Are reciprocal ratings the cure or the curse?

You take a Uber ride. You get off the car, open your Uber app, and leaves the driver a 4.0 / 5.0 rating. As you walk away from the car, the driver pulls out her app, and gives you a 5.0 / 5.0 rating. This is an example of reciprocal ratings, i.e., where both parties get to rate each other.

There are many examples of reciprocal ratings, especially in areas where the experience is co-created and / or shared by both parties (albeit could be in different ways). For example, on Airbnb, the guest(s) get to rate the host(s) and vice versa. In debate competitions, the adjudicators score the speakers and the speakers often get a chance to rate the adjudicators in return based on the justification of their decisions and the quality of their feedback.

The question I’d like to discuss in this post is: do reciprocal ratings bring net benefits or net harm?

The Case For Reciprocal Ratings: Fairness & Incentives to Perform

Starting from principles, it seems fair to let both sides rate each other, especially if both sides share responsibility in an experience and / or are impacted by the other side’s actions. For example, the holistic Uber ride experience is affected by both the driver’s performance (e.g., cleanliness of vehicle) and the user’s behavior (e.g., arriving on time).

I really like the concept of The Wittgenstein’s Ruler, which Nassim Nicholas Taleb (the author of “Black Swan”) talked about in a Tweet:

The ONLY test of intelligence that counts is to see if the person detects Wittgenstein's ruler situations:

1) When you use a ruler to measure the table, you are also using the table to measure the ruler.

2) The more unexpected the measurement, the more you apply W's ruler.

— Nassim Nicholas Taleb (@nntaleb) January 8, 2019

It is worth repeating: “When you use a ruler to measure the table, you are also using the table to measure the ruler.” Sometimes, the best measurement of how good a ruler is is not an external judge, but the tables that are measured by itself.

If we look at practical consequences, reciprocal ratings may help both parties become more accountable for their behavior and / or decisions. In the example of a debate competition, for example, letting debaters rate adjudicators in return incentives the adjudicators to: (a) be more responsible in reaching a decision, and (b) be more detailed & elaborate in explaining their decision. Just as an adjudicator’s feedback could help debaters improve, so does a debater’s feedback let an adjudicator learn how to better judge a debate. Taking a step back, this type of benefit is not unique to reciprocal ratings, but to ratings in general: when people know that their performance is being measured (and that measurement is linked to some carrots or sticks), they are more likely to put in more effort. It is all about incentives. Economics 101.

You could say that reciprocal ratings make the interests of both parties more intertwined with each other – because debaters have a chance to rate adjudicators, it is now in both the debater and the adjudicators’ best interests to let debaters receive well thought-through feedback after a debate round. Reciprocal ratings put everyone “in the same boat” in a way.

The Case Against Reciprocal Ratings: Inflated Ratings?

But sometimes you could go from two parties being close to each other to two parties being too close to each other. Making the interests of both parties interrelated provides incentives to cooperate, as well as incentives to cheat. For example, if debater feedback for adjudicators were submitted using their real names in a debate competition, then one could argue some debaters may inflate their score for an adjudicator for fear of retaliation by that adjudicator (assuming the debaters have a significant chance of running into the same adjudicator in a future round).

There are real-world examples where people are asked to leave comments under their real name – Airbnb guest reviews, for example, are published under the guests’ real names & profile pictures. This helps to increase the perceived legitimacy and authenticity of the reviews in the eyes of interested people checking out the property’s profile page.

Assuming that (a) hosts get to rate guests in return and (b) hosts get to see the guests’ ratings & comments, then one possible scenario may happen: a guest inflates the rating for his / her host out of fear that if he / she gives the host the low rating, the host would retaliate with a low (or even lower) rating in return. The problems is symmetrical, as in one could argue that the host also has an incentive to inflate his / her ratings of the guest for the exact same reasons.

Assuming the ratings are indeed inflated, would that break the whole rating system?

Before we dive into this question, let us first look at the bigger picture: why do ratings matter in the first place? How are ratings used by a platform like Airbnb? It is worth pointing out that what matters more is the relative ranking rather than the absolute score. It is the differential rather than the absolute value that holds the key. For example, Airbnb uses relative ranking of host property to decide the ranking of search results for properties that match a user’s search criteria; similarly, Uber uses driver ratings to prioritize ride assignment.

With that established, let’s come back to the inflated ratings problem. For simplicity, let us study one side of the problem, i.e., let us assume Airbnb guests inflate their ratings of their hosts. What happens then? (Note the other side of the problem, i.e., hosts inflating their ratings of the guests, should follow a similar thought process as below.)

Let’s break down the problem into two possible scenarios:

[Scenario A] Rating inflation is a generic problem, i.e., the majority of guests inflate their ratings of hosts, or what the defenders of fairness would call “the whole system is rigged”.

