Tuesday, September 15, 2015

"The free market isn’t merely the best mechanism ever devised to provide people with what they want; it is also the best mechanism ever devised to provide people with what they don’t want."

Wanting is a prime driver of much of our life. The Second Noble Truth of the Buddha is often described as Wanting/Grasping/Desire (in Sanskrit trsna) - which is a cause of unsatisfactoriness (dukkha) and stress/suffering in life. According to the 4 Noble Truths, wanting and not-wanting are similar in their role of leading to dukkha in our life.

There is a new book,“Phishing for Phools: The Economics of Manipulation and Deception,” by Nobel laureates in economics George A. Akerlof and Robert J. Shiller. Here are several excerpts from recent good review articles:

"Markets are capable of such power for good, because they allow so much positive selection. Even so, markets can produce a great deal of harm, because they also allow negative selection. Not all of those new ideas are good-for-you/good-for-me. Some of them are good-for-you/bad-for-me. And associated with such ideas come the tricks to inveigle me into buying in."


"RS: An information phool is someone who has been fed a biased set of information so that they then would make erroneous judgments. A psychological phool is someone who is affected by his or her own feelings, emotions and psychological anomalies. Information phools and psychological phools are everywhere, and you might be one of them. We know that we are.

Q: But why isn’t phishing competed away? Why don’t customers do business only with those who treat them fairly?
RS: Often the glitch in your defenses is very subtle and even the phisher doesn’t know exactly how it works. Also, businesses play tricks, and [their] competitors play tricks. Businesses often have tight profit margins. They can’t give money away. So they have to play the same tricks themselves. Professionals develop skills in manipulating people, and there’s a survival of the fittest for them: The very best ones amplify and are everywhere in their impact.

Q: The book argues that incentives will inevitably lead some people to manipulate and cheat others. Doesn’t every five-year-old child learn on the playground that some kids cheat when they trade candy and gum? Doesn’t everybody already know what you’re saying?
GA: Everybody thinks they know it. But people think of manipulation and deception as things that take place on a one-off basis, not as something that’s inevitable. Phishing is as universal as the benevolence of the butcher and the brewer and the baker that Adam Smith talked about."


A youtube presentation:


And this: