Results for “manipulation”
74 found

Currency manipulation doesn’t actually work so well

That is the topic of my latest Bloomberg column, here is one excerpt on the empirical side:

It is also worth keeping in mind a number of empirical points. First, the ECB has not historically been all that expansionary. Rather, it is renowned for a fairly tight monetary policy. Eurozone rates of price inflation are usually below 2%, and that does not seem about to change.

Second, up through the late 1990s, Chinese currency manipulation consisted of keeping the value of the currency “too high” rather than “too low.”  Yet in those earlier times, Chinese exporters still were gaining ground. And since 2005, the Chinese currency has risen considerably — arguably, it has attained the levels one would expect in a normally adjusting market. More recently, the Chinese central bank may be propping up the currency, to limit capital flight from China. That is currency manipulation, but in a manner that will damage Chinese exports, not help them, and indeed China probably is headed toward having permanent trade deficits with the rest of the world.

Finally, countries with low household savings rates tend to run trade deficits, and of course that is the U.S., with savings rates usually below 10% and often as low as 4%. Obviously, if you spend most of your money, some of those expenditures will go abroad, and that will hurt your trade balance. Whether or not you think that is a problem, America’s savings shortfall has little to do with Chinese currency manipulation.

Of course President Trump and yes also Elizabeth Warren are the main offenders here.  Read Warren’s Medium essay on these topics, it is shocking in its crude nationalism: “A Plan for Economic Patriotism.

Intrade Manipulation Fail

Brad Plumer at the Wonkblog discusses a recent attempt to manipulate Intrade.

On Monday night, after the debate, Barack Obama was leading Romney on Intrade by around 60 percent to 40 percent. But at around 10:00 a.m. on Tuesday morning, Romney surged to 48 percent. Was this evidence that the conventional wisdom was wrong? Had Romney actually won the debate handily? Or, alternatively, was the nosedive in the stock markets putting a dent in Obama’s re-election chances?

Neither. As economist Justin Wolfers pointed out on Twitter, the huge swing toward Romney appears to have been driven by a single trader who spent about $17,800 buying up Romney shares and pushing the Republican candidate’s chances on Intrade up to 48 percent. But the surge only lasted a few minutes before other traders whittled the price back down to what they saw as a more accurate valuation. Romney’s odds of winning are currently back at around 41 percent.

…As Wolfers pointed out, this mysterious trader ended up overpaying by about $1,250 for shares that quickly collapsed in value. Was this just someone who made a bad trade? Or was somebody trying to influence Intrade odds in order to sway perceptions of the race? And if so, was it worth $1,250 to jolt the markets for less than 10 minutes?

Plumer quotes me from 2008 discussing an earlier attempted manipulation:

This supports Robin Hanson’s and Ryan Oprea’s finding that manipulation can improve (!) prediction markets – the reason is that manipulation offers informed investors a free lunch.  In a stock market, for example, when you buy (thinking the price will rise) someone else is selling (presumably thinking the price will fall) so if you do not have inside information you should not expect an above normal profit from your trade.  But a manipulator sells and buys based on reasons other than expectations and so offers other investors a greater than normal return.  The more manipulation, therefore, the greater the expected profit from betting according to rational expectations.

Addendum: Justin Wolfers offers more comment.

Manipulation of Prediction Markets

As many people suspected someone was manipulating Intrade to boost John McCain’s stock price:

An internal investigation by the popular online market Intrade has revealed that an investor’s purchases prompted “unusual” price swings that boosted the prediction that Sen. John McCain will become president.

Over the past several weeks, the investor has pushed hundreds of thousands of dollars into one of Intrade’s predictive markets for the presidential election, the company said.

This is big news but not for the reasons that most people think.  Although some manipulation is clearly possible in the short run, the manipulation was already suspected due to differences between Intrade and other prediction markets.  As a result,

According to Intrade bulletin boards and market histories, smaller investors swept in to take advantage of what they saw as price discrepancies caused by the market shifts – quickly returning the Obama and McCain futures prices to their previous value.

This resulted in losses for the investor and profits for the small investors who followed the patterns to take maximum advantage.