There are two sub-scenarios:

(A1) If the majority of guests inflate their ratings by a similar absolute amount, e.g., +1 star higher.
=> Verdict: In this sub-scenario, rating inflation does not impact the effectiveness of the search ranking algorithm. This is because if the score of every host gets bumped up by +1 star, then their ranking does not change, i.e., a potential guest searching for a property would still see a list of hosts ranked in the same order;

(A2) If the majority of guests inflate their ratings to a certain level, e.g., if everyone gives their hosts 4 stars (regardless of whether they think they only deserve 2 stars or 3 stars), then things get a bit tricky. You could say in this case, the really stellar hosts will still get their 5-star ratings and rise to the top of the competition – they would still be prioritized by Airbnb’s search ranking algorithm. However, in this case, one could no longer differentiate between the mediocre hosts (e.g., those who deserve 3 stars) from the really bad ones (e.g., those who deserve 2 stars), as their scores are all inflated to 4 stars across the board.
=> Verdict: In this sub-scenario, rating inflation does make the ranking algorithm less effective – it is still able to break down hosts into groups based on their ratings (stellar hosts vs. other hosts), and prioritize the groups in search results. However, the grouping becomes less granular. One could argue the practical results may not be too bad – as the super-stellar hosts that get 5 stars would still come up at the top of search results for hosts. If we assume that the top search results are also the most-clicked-on results by potential guests, then it is likely that the final choice of the guests are not distorted that much. This kind of reasoning reminds me of the Pareto principle (80/20 rule) – applied in this context, 20% of your search results (the top ones) may generate 80% of your revenue. If this holds, then as long as the top search results are not distorted, then the search ranking algorithm has served its purpose.

[Scenario B] Rating inflation is an isolated problem, i.e., only a very small % of the guests inflate their ratings of the hosts. The majority of the guests rate their hosts honestly.

The answer here is quite straightforward: this would have very limited impact on the search ranking results. Perhaps a small number of hosts would get their ratings bumped up a bit, but the majority of the hosts are ranked fairly. By definition of an “isolated problem” above, this is not a problem that causes massive headaches for the average user – and hence not worth losing your sleep over.

The Verdict on Reciprocal Ratings

Having reciprocal ratings is probably a good idea – based on the very limited analysis thus far. Caveats: 1) I have (very lazily) only considered inflated ratings as a down side to reciprocal ratings, though there could be many more, and 2) the designs of the ratings could affect the incentives of players – for example, is one side asked to rate another side first? Are the ratings published in real time? Are the ratings published anonymously? Etc.,

All in all, I find reciprocal ratings design – and ratings in general – to be a fascinating real-world game-theory topic. The next time I take a Uber ride and rate a driver, I’ll certainly “think twice” before giving that 5 stars.

Come Out to Play for Fun – On “Finite and Infinite Games”

Context: This post is inspired by the book Finite and Infinite Games. As the subtitle reads, this book offers “a vision of life as play and possibility.” Perspective-changing. At time of writing, I have finished ~1/3 of the book.

Finite games play within boundaries.
Infinite games play with boundaries.

James P. Carse, “Finite and Infinite Games”

There Are Two Kinds of Games

Namely: finite games and infinite games. See quote above for what I think is the most important takeaway to remember on what sets the two apart.

But first, let’s talk about what all games have in common: whoever plays, plays freely (by free choice):

In one respect, but only one, an infinite game is identical to a finite game: if they play they play freely; if they must play, they cannot play.

James P. Carse, “Finite and Infinite Games”

Other than this similarity, finite and infinite games differ drastically. I summarize below the key takeaways for different types of readers:

A/ For efficiency-maximizing readers => here are your bullet points

P.S._version_fun: I am aware that “efficiency-maximizing” is sometimes used as an euphemism for “I don’t have time” and / or “I don’t care” and / or “I am too important for details”. Just joking. 🙂

How to read: trait_of_finite_games vs. trait_of_infinite_games (I give myself credit for clearly labeling my legend):

• Goal: to win vs. to continue playing;
• Is temporally bounded: yes (clear start and end) vs. no (unclear start and no end)
• Is spatially bounded: yes (within a marked area) vs. no
• Is numerically bounded: yes (fixed number of players, so that one could emerge as the clear winner and end the game) vs. no (players walk on and off the field as they wish)
• Rules of the game: contractual terms by which the players can agree who has won, and do not change throughout the play vs. contractual terms by which the players agree to continue playing and are dynamic

B/ For word-lovers and creatives => here is your metaphor

And a bonus picture for the metaphor:

P.S._version_creepy: 23. This number is why I chose the picture above. The 23 enigma is, depending on your perspective, creepy and/or mysterious and/or inexplicable and/or irrational and/or nonsense and/or [insert adjective(s) of your choice].

I bet after you read up on “23” and its stories, you will start to see the number everywhere. Just like how I was able to immediately spot the 23 in this picture when I was searching for theatre-related pics. Don’t say I didn’t warn you. For those who want to go down the rabbit hole of more things that will surprise your brain (disclaimer: surprise could mean “mess up seriously” for some people) – check out the book Cosmic Trigger I: Final Secret of the Illuminati. My biggest takeaway from the book is: don’t read the book if you want to remain sane. You’ve been warned. This is the one time I am trying (and I think I am actually) being nice.

The metaphor itself (finally emerges after a super-long ad above which does not generate any additional income for me): finite games = theatre, infinite games = drama:

Finite games mirror theatre in –

• Have a clear ending – finite games end when a clear winner emerges
• Have scripted roles – all players in a finite game play the role that (they think) will help them win

Infinite games mirror drama in –

• Avoid predictable outcomes – a game is an infinite game precisely because the outcome is not known
• No scripted roles – players in an infinite game constantly change to continue the game playing with no ending, and to continue the surprise

Insert-rant: And I totally love I also used bullet points in this section. It is as plain as day that I am an efficiency-maximizing writer. I have deliberately chosen the color red to emphasize how unimportant this rant is. Oh, I meant the color red *and* the italics.

