Irrational Exuberance

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I thought of a great way of teaching game-theoretic equilibria today. The scenario is emo internet people.

Let's say you have a friend who leaves an entry that's like, "A Final Note: It's the end of the road for me. Everything has sucked so much I can't carry on." with tags of sigh;bitching;handgun_in_mouth

Now, you as an individual have to assess whether or not to take some kind of action. You can either intervene, or do nothing. Let's set up a game matrix



I'm not editing my box to correct the misspelled word that I Ctrl+C'd to double up on. Also, maybe instead of embarrassment, they get mad at you and you lose that friend, but we'll disregard that because really, "Fuck you. Sayonara, if you're going to be mad at me for that." Otherwise, the outcome is that you're losing the friend anyway, so why save them? 

The top of each box is their outcome. The bottom of each box is your outcome. Now, you do not know whether or not the person is serious, so you have to assign probabilities to whether or not they're actually suicidal. Should you call the cops?

Well, you want to look at what you should do in the event of each move they can make. If they are suicidal, your choice is between doing nothing and feeling guilty forever, or stopping them. Clearly, I believe, you'd want to stop them.

If they are not suicidal, your choice is between being embarrassed and nothing. Now, you probably would nothing in that case, but if you're sick of their whining and think it would be good to show them why their behavior is obnoxious anyway, then you'd want to call the cops, in which case you'd call the cops in either case and that's your dominant strategy and clearly calling the cops is optimal.

But say it's not. Say if they weren't suicidal, you'd rather do nothing. Do you call the cops or not.

Well, let's say that you think them being suicidal is a tossup. If you do nothing, there's a 50% chance they die, but a 50% you forego the embarrassment. If you call the cops, there's a 50% you're both embarrassed, but a 50% chance you've saved their life. Either way, you want to call the cops if you weigh their life as much as the embarrassment. In this case, you'd call the cops.

Now assume you think there's a 90% chance they're not suicidal, and a 10% chance they are. Well, now you want to call the cops if saving their life is at least 9 times as important as avoiding embarrassment (since the probability they're not suicidal is 9 times as high as the probability they are). For most people, this would still be true.

So as long as the relative weight you put on stopping someone from killing themselves is greater than the probability they're not suicidal divided by the probability they are suicidal, you should call the cops.

Moral: If you don't want your friends to call the cops on you, don't make LJ posts that cause people to assign non-zero probabilities to the chance you're going to kill yourself! You're basically making your friends choose between embarrassing you or living with the fact they could have done something before you blow your head off. If you want to kill yourself, just do it and leave your friends alone about it. It'll make it easier on them in the long run.

The above is a one-shot game. If it's repeated, each time through you reduce the expected probability the person is going to kill themselves (the Boy Who Cried Wolf effect) and you reduce the cost to you of them killing themselves or of you embarassing them (the Annoying the Shit Out of You With Drama Erodes Your Friendship effect). Eventually, over enough iterations, the dominant strategy will become to do nothing because you assume the odds are negligible...and you stop caring very much about it anyway.

Rules: Post a summary (without screwing someone's f-lock) of the last 50 entries on your f-list, as well as the number of journals and communities you are actively watching. Who posts the most? What type of post comes up most? Tag anyone you want to do the same.
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I'm looking forward to this woman languishing in prison:

Court orders chemotherapy treatment with 90% success rate (5% chance of survival without it) on 13-year old boy who isn't old enough to give consent and can't read anyway.
AND
Mom takes the kid and runs for California or Mexico for 'alternative medicine'.

I suppose it would be cruel and unusual to keep her in a cell with a looping video of her son dying from the cancer she refuses to have treated. Yeah, I know people refuse blood transfusions and chemotherapy because they think it'll damn them. Granted, they had the first course of treatment, so her religious argument seems flimsy. If she wants to fight to the death to deny her son life-saving medical treatment, I hope that can be arranged.

No. Don't post angry. Don't post angry. She thinks she's doing the right thing.

This isn't isolated. An 8-year old boy in Ohio died of cancer last year after begging his parents to take him to the hospital. I think charges are pending. A Wisconsin mom has been charged with second-degree homocide after her 11-year old daughter died of diabetes after the mom only tried prayer to help her. In a scientific poll (stratified random sampling), 56% of people believe parents should be able to refuse vaccinations for their kids (although 78% think it's a serious concern that not all children are vaccinated). Unscientific polling (normal web-based stuff) has about a 50-50 split on whether or not the judge should have forced chemo, so I know I'm not in the overwhelming majority on this.

So I went to KFC for the first time in...almost ten years...to redeem a coupon for a free grilled chicken meal.

Well, turns out with the run on their grilled chicken, they quit honoring them, and instead have started giving people rain checks to come back later to collect their meals. Fine. So I filled out the form and handed in the coupon and apparently they will mail me the raincheck in a few weeks that specifies some time frame I can come in to collect my meal.

Here's where it gets funny.

So my friends that I'm there with and I try to decide if we want to eat there, and we decide not to because everything else on the menu outside of a couple of sides consists of unhealthy shit. So we're turning to walk out, and I said, "Wait, wait...I've just gotta be sure."

So I step up to the cashier, and she asks what I want. I ask for one grilled chicken meal with two sides, which is exactly what I had the coupon for. They immediately ring it up and tell me that my total is like $5.44 or something. My response:

"I'm sure this isn't your fault, so I'm not directing this at you, but please tell your manager *holds up middle finger* from me when you get a chance." Then I walked out to laughter from my friends and we went across the street to Szechuan Garden, where our waiter had arms so huge that we were betting if we pissed him off he could put one of us in a headlock and flex, and we'd be decapitated. But that's besides the point.