This supports Robin Hanson’s and Ryan Oprea’s finding that manipulation can improve (!) prediction markets – the reason is that manipulation offers informed investors a free lunch.  In a stock market, for example, when you buy (thinking the price will rise) someone else is selling (presumably thinking the price will fall) so if you do not have inside information you should not expect an above normal profit from your trade.  But a manipulator sells and buys based on reasons other than expectations and so offers other investors a greater than normal return.  The more manipulation, therefore, the greater the expected profit from betting according to rational expectations.

An even more important lesson is that prediction markets have truly arrived when people think they are worth manipulating.  Notice that the manipulator probably doesn’t care about changing the market prediction per se.  Instead, a manipulator willing to bet hundreds of thousands to change the prediction of a McCain win must think that the prediction will actually affect the outcome.  And if people think prediction markets are this important then can decision markets be far behind?

Hat tip to Paul Krugman.

Saturday assorted links

Monday assorted links

1. Gottlieb and McClellan, both former FDA heads, call for accelerated vaccine approval for designated groups, without relaxation of broader standards (WSJ).

2. The perfection premium.

3. A time-lapse map of every nuclear explosion through 1998.

4. “We find no evidence of manipulation of Chinese COVID-19 data using Benford’s Law.

5. “We conclude that the Sturgis Motorcycle Rally generated public health costs of as much as $12.2 billion.

6. Open-air winter schools in New England, in pre-complacency times.

7. Life on Venus?  No one cares about that either…(NYT)  As a kid I was convinced there was life on Venus, and was never persuaded by the impossibility arguments.  So today (while this remains uncertain) I am feeling ever so slightly vindicated in one of my earlier specific beliefs.

Friday assorted links

Rereading Ayn Rand on the New Left

It used to be called The New Left: The Anti-Industrial Revolution, but the later title was Return of the Primitive.  It was published in 1971, but sometimes drawn from slightly earlier essays.  I wondered if a revisit might shed light on the current day, and here is what I learned:

1. “The New Left is the product of cultural disintegration; it is bred not in the slums, but in the universities; it is not the vanguard of the future, but the terminal stage of the past.”

2. The moderates who tolerate the New Left and its anti-reality bent can be worse than the New Left itself.

3. Ayn Rand wishes to cancel the New Left, albeit peacefully.

4. “Like every other form of collectivism, racism is a quest for the unearned.”  Ouch, it would be good to resuscitate this entire essay (on racism).

5. She fears the collapse of Europe into tribalism, racism, and balkanization.  I am not sure if I should feel better or worse about the ongoing persistence of this trope.

6. It is easy to forget that English was not her first language: “Logical Positivism carried it further and, in the name of reason, elevated the immemorial psycho-epistemology of shyster lawyers to the status of a scientific epistemological system — by proclaiming that knowledge consists of linguistic manipulations.”

6b. Kant was the first hippie.

7. The majority of people do not hate the good, although they are disgusted by…all sorts of things.

8. Like many Russian women, she is skeptical of the American brand of feminism: “As a group, American women are the most privileged females on earth: they control the wealth of the United States — through inheritance from fathers and husbands who work themselves into an early grave, struggling to provide every comfort and luxury for the bridge-playing, cocktail-party-chasing cohorts, who give them very little in return.  Women’s Lib proclaims that they should give still less, and exhorts its members to refuse to cook their husbands’ meals — with its placards commanding “Starve a rat today!””  Feminism for me, but not for thee, you could call it.

Overall I would describe this as a bracing reread.  But what struck me most of all was how much the “Old New Left” — whatever you think of it — had more metaphysical and ethical and aesthetic imagination — than the New New Left variants running around today.  As Rand takes pains to point out (to her dismay), the Old New Left did indeed have Woodstock, which in reality was not as far from the Apollo achievement as she was suggesting at the time.

Signaling virtuous victimhood as indicators of Dark Triad personalities

We investigate the consequences and predictors of emitting signals of victimhood and virtue. In our first three studies, we show that the virtuous victim signal can facilitate nonreciprocal resource transfer from others to the signaler. Next, we develop and validate a victim signaling scale that we combine with an established measure of virtue signaling to operationalize the virtuous victim construct. We show that individuals with Dark Triad traits—Machiavellianism, Narcissism, Psychopathy—more frequently signal virtuous victimhood, controlling for demographic and socioeconomic variables that are commonly associated with victimization in Western societies. In Study 5, we show that a specific dimension of Machiavellianism—amoral manipulation—and a form of narcissism that reflects a person’s belief in their superior prosociality predict more frequent virtuous victim signaling. Studies 3, 4, and 6 test our hypothesis that the frequency of emitting virtuous victim signal predicts a person’s willingness to engage in and endorse ethically questionable behaviors, such as lying to earn a bonus, intention to purchase counterfeit products and moral judgments of counterfeiters, and making exaggerated claims about being harmed in an organizational context.