Some addendums on acting: in finite games, “self-veiling” is inevitable, as in all players act according to a scripted role (that they have assigned themselves, or think they ought to be playing). I find this part from the book to be very thoughtful:

What makes this an issue is not the morality of masking ourselves. It is rather that self-veiling is a contradictory act – a free suspension of our freedom. I cannot forget that I have forgotten. I may have used the veil so successfully that I have made my performance believable to myself. I may have convinced myself I am Ophelia. But credibility will never suffice to undo the contradictoriness of self-veiling.

James P. Carse, “Finite and Infinite Games”

This reminds me of this quote of Irene Adler in BBC’s Sherlock TV series: “Do you know the big problem with a disguise, Mr. Holmes? However hard you try, it’s always a self-portrait.”

Why so serious? (And how to be playful?)

Seriousness is too boring to the playful human condition.

Michael Bassey Johnson

Here is some serious chain-of-thinking delivered in playful tones:

Seriousness is too boring yet all too common, because boredom is the default tone of life, which may not be a bad thing if you believe the existence of “boredom” is what makes the “NOT-boredom” possible, similar to how Taoism tells us that concepts exist in opposites just as brightness cannot exist without darkness, just as the “is” defines the “is not” and vice versa.

I appreciate you moving on to read this line, as the above paragraph has not scared you off. 🙂 Smiley emoji here because: why so serious?

And seriously: why are we so serious?

And the serious answer: “Seriousness always has to do with an established script, an ordering of affairs completed somewhere outside the range of our influence.“

Think about it, seriousness always implies there is a script, which implies there are scripted roles. We are more serious than usual when we interact with a uniformed policeman or doctor, compared with interacting them in their off-uniform casual clothes.

In contrast: “We are playful when we engage others at the level of choice, when there is no telling in advance where our relationship with them will come out – when, in fact, no one has an outcome to be imposed on the relationship, apart from the decision to continue it.”

As you may have guessed, being serious is the tone of finite games, while being playful is the game that the infinites play. Importantly, to be playful should not be confused with to be “trivial or frivolous, or to act as though nothing of consequence will happen”. To be playful means acknowledging that any consequence could happen, and welcoming this unbounded realm of possibilities:

To be serious is to press for a specified conclusion. To be playful is to allow for possibility whatever the cost to oneself.

James P. Carse, “Finite and Infinite Games”

Linking back to the common purpose of all finite games – play to win. Yet how can you be truly playing playfully, if you take winning seriously? Thus, being playful is the luxury reserved for the infinite game players – who play playfully with the goal to continue playing.

And I must conclude this section with a playful picture:

Pick your poison: Power or Strength?

Of course I am obliged to be playful and “not-so-serious” by this point. So the playful answer is: why not both? Get a personal trainer if you want some help with fitness.

Back to the serious topic: Finite games play for power. Infinite games play for strength.

Power is embedded in the emergence of a winner at the end of the game. Power is passive, it is “never one’s own,” as it requires the voluntary acceptance of the power by others.

Strength is paradoxical. “I am not strong because I can force others to do what I wish as a result of my play with them, but because I can allow them to do what they wish in the course of my play with them.” Strength is mocking power in the face and having no thoughts of it whatsoever.

Power concentrates only in a small hand of victors – because winning is not something you could opt into, but something that is decided for you according to the rules of the game.

Strength benefits potentially anyone – because strength is something we could all choose to have, something we decide for ourselves according to the will of our mind.

So my friends – decide how you want to play. Pick your script – or no script. Recite seriously or explore playfully. Fight for your power or defend your strength.

The night is getting dark…

…and time to come out to play.

[Big Ideas – Special] Understanding Markets via “Narrative Economics”

The secret of effective market game-playing is to recognize that the market game hinges on the Narrative, on the strength of the public statements that create Common Knowledge.

Epsilon Theory Manifesto

Nobel-winning economist Robert Shiller recently published Narrative Economics, a book on “How Stories Go Viral and Drive Major Economic Events“. Shiller gave a talk at LSE on the big ideas (video, audio, related 2017 paper).

Context: This article is part of the Big Ideas series, where I synthesize takeaways from the world’s best experts in multiple disciplines. This article is a special in the series, because unlike other articles that are synthesized from Discover magazine expert interviews, this piece is largely inspired by a public lecture.

What is a Narrative?

Let’s start with definitions. According to Shiller:

• Narrative = a telling of a story that attaches significance, meaning or emotions to it;
• Story = a chronology of events.

What is Narrative Economics?

Shiller makes a key distinction between narrative economics as defined in the dictionary vs. defined by himself. The textbook definition of narrative economics is “economics research that takes the form of telling a narrative about economic events”.

For Shiller, narrative economics should have a narrower focus, i.e., only investigating popular economics narratives that “went viral”, “changed things” and “became contagious”.

