding out<\/a>.<\/li>\n<li>The cup of course doesn&#8217;t actually have to attain infinite value for this model to be interesting. \u00a0If it\u00a0increases in value at all over several people, then that&#8217;s evidence for the mechanism.<\/li>\n<li>Step 2 at least, and probably 3, aren&#8217;t giant leaps. Who would know if this argument has been made before?<\/li>\n<li>There is a real world case for this. \u00a0A bit too complicated to be clean-cut evidence, but at least\u00a0suggestive. \u00a0The archetypal example of <a href=\"https:\/\/en.wikipedia.org\/wiki\/Gift_economy\">gift economies<\/a> was the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Kula_ring\">Kula ring<\/a>, in which two types of symbolic\u00a0gift were obligatorily traded for each other over a ring of islands, with one type of gift circulating clockwise \u00a0and\u00a0the other counter-clockwise through the islands. These items had no practical use, they existed only to\u00a0trade. \u00a0They became highly sought-after over time, as indicators of status. \u00a0In the variant described,\u00a0both types of items should become invaluable over both directions around the circle, but should remain\u00a0tradable for each other.<\/li>\n<li>This example ends up as a fun paradox for utilitarianism under boundedly rational agents, a la Nozick&#8217;s\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Utility_monster\">utility monster<\/a>, which subjectively enjoys everything more\u00a0than everyone, and therefore under a utilitarian social scheme should rightfully receive everything.<\/li>\n<li>The effect should be smaller as the number of people in the ring gets smaller. \u00a0A smaller ring means fewer\u00a0steps until I&#8217;ve seen the object twice (less memory decay). \u00a0My memory that the thing was less valuable\u00a0yesterday acts here as a counterbalance to the inflationary effect of loss aversion.<\/li>\n<\/ul>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content --><!-- AddThis Related Posts generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Decision research is full of fun paradoxes.\u00a0 Here&#8217;s one I came up with the other day. I&#8217;d love to know if it&#8217;s already been explored. Imagine a group of people trading Kahneman&#8217;s coffee cup amongst themselves. If you can require that it will keep being traded, loss aversion predicts that it&#8217;ll become more valuable over &hellip; <a href=\"https:\/\/enfascination.com\/weblog\/post\/2315\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Subjective utility paradox in a classic gift economy cycle with loss aversion<\/span><\/a><!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><!-- AddThis Related Posts generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":2330,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"wpupg_custom_link":[],"wpupg_custom_link_behaviour":["default"],"wpupg_custom_image":[],"wpupg_custom_image_id":[],"footnotes":""},"categories":[10,8],"tags":[],"_links":{"self":[{"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/posts\/2315"}],"collection":[{"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/comments?post=2315"}],"version-history":[{"count":8,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/posts\/2315\/revisions"}],"predecessor-version":[{"id":2331,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/posts\/2315\/revisions\/2331"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/media\/2330"}],"wp:attachment":[{"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/media?parent=2315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/categories?post=2315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enfascination.com\/weblog\/wp-json\/wp\/v2\/tags?post=2315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}