Fuck you, KFC! Somehow I doubt I'll be getting my coupon, but I don't care.

Still writing up results from those experiments I posted about earlier. More sophisticated analysis has turned up some pretty cool stuff.

Anyway, not going to prattle about that. I've been keeping sane with frequent breaks on my piano...which has decided to work consistently for the first time in the six years I've had it apparently.

Took a few more cracks at that Morse thing, but with less emphasis on the Morse. I think I was coming up with something cool at about 2:11, but I couldn't really take it somewhere on the fly. Next piano is going to have a USB connection to score things while I play. Distress (or Destress)

And this popped out. It's...kinda fun. I'll never be able to duplicate it, so no point in trying to improve it. A Tenuous Grip

*returns to writing up the report - 121 pages and counting*

Objective: Write a song with lyrics in morse code.

Output: james.ryan.maxwell.googlepages.com…

Result: Rhythm is too awkward. Well...it was arty.

Yesterday: I open up my chest freezer. It has broken. STuff on the top has melted, there's water in the bottom. I toss about $100 worth of meat, set some out to cook, and cram my refrigerator's freezer to capacity.

Today: I go to work. Repairmen apparently show up immediately after and replace my refrigerator (which had gone on the fritz earlier - but the freezer part was fine). I get a note.

"Too much stuff in freezer. Makes refrigerator not cool so good. (We) Put stuff in your chest freezer."

Are you fucking kidding me?

*fills a trashbag with meat and rage*


P.S. I now have the world's most disorganized refrigerator, and given the stuff on my counter, we have different ideas of what needs to be refrigerated and what doesn't. What is my fucking deli meat doing on the counter ?

Saw Star Trek. Mostly liked it.

This isn't it. I'm just thinking.

So Congress just passed a $787 billion stimulus package, with 24% spending (infrastructure), 38% tax cuts, 38% aid (medicaid, schools, unemployment, student aid). This is all being added to the national debt, which we're going to have to pay back with interest, probably to China, 10-30 years down the road.

It's not big enough.

*rests head on desk for a few minutes*

So it's probably going to take another trillion or two to unclog the financial sector, and probably another three quarters trillion to unlock the economy. That's a cool, interest-adjusted $30,000 per American family in additional debt.

*puts head back on desk again*

The problem, in a nutshell, is that when the tech bubble burst, all that money had to go somewhere. Really low interest rates and preferential tax treatment made housing particularly attractive, and as the money poured in, values inflated. People then began treating houses as an investment, rather than an expense, and bought more than they could afford assuming they would keep rising. Banks offered terms that were ridiculously loose for lending, increasing their risk. On the other hand, they didn't directly face the risk because they could package mortgages into things called tranches and sell them as securities to be bought and sold on the open market. Credit agencies then rated these tranches as "super safe" even though they were risky, and so holders of these tranches could borrow a lot of money against them at good interest rates even though they might not be worth that. Also, insurers could insure that the tranches had value even though they didn't have to actually put up any collateral in case the loans couldn't be paid back.

So the housing bubble burst. Suddenly, the tranches aren't worth as much. This means all the money borrowed against the tranches is unlikely to be paid back. Banks don't know if their loans are coming back, so they quit making new ones. Businesses lay people off. Incomes fall. People buy less houses. Home prices fall more. We have our downward spiral.

Setting aside all the tenuous strands people try and connect in order to blame one political party or another, the perpetrators are a combination of stupid borrowers, stupid lenders, and a regulatory system that completely failed to conduct proper oversight. Fair enough. Most people would agree, of course, that these are the people who should pay for their errors.

The problem is that the stupid borrowers are broke, so we can't get it from them. The stupid lenders have leveraged the assets of responsible people against the debt, so they're going to take us down with them. We pretty much sent the only signal we can regarding the stupid government, which is to kick the bums out. We'll see how the new bums do.

Anyway, the fact the stupid lenders are going to take us with them is why our hands are sort of tied when it comes to just letting the free-market correct itself. The free market will correct itself, but it's going to take a depression to do so. Maybe not a Great depression, but I can easily see 13-15% unemployment (we went over 25% in the depression, but our worst recessions have only seen 10%) persisting for a long period of time if we don't do something, and looming in the background is the fact that oil prices are going to come back up, because the price rise is supply driven and our demand decrease is just a reprieve, and the fact we really do need to invest in some environmental mitigation strategies.

This leaves us, really, with only one really horrible, obnoxious option, in two parts.

1) A bail-out, where we're going to have to come up with some strategy that nets out to handing out all the money people lost on their houses, because unbelievable amounts of personal and commercial debt are leveraged against them. We can do this by buying mortgages and selling the house back at the current value and eating the losses, or continuing to shower banks with money. All these are incredibly infuriating.

2) Good old fashioned Keynesian intervention.
Total Output = Consumption + Investment + Government Spending + Exports - Imports. Interest rates are basically zero, so we've juiced investment as much as we can. We can cut taxes to raise consumption, and increase government spending to raise that component. *eyes first paragraph* And there's our stimulus.

Unfortunately, it appears we're looking at an amazing shortfall that's probably going to take an even bigger stimulus to get the economy going. Even better, every million jobs we save NOW is going to cost us a couple hundred thousand jobs in the long run because we're crowding out future investment with debt we have to pay back.

So we have two options:
A) Burn baby burn for the entire economy.
B) Transfer a few trillion dollars to morons and reset the system.

Happy Valentine's Day.

P.S. For Americans, I advise the use of a Roth IRA, where you pay taxes now on retirement contributions and pull them out tax free later. Why? Because tax rates in the future are going to be amazing in order to pay for all this shit.