Shiller thinks economics narratives are powerful in affecting (& shaping) economic decisions. He identifies 9 perennial economics narratives:

1. Panic vs. confidence narratives – e.g., the Big Depression is a panic narrative;
   
2. Frugality vs. conspicuous consumption – e.g., Trump’s book “Think Like a Billionaire”;
   
3. Monetary standards – e.g., the Gold Standard vs. Bimetallism debate;
   
4. Technical unemployment, i.e., labor-saving machines replace many jobs;
5. Automation & AI replace most jobs;
   
6. Real estate booms & busts;
7. Stock market bubbles;
   
8. Boycotts, profiteers & evil business;
9. The wage-price spiral & evil labor unions.

Broadly speaking, the 9 narratives above focus on the macro economics momentum / “culture” (1-3), employment (4-5), investment (6-7) or actors in power (8-9).

Shiller argues that data sources are at the root of economics evolutions. He believes the recent “digitization of search” is and will bring shifts to narratives. Moreover, Shiller claims that big events occur often not because of a single narrative, but because of a “confluence of narratives“, i.e., as a result of the chemical reaction of multiple narratives.

With an interesting twist, the word “narrative” appears less frequently academic articles in economics & finance compared with other subjects – see this analysis of JSTOR articles below:

Studying Narrative Economics via the Virality Model of Epidemics

If we think of a narrative as a disease, then we could study its spread by borrowing patterns from research on epidemics. In other words, we could leverage research on how viruses “go viral”, and try to figure out how narratives get popular.

The Kermack-McKendrick (1927) mathematical theory of disease epidemics is a breakthrough in medicine, because it “gave a realistic framework for understanding the all-important dynamics of infectious diseases” in the words of Shiller.

The Kermack-McKendrick model divides the population into three groups: susceptibles, infectives, and recovered. Importantly, the model suggests the curve of the number of infectives to take a “humpback” shape, i.e., rising sharply before declining at a similarly fast speed:

We could see similar “humpback” shaped curves in data that could serve as proxy measurements for how popular an economics narrative is.

Here’s an example on how frequent the phrase “stock market crash” appears in news & newspapers:

Here’s another example on how frequent the phrase “Great Depression” appears in news & newspapers:

The Future of Narrative Economics

Shiller is hopeful that ” the advent of big data and of better algorithms of semantic search might bring more credibility to the field”.

Meanwhile, narrative economics faces challenges, including:

• On data collection, we need to move beyond “passive collection of others’ words, towards experiments that reveal meaning and psychological significance”, e.g., via focus groups or social media – though the proper design & implementation of such experiments is not easy;
  
• Dealing with the overlap & “chemical reactions” of multiple overlapping narratives is difficult;
  
• Causality is tricky. As Shiller says, one challenge is in “distinguishing between narratives that are associated with economic behavior just because they are reporting on the behavior, and narratives that create changes in economic behavior.”

Nevertheless, the challenges make the field more interesting. I am particularly interested in predicting which narratives will gain momentum. Perhaps the narrative machine will serve, to some extend, as a crystal ball that offers a narrow glimpse into the future.

The Tastiest Pizza is often the Messiest One

“Splitting a city into residential, commercial and business zones is like throwing dough, cheese and pepperoni into the different compartments of a bento box and calling it a pizza.” In this article, Uber product manager Florent Crivello write about what he calls the “efficiency-destroying magic of tidying up”.

Florent shares this picture that he calls “an urban planner’s dream pizza” – I bet it’s not what you have in mind as your perfect pizza:

The word chaos has a negative connotation in most contexts. In fact, the Oxford dictionary defines chaotic as “in a state of complete confusion and disorder“. Chaos tends to stir up emotions of being lost, not knowing what to do.

When we are at a loss of what to do, more often than not it is because we do not truly understand. The flip side of that is, in the words of Austrian philosopher Ludwig Wittgenstein: “To understand is to know what to do.”

This was echoed in Florent’s article:

If outsiders complain, but people living inside the system seem happy with it, it probably means that the chaos is serving them right, and that it’s just foreign eyes who are unable to perceive its underlying order.

The Efficiency-Destroying Magic of Tidying Up, by Florent Crivello

It is tempting to equate a lack of order (or at least lack of what we perceive to be order) with a lack of value or quality, which justifies a need for intervention. This is not ill-advised in some cases, with the emergency of rule of law as a case in point. A complete lack of any legal order in a community threatens the safety of its members.

In contrast, some corrections of chaos could produce outcomes that go against our wishes instead of in their favor. Apart from the pizza example above (I assume 99.9999% of the population prefers a ‘messy’ pizza where the ingredients are mixed instead of separated), another example is the free market vs. central planning: a “chaotic” free market is magically more efficient than central planning, in terms of the total sum of outputs produced. Of course, free market is not without its limitations – which is a separate topic.

The point here is: the presence of chaos does not automatically equate a need for correction. If chaos should warrant anything, it should warrant a drive to understand the underlying order, the “invisible hand”, the hidden structure that are yet elusive to our foreign eyes.

Resisting the urge to “correct” chaos may not be that easy. As Brian Arthur, pioneer of complexity theory & complexity science, mentioned in an interview, subjects such as economics seek “equilibrium, a place of statis (stability) and simplicity”. In a sense, equilibrium is (perceived to be) at the opposite side of chaos.

