Precise Mathematical Conditions for Perfectly Competitive Markets Inhabited by Perfectly Rational Agents

Some economist blogger called Dani Rodrick neatly translates my suspicions about economics and economists into economist-talk. He also manages to explain why some economic theory seems reasonable and forthright while other of it seems impossibly ridiculous, or at least plausible and internally coherent to some alternate universe into which graduate students of schools of economics are whisked during their orientation weeks, and where they continue to live their intellectual lives while their physical shades wander still in our world, saying these things which consequently seem so strange to us.

“The gut instinct of the members of the first group is to apply a simple supply-demand framework to the question at hand. In this world, every tax has an economic deadweight loss, every restriction on individual behavior reduces the size of the economic pie, distribution and efficiency can be neatly separated, market failures are presumed non-existent unless proved otherwise (and to be addressed only by the appropriate Pigovian tax or subsidy), people are rational and forward-looking to the first order of approximation, demand curves always slope down (and supply curves up), and general-equilibrium interactions do not overturn partial-equilibrium logic….Those in the second group are inclined to see all kinds of complications, which make the textbook answers inappropriate. In their world, the economy is full of market imperfections (going well beyond environmental spillovers), distribution and efficiency cannot be neatly separated, people do not always behave rationally and they over-discount the future, some otherwise undesirable policy interventions can generate positive outcomes, and general-equilibrium complications render partial-equilibrium reasoning suspect.”

There’s a problem here, for me. The buddhists council against believing something just because it fits with your existing points of view (or pretty much any other reason actually), and so I’d better watch it with this stuff. The internet will always supply somebody who’s got your back on what you already believe.That experience of having your ‘common sense’ suspicions elegantly reified is a guaranteed zinger, and I think it’s where long-lasting ideologies are born. I don’t need any more ideologies. I’m finding the ones I already carry heavy enough, thank you.

So I’ll thank this Rodrick for being less convincing in future, and keep my eye open for some Uncle Milty apologists who can blithely rebut him, preferably quickly, as I am busy.

Cosma Shalizi, as quoted at Crooked Timber, is clearly not the man for that job:

“Now, I am the last person to deny that the invisible hand is a very powerful and valuable concept, and I’m certainly not going to deny the fundamental theorems of welfare economics; Debreu’s Theory of Value is one of my favorite books. Under certain precisely specified mathematical conditions, perfectly competitive markets inhabited by perfectly rational agents will allocate scarce resources in ways which cannot be altered without making some people worse off. Whether those conditions are satisfied by any economic system in the real world is an empirical question, and the answer is of course No. Given that those theorems do not apply, the efficiency of markets is another empirical question, or rather a whole series of questions, with answers depending on the market and the tasks they are being asked to perform. There are many situations where markets are a very valuable and powerful social technology, a useful way of coordinating actions, allocating resources, and eliciting valuable efforts. … There are other situations where they produce awful, even perverse results, and still others where they’d never begin to get off the ground, like funding basic research or national defense. … “

The Finnicky Wisdom of Crowds

I was tickled to see Crooked Timber, one of my most-frequented blogs, report on Cosma Shalizi reporting on Scott Page‘s analytic work on diversity. Back home in Ann Arbor, the complexity reading group is meeting on patios to discuss Page’s new book “The Difference”, and I gather Scott (if I may call him Scott) has been showing up to some of the events. Or perhaps he was there for the sangria and decided to stick around. Scott (and I suspect I may call him Scott, I’ve only briefly met him but he seems like a super nice guy) is one of the most engaging presenters I’ve seen and a crackerjack thinker and I’d love to be in on that discussion, whether with or without him. And hey, I like sangria. I’ve not read the book but Cosma Shalizi does his usual great job of boiling down to the sauce of essence, and the basic pitch seems to be: multiple divergent weak hueristics applied serially can solve problems with multiple interacting factors better than a single strong hueristic. Thus groups composed of diverse people can be more successful than homogenous ones. With the caveat that there must be some degree of agreement on what the goals and success criteria are. Cool.

As a perhaps-interesting test case of the idea, Wired has a big fat report up on the results of their “Assignement Zero” project. The idea was to let anybody contribute to an effort to generate a large body of high-quality reporting on a subject, that subject being the ability of distributed crowdsourcing to produce high-quality work. Apparently it played out a little rocky. Apparently there was a great many lessons learned, a certain fraction (estimated at between 1 and 3 quarters of the total) of decent material produced, and apparently a lot of the problems related to people not knowing or agreeing on… what the goals and success criteria for the project were. Interesting.

The Bronze Age Reflects on the Stone Age of Scientific Information Retrieval

Today I came across a reference to an article I wanted to read. For some reason, neither U Mich nor U Victoria’s libraries had electronic subscriptions to the journal it was in. So I actually went to the library, wandered around in the stacks, got lost, asked for directions, found the journal, took it to a copier, realized I didn’t have money on my card, walked to a bank machine, went into a store for smaller bills, went back to the university, discovered that the computer printing cards are different than the library copying cards, went to the desk, waited in line, bought a card, went back up to the photocopier, pressed the bound journal against the flashing glass, spun the alternately upside-down copied pages into the right direction, found a stapler and stapled it together. While I was doing all this I kept thinking “this is how I got every article I ever read in undergrad. crazy.”

I’m routinely irritated by the process of retrieving journal articles electronically. Despite the fact that the one thing researchers want you to do most is read their articles (as a very serious multiple-publication scientist I can attest to that), and despite the fact that journal articles are all tagged with a wealth of formalized metadata which should make it trivially easy to catalogue and search them (title author year keywords abstract journal volume page range) compared to most of the messy and ill-defined stuff floating around on the global networks, getting one’s hands on eprints is a huge pain. Search google scholar for keywords. Or, if you so dare, figure out your university’s tragically complicated keyword search system (choose from dropdown list of database topics, click boxes to indicate which of the meaninglessly named topic indexes you wish to search in. navigate powerfully unclever series of output screens. pray you haven’t missed any relevant journals.) Then, with full and complete citation in hand, return to school’s journal search screen. Enter exact journal name. Receive a dozen possible responses, with yours listed strangely towards the bottom. Click on it. Another window pops open allowing you to choose between accessing it electronically from your campus or some other campus. Click. Another window. Which archive would you like to access your article from? Click. Another window. Optionally you can front load the archive access with the year volume and number of the journal the article is in. But if you do, you will get the same results as if you didn’t. Click. This window shows the journal. You can try their puzzling search interface, but it’s usually just best to browse. Shuffle through all the open windows to find the one with original citation. Read the year. Click back to the ‘browse’ window. Enter the year. Switch back to the citation to find the volume. Back to the browse screen. Oh look! This journal sorts by page, not by volume. Back to the citation. Back to browse. Click on the page range. Goody, another window opens. Scan through the articles, hoping you did indeed choose the proper journal name when confronted with 12 of them. Yes, there is the article. Click on it. Another window opens asking if you want the article in text format, .tiff or .pdf. Gosh I just wonder. Click. Up pops a new window. But hey, there’s you article. Click save. Note that the default filename is an apparently random string of alphanumeric characters. Close the save window. Try to copy the article name. Discover the article is saved as an image and you don’ t have that option. Click save again. Type out the article and author names by moving the save window back and forth across the screen so that you can see the text you’re transcribing. Click OK. OK.

But I have to admit, as ridiculous a way of searching and saving explicitly catalogued and distributed files as that is, it still beats the sneaker net. And I was lucky I could find someone to give me change so I didn’t have to buy $20 worth of copy card. And on my way back up to the copiers I passed the card catalogue rack they keep on exhibit.

An Agent-Based Modeling Textbook, Free in Alpha

José M. Vidal is writing a textbook called “Fundamentals of MultiAgent Systems”, and he’s posted an alpha version on his site, with a call for comments. It’s here:

Fundamentals of Multiagent Systems Textbook

The link to the .pdf seems a bit flakey, but if you try a couple of times it should come through.

Apparently the book is based on his experiences running a grad course in agent based systems. Cool.

He also runs this user-blog on multi-agent systems:

which works on the mechanism that if you assign a weblink in with a certain tag (for:jmvidal), that link and your accompanying text will show up on the blog. Neat.

Field Notes from Complexity Studies

It’s a shimmering new term, and here I am, still living the dream. Complexity and ecology studies at the University of Michigan, the possibility that dogged my dreams as I twisted in my smelly sleeping bag all those years ago, Mitchell Waldrop’s Complexity creasing beneath my thermarest.

Some brief observations.

At the first meeting for the Agent-Based Modeling course, Rick surveyed the represented disciplines, as he seems to like to do. The score: of the 15 students who showed up, 10 of us were from SNRE. Professor Riolo pointed out that even if all the students who weren’t there yet aren’t snerds, that’s a big jump from the usual 2-3. What does this mean? Am I part of a movement? Oh good. Rick charmingly described us as invasive species. Fine then.

At the first meeting of the Intro to Complexity course, the count was 11 departments among 15 students. That’s more like it. There was a pile of copies of the above mentioned Waldrop’s Complexity on the table. I picked up a fresh one to replace my (Fish’s) old copy, which I left on a coffee table in Yellowknife after that planting season, all those years ago.

Maybe now I’ll get to find out what happens in the end.

It Could or Could Not Be Worse

For the first time in half a decade, it is exam season. Which really is not a good thing.

Thanks then to this anonymous planter-blogger for an extended reminder that it could be much worse:

Girl Gone Wild: Treeplanting Edition.

I asked Tony to be paired with Joel one day last week to help me with my speed. It was a cut throat day: Joel trying to lose me, fuming that I had replaced Laura. Criticizing all my moves. Blaming me for creating holes, and not flagging properly. It got me going. I’ve been out here as long as he has, and I lost it. The feminist spark in me reacts violently to his alpha-male-football-player gasolene. I pounded in low quality shit all over his piece, ghostlines and all.

Sara quit last week after nights and nights of gut wrenching coughs and tears. She developed severe tendontis in her shoulder. There is a big dry space in tent city where her “home” used to be and the truck has been quiet without her loud voice garbling unnecessary cheer every morning. That leaves Mary, Laura and I as the only females on the crew. More block discussion about the merits versus benefits of Sara’s existance in our world. “But she kept me up at night.” Bend. “Yeh, but I felt good knowing someone had it worse than me.” Up. “She brought moral down…..” Bend.

Okay, maybe it doesn’t sound so bad. Naw, it does. Or maybe not. What the hell.

Not entirely coincidentally, there are a couple of new LSFS photos up.

Also… it seems that Ed from the Barenaked Ladies has a tv show (wtf?) in which he travels around and does jobs, and one of them was planting. So if ever you wanted to watch a member of the Barenaked Ladies get busted for Js, now you can. Was I supposed to be studying? Some things never change.

← newer posts