Brian Arthur points out what seems to be in equilibrium could be different from what is actually in equilibrium – this depends on how macroscopic vs. microscopic our view is. For example, the sun seems to be in equilibrium when we look up at it in the sky – it is a beautiful sphere held in place by gravitational forces. Yet, the sun close up is full of plasma bursts – what you could call “chaotic” reactions.

Instead of viewing chaos & equilibrium as opposing concepts, we could view them as relative concepts instead. Instead of being either chaotic or in equilibrium, an object could be both – depending on the context & our level of understanding.

So give chaos some credit – just as the tastiest pizza is not the orderliest one, the best scenario may not necessarily be the most organized one. The next time you find yourself anxious about a chaotic environment? Think about how delicious that bite of pizza littered with messy toppings is – then sit back & relax.

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Witch Hunt 2019 Version: On What Grounds Do You Stand?

“What if everything we are taught in economics 101 is not only wrong, but may even be setting us up for populism, dictatorship or revolution?”

Find this question provoking?

Check out the eye-opening answer of Professor Timur Kuran in an interview with Eric Weinstein on “The Portal” podcast. I don’t think the show notes are exaggerating too much by saying “(t)his could well be the most important economist you’ve never heard of.” This episode is especially relevant given the current political discourse & climate.

Note: For podcast lovers, I highly recommend The Portal – I have found each and every episode thus far to be of consistently high quality. The podcast is thoughtfully named “The Portal”, to refer to different portals (ways) of looking at the world.

The 1st guest on the show was Peter Thiel, who spoke highly of the Mimetic Theory proposed by French philosopher R. Girard. I have written about it in Life is the Ultimate Imitation Game.

Fake Your Ground via “Preference Falsification”

Question: You go to your friend Emma’s birthday party. She greets you at the door with a hug, takes a step back and spins in her green dress with gigantic, yellow polka dots. Emma smiles up at you and asks: “My brother bought this new dress for my birthday! What do you think?” Honestly, you find the dress to be shockingly hideous (or hideously shocking). How do you react?

Multiple Choice: Your response is

(A) Honesty Brutality is the best policy. Say it to Emma’s face that you find this dress to be an utter disgrace, and she should dump it in the bin right now and change before more guests arrive at the party – so as not to embarrass herself.

(B) Be the best lying friend you think you should be. Say it with a forced big smile that you find the dress to be gorgeous.

(C) Bring out your dark human side. You remember Emma told you last Christmas that pair of purple socks with snowman icons were adorable. You wore that to your first date with your crush, and she found it absolutely incredible laughable. It is time for revenge. You tell Emma with the most sincere smile and starry eyes you could put on, and encourage her to wear the dress all the time.

I would wager most people would go for option (B), i.e., what you say is different from what you really prefer. This is what Timur Kuran refers to as preference falsification, i.e., “misrepresenting one’s wants under perceived social pressures“.

Fake Ground Protects You in the Modern “Witch Hunt”

Question: You live in a neighborhood where durian is treated as a sacred food that everyone should love. Durian is everywhere, e.g., durian flavor is the only flavor of ice-cream allowed. However, you secretly find its smell vomiting. One day, a tourist new to town stops you on the street and asks you about what this “durian” thing is, as she has never heard about it before.

Multiple Choice: Your response is

(A) Tell her (in secret) that while everyone else says durian is awesome, you find it disgusting, and she should run away from it.

(B) Exclaim with enthusiasm that durian is the best food out there – just like what all of your community members would say – and recommend her to check out the durian ice-cream shop around the corner.

Before you decide, you weigh your options carefully. If you go with option (A), you are aware of the risks that words get out – if any of your friends know that you whispered slander against durian, they would immediately cut all ties with you. They would unlike all your Instagram pictures, and unfollow all your social media feeds. You risk your date dumping you. You risk your parents signing you up for “durian acceptance” workshops. You risk opening up your mailbox and discovering 10 books on durians, sent from “Durian Anonymous” group.

As Professor Kuran illustrated, a common type of social pressure that leads to “preference falsification” is the presumption of one & only one orthodox preference – and the rejection of the rest as heresy.

Durian is tasty and everyone loves durian. Case closed. You are simply not allowed to have a different preference. By claiming yourself openly as a “hater of durian”, you immediately declare yourself as the “enemy of the people”.

The minute you voice a different preference, you subject yourself to a modern version of the Witch Hunt – and be prepared for “reputational violence” as punishment, if not something more severe. Just like those labelled witches in the Middle Ages, expect yourself to be the outcast in your circle and consider a cold shoulder as the mildest form of sanction you would get.

Preference falsification – applauding the orthodox view in public while rejecting it in private – is a tactic to stay safe in the modern version of witch hunt. A milder tactic is to remain silent – and saves you the pain of the schizophrenic pressure to balance between a fake voice vs. your true self.

Note: There are two concepts related to preference falsification – chilling effect (i.e., self-censoring for fear of backlash) and strategic silence (i.e., purposefully silencing others or information, usually with the intent to control the narrative). I’ve written about these concepts in What Silence Quietly Says: On The Chilling Effect & Strategic Silence. In this case, the chilling effect is in sharp contrast to preference falsification – the former keeps silent, the latter shouts out loud though in a “fake” voice.

And speaking of being open-minded to different opinions, I took a stab at what the word “open-mind” means in this article (that features delicious pictures of ice-cream & durian): “Are you open to durian ice-cream” & an Open-Minded look at Open-Mindedness.

The Witch Hunt in the Middle Ages scarred communities – people lived in fear and dialogues were stifled. Likewise, the modern version of Witch Hunt has its negative consequences. When a large percentage of society practices preference falsification, our political system could produce an outcome that “very few people actually want”:

You open up the possibility that because people are not openly expressing what’s on their mind, the system of knowledge production & knowledge development…(the system) of solving problems…that gets corrupted.

Eric Weinstein

When preference falsification is prevalent, you end up with the weird scenario where everyone in the room wears a pink shirt, although the majority actually prefers the blue one. The irony here is everyone thinks they are wearing pink because everyone around them prefers pink. Hence you are stuck in this weird lose-lose “equilibrium” where as if the collective solved for the wrong problem (or opted for the wrong solution) of how to “minimize utility”. We end up with a schizophrenic world where everyone struggles with the conflicts between their private preferences vs. public preferences.

Middle Ground = Underground?

The two extremes, both are playing this game of “you are with us or against us”, reinforcing each other. They are completely agreed on that.
* * *
There is no middle position. And having a middle position, having the media pay attention to people in the middle, would hurt them (the extremes) both.

Timur Kuran

In this “Economy of Deception” littered by falsified preferences, the middle ground – a nuanced and open-minded stance – has to seek shelter underground. As Professor Kuran points out above, the extreme ends on either side of the spectrum do not want to entertain the possibility of a 3rd option, i.e., seeking compromise and resolution.

Eric Weinstein calls this a “black market (in the marketplace) of ideas“, i.e., underground concepts, ideas, fears that “can’t be discussed in a curated market managed by institutions“. Going back to the durian-lover-community example, think of this as forming a secret club that meets discreetly underground every month to discuss your shared detest for durian.

Occasionally, you have seen brave friends who declare their distaste for durian in the open and advocate for plurality-of-fruit-choices. You admire their bravery, and you relate deeply to this quote:

“We are dependent on people of integrity who risked everything, when it was least popular to do it. We could hold these people in reserve, so that when the madness becomes too great, we could turn to them.”

Eric Weinstein

Where We Go From Here

I leave you with this excerpt from the preface in Professor Kuran’s book Private Truths, Public Lies: The Social Consequences of Preference:

“(D)espotic government is not the only source of fear the only obstacle to overt and candid discourse. A more basic factor is public opinion. For one thing, despotism is unsustainable without at least the tacit consent of public opinion. For another, public opinion is itself a determinant of people’s willingness to reveal their innermost selves.“

“To be sure, time and again the courts have ruled that unpopular views, no matter how outrageous, are protected by the law. Yet a person may be free under the law to enunciate despised views without enjoying the same esteem, in the eyes of others, as people with widely accepted views. However strictly enforced, freedom of speech does not insulate people’s reputations from their expressed opinions.“

“My preoccupation with the darker side of human nature was not without reward. I became more sensitized to the independent streak in the human character, to the spirit that gives on the courage to say ‘no’ when the pressures of the moment demand a ‘yes.’ With a heightened appreciation for the complexity of the human personality, for the tensions we all endure in trying to mediate between our needs for social approval and those for self-assertion, I gained more respect for the nonconformist, the pioneer, the innovator, the dissident, even the misfit. It is my hope that the reader will come to share in this appreciation.“

It is also my hope that the reader – you – will come to share in this appreciation. The consistency in aligning one’s public preferences with one’s private ones. The audacity in listening to one’s innermost self and reach peace with the outer world.

May we all have a mindful journey.

What are some good materials you’ve come across on public discourse? I’d love to hear from you – please reach me at fullybookedclub.blog@gmail.com or on LinkedIn. 

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Talk Takeaway: “Fintech & Blockchain in China” by Prof. He Zhiguo (University of Chicago)

I attended a talk by Prof. He Zhiguo from the Booth Business School at the University of Chicago, titled “Fintech & Blockchain in China”. The talk was recorded and I hope it will be shared online for public view later. In the meantime, here are the most interesting parts I took away:

Pig Faces & Fraud Detection in Insurance

…have nothing in common? You read the section title and stare at me with a puzzled look.

You are not alone – that’s what I thought too. But contrary to our belief, the technology of identifying the face of a pig is very valuable for insurance companies to detect fraud. (Yes, “facial recognition” does not necessarily has to mean human facial recognition.)

Here’s the trick: imagine you are an insurance company, and a farm owner comes to you to buy insurance for his pigs – he wants to secure against say diseases or other factors that may cause his pigs to fall ill or die.

As a scheming insurer, you worry about a potential fraud case – say you enter an insurance contract with the farmer for 100 pigs. Ten months later, the farmer comes back to you and argues that one of the pigs has caught an illness covered by your insurance contract – let’s call that pig Piglet X.

Now, how can you be sure that the Piglet X is one of the original 100 pigs covered by your insurance contract? How can you be sure the pig you see today is the same pig you saw ten months ago? The answer is: you cannot – unless you have technology that could reliably recognize the face of a pig!

At current technology levels, an accuracy rate of ~80% is already top of the league – with much room for improvement. When the number of pigs is large enough, a 20% error rate could mean a considerable amount for an insurer!

Understanding Bitcoin Mining: Think About Kings & Followers (a mathematical game-of-thrones)

In explaining the rules-of-the-game for Bitcoin mining, Prof. He used the analogy of a “game-of-thrones”.

In Bitcoin “mining competition”, each round has multiple miners compete for their own block of transactions to be chosen as *the* canonical block that everyone else follows. Think of each round of Bitcoin mining competition as multiple miners competing to be elected the King-of-the-Round that gets to write history – and this history would be recognized as The Universal History that everyone treats as sacred. All other versions of “history” from other miners – those who lose the fight for the throne – are treated as heresy not to be trusted.

Importantly, to be elected the King and to keep the “crown”, you must write history truthfully. If you blatantly lie (e.g., make up a transaction), you risk losing followers, i.e., your people ‘rebel’ and go after a new king. In other words, there are cryptographic / mathematical checks & balances to make sure the “King” does not get to dictate history entirely to his will.

One common critique of Bitcoin mining is that it is an Arms Race – plus a relatively inefficient arms race. With more inputs in the race (i.e., more miners and / or more computing power & energy that enter the race), the output does not grow proportionately.

Money, In Simplest Terms, Is A State-of-the-World With 3 Factors: You, Me, How Much

The concept of money, put simply, is an accounting system – it simply answers this question: who paid whom by how much?

Say I paid you $100. The ‘money’ in this case is a “state-of-the-world” with 3 variables – you, me, how much ($100).

When we say “money”, we mostly care about one of two things:

1. Who are the transacting parties – sending vs. receiving?
2. What is the amount transacted?

The forms of money could vary – from paper money to numbers on a ledger to digital entries with no physical form…but all forms of money have one thing in common: they (aim to) represent a state-of-the-world with 3 key factors: You (Who), Me (Who Else), How Much?

Interested in similar write-ups of fun ideas across all walks of life? Subscribe to my newsletter (free!) and check out past issues.

Have comments or want to discuss more? I’d love to hear from you! Write to me at fullybookedclub.blog@gmail.com or reach me on LinkedIn. (P.S. At time of writing, I am working at a fintech / blockchain company.)

Interested in other fun events in Hong Kong? Check out this newsletter where I list out events I’m going to this month.

* * *

Special thanks to the University of Chicago for hosting this talk, for free, at their gorgeous Hong Kong campus. The event was well-organized – shuttle buses to and from metro stations, refreshments & food, name badges for registered attendees were thoughtfully provided for. Kudos to the team!

Life Is The Ultimate Imitation Game (René Girard reading notes 1)

Man differs from the other animals in his greater aptitude for imitation.

Aristotle, Poetics, 4

This article is inspired by “Things Hidden Since the Foundation of the World” by René Girard – Book I: Fundamental Anthropology, Chapter 1: The Victimage Mechanism as the Basis of Religion. All Girard quotes below are from this chapter unless otherwise specified.

Imitation is A (The) Portal Onto the Past, Present & Future

Mind-blowing.

If I could only describe René Girard’s model of the world in one word, “mind-blowing” is my pick, and even that may be an understatement.

I first heard about Girard in an interview with Peter Thiel, where he spoke highly of Girard’s Mimetic Theory on the role of imitation:

It’s a portal onto the past, onto human origins, our history.

It’s a portal onto the present and the interpersonal dynamics of psychology.

It’s a portal onto the future in terms of whether or not we’re going to let these mimetic desires run amok and lead us to apocalyptic violence.

Peter Thiel commenting on Girard’s Mimetic Theory, The Portal podcast

Understanding imitation is a portal – perhaps THE portal – to understanding the one big question in the “science of man”:

[T]he precise domain in which the question of man will be asked…is that of the origin and genesis of signifying systems…it is the problem of what is called the process of hominization.

René Girard

Let us dissect the question of hominization from multiple angles below:

The Evolutionary Biologist: Survival is the “Who-Creates-More-Imitations” Game

Let us go back in time and look at the rules of the game that govern the evolution of species.

In a highly entertaining book on evolutionary biology, “The Ape that Understood the Universe: How the Mind and Culture Evolve” (with its entertaining feature evident from the entertaining title), Prof. Steve gives a concise summary of key ideas behind gene selection:

Genes are selected to the extent that they propagate themselves in the gene pool. Often, they do this by helping their owners to survive and reproduce, or by helping their owners’ kin to survive and reproduce.

…adaptations are designed to pass on the genes giving rise to them. And human beings, along with all other organisms, are gene machines.

Steve Stewart Williams, “The Ape that Understood the Universe: How the Mind and Culture Evolve“

The highest & sole purpose of existence of a gene is to propagate copies of itself – to create imitations. Interestingly, in the case of humans (& many other species that mate to reproduce), the reproductive process creates genes (children) that are close imitations of either parent, instead of exact replicas. It is an imitation, not a 100% copy, in the truest sense of the word.

More interestingly, at the start of time, cells reproduced without mating and simply replicated an exact copy of itself – 100% original, 0% room for experimentation. However, this copy-and-paste approach – while efficient (saves time of finding a mate) – is detrimental to the propagation of the original gene in the long run. In other words, 100% cloning limits the ability to create more imitations (replicas) as time goes on:

…while clonal reproduction helped bacteria pass on beneficial mutations, it also left some entire colonies at risk when dangers such as bacteria-infecting viruses arose, because the cloned bacteria possessed too many of the same inadequacies in their defense mechanisms. Sexual reproduction changed that in a big way.

…Organisms that reproduced sexually had more genetic losers that their clonal forebears, but they also had a far greater possibility of evolving genetic winners.

Jamie Metzl, “Hacking Darwin: Genetic Engineering and the Future of Humanity“

Being too predictable in the Survival Game (reproducing via clones that are 100% replicas) makes a species hack-able – what kills one in your species could, in theory, wipe out the entire species. Predictability kills at times. The hack to that is to create imitations – close enough but not entirely the same. The cost of hack is the reproductive process is more time-consuming. Nature is fair with trade-offs.

The Philosopher: Identity is the “Who-Should-I-Imitate” Game

“What is my identity” is a trendy way of phrasing the questions:

• Who am I?
• Who do I want to be?
• Who do I see myself becoming?

Identity is not just a static question of who I am at present – identity creates the drive to change, to move dynamically towards an ideal persona we see ourselves becoming. The process of finding our “identity” is the process of finding what type of person we want to imitate. The act of staying true to our identity is the act of not deviation from the imitation game we are playing to mimic the perfect, model persona in our minds.

When we say we “identify with” someone or something, we mean we see the similarities – we see the other side as imitations of ourselves, and we want to imitate them in return.

Identity politics is the product of us carving out individuals or groups that we see more closely resembles ourselves. And on that note, let’s turn to the politician’s point of view.

The Politician: Campaigning is the “Freedom-To-Imitate” Game

When a gay couple fight for their right to marriage, they are effectively saying is: I don’t want to be forced to imitate the conventional marriage structure of others.

When some people oppose gay marriage, they are effectively saying is: You should imitate us – our way of living, our understanding of marriage.

When politicians promise on a campaign to protect the rights of homosexuals, what they are effectively saying is: I will let you freely choose who or what behavior you want to imitate.

Almost all political campaign messages boil down to this promise: I will give you what you want. Let’s translate that into: I will let you choose who or what you want to imitate, or you let others imitate. Or perhaps we can call this type of freedom of choice: “freedom to imitate”.

The Economist: Decision-Making is the “Mind Imitation” Game

Speaking of choice, the economists will definitely not miss out on the chance to have a say on decision-making.

In the Prisoner’s Dilemma, the two equilibrium outcomes have one thing in common: both prisoners imitate each other, i.e., they arrive at the same decision to either remain silent or frame the other person. This symmetry is a delicate balance.

In Game Theory and decision-making in daily life, we frequently decide based on what we think other people are thinking. We can think of it as a “mind imitation” game – trying to mimic the thought process of the other party. Thinking out of the box is when your mind is hard for others to imitate – hence you surprise them. The “box” is the set containing all the copies of your mind the other imitators have drawn up.

This quote aptly describes the “mind imitation” game:

I am not what I think I am, and I am not what you think I am.

I am what I think you think I am.

Charles Horton Cooley

The Engineer: AI is the “Create-The-Best-Imitation” Game

Since we started with a look at the evolutionary history of species, let us conclude with a look at an exciting topic that could shape the future of mankind: Artificial Intelligence (AI).

The very definition of the phrase AI already reveals that imitation sits at its core:

Definition of artificial intelligence

1. a branch of computer science dealing with the simulation of intelligent behavior in computers

2. the capability of a machine to imitate intelligent human behavior

Merriam-Webster Dictionary

When literature & media discuss (or predict) potential dangers of AI, they most often point to the possibility of AI breaking free of the imitation game it is wired to play – instead of imitating human beings, AI achieves a level of transcendental intelligence that we human beings are incapable of imitating (or controlling) in return.

This paragraph below captures the fear of this type of danger:

Let an ultra-intelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever…and the intelligence of man would be left far behind.

Thus the first ultra-intelligent machine is the last invention that man need ever make, provided that the machine is docile enough to tell us how to keep it under control.”

I. J. Good, “Speculations Concerning the First Ultra-intelligent Machine“

Life is The Ultimate Imitation Game

We are all “game theorists” – playing the Ultimate Imitation Game of Life. To borrow (& tweak) the words of Shakespeare: to imitate or not to imitate, that is the question. Every decision we make in everything we do is boiled down to whether we imitate, who we imitate, and what we want others to imitate about us.

If life were a grand game of chess, then we are all studying & imitating the moves of other players, while being imitated in return. Each “genius” move is born to be unique, unparalleled & unprecedented, while at the same time born out of imitation.

The winner emerges out of imitating the winning; the loser falls out of being out-imitated. Contrary to conventional belief, victory belongs to the best imitator, not the best creator – as there is no such thing as creation without imitation.

So imitate wisely and take on the game of life victoriously. But when you win, know that the victory is yours but not yours alone – it belongs to the collection of countless imitations that have happened before your time, happening at your time, and will continue to happen in the time to come.