That is a new paper by E. Ok,, via a loyal MR reader.  Here are various versions of the paper.

The Gaslighting of Parasite Parasite: Kang Ho Song, Sun Kyun Lee, Yeo Jeong Cho ...I am late to this but Parasite, now available on streaming services, is the most willfully misinterpreted movie that I have ever seen. The conventional interpretation is so obviously wrong that I cannot but think that it is anything but a collective gaslighting. The conventional interpretation is that the film is about inequality and on the surface that makes sense. After all, there is a rich family and a poor family, and an upstairs and a downstairs, and everyone knows that inequality is the problem of our age so despite the subtitles this Korean film must be a version of what we expect to see. Hence, Manohla Dargis writing at the New York Times says “The story takes place in South Korea but could easily unfold in Los Angeles or London.” True but not in the way she imagines! Rather than a conventional discourse on “inequality,” Parasite is deeply, shockingly, politically incorrect, even subversive. Mild spoilers.

The Dargis review is spectacularly, hilariously wrong from the very first sentence “a destitute man voices empathy for a family that has shown him none. “They’re rich but still nice,” he says, aglow with good will.” The man is not destitute (his entire family has been raking in the cash by this point), the family has shown him nothing but generosity and respect, and he is not aglow with good will. But what do you expect from a newspaper that rates Parasite an R for “class exploitation”! The Times is leading the cultural revolution.

Indeed, in the entire film the rich family does nothing wrong whatsoever. This is not my judgement it is what the film tells us. The rich family pay their employees generously (the film goes out of its way to note that they pay overtime), the work is not especially hard (English tutor, art therapist, chauffeur, cook and cleaner), and the employees are treated with respect. Moreover, the rich family are kind and loving. The father works hard but he is not absent. The rich family’s wealth is explicitly shown as coming from innovation and entrepreneurship (not say shady deals or stock market manipulation).

Are the poor family destitute? Not really. The son is handsome, he knows English well and he has an exceptional psychological sense which he uses to teach his student and his father; the daughter is gorgeous and skilled with computers. The mother was a champion athlete, the father is intelligent enough. It’s obvious that this family has everything needed for success. Moreover, the family isn’t discriminated against–they aren’t African-American in the 1950s south, they aren’t Dalits, they aren’t even North Koreans. So why aren’t they successful? One reason is because they aren’t willing to do an honest days work for an honest day’s pay. They fail utterly at folding pizza boxes–not because they are stressed or because the job is difficult–but because they are lazy and don’t give a damn. The film also shows that it is other hard-working, honest-people who are harmed by their laziness (not some evil pizza corporation). The fact that the kids are gorgeous, by the way, is important. The director Bong Joon-ho (and writer Han Jin-won) are telling us to look below the superficial. Note that everything the poor family gets they get by lying and stealing–they are grifters. The son even steals his best friend’s girlfriend–whom he doesn’t even especially like. To exploit her further, he steals her diary.

In fact, Bong Joon-ho hits us over the head with his message. In an early scene, for example, we see the poor family being fumigated but this is not played for pathos. Indeed, the family welcomes the fumigation. The director is telling us that this is the family’s natural habitat. Who gets fumigated? Work it out. The title may help.

Toilets also play a big role. There are many scenes with the poor family and toilets (and none with the rich family). In one scene the poor family is literally swimming in shit. This is not played for pathos. Bong Joon-ho covers the family in shit because he wants us to know they are a shitty family. (This scene comes immediately after a scene making this clear.) The daughter is so comfortable in the shit she relaxes and smokes a cigarette.

At one point, the rich family is away and the poor family takes over their house. What do they do? They immediately get drunk, including the kids. And not just drunk but slovenly drunk with food and garbage spread all over what had been an immaculate house. The family talks about what it would be like if they lived in this house–the film makes it clear that if they lived in this beautiful house it would soon go to shit.

The shit is not an accident. A key element of the film is that the poor family smells bad. Some people read this as a sign of disrespect but the rich family never demean the poor family or bring it up to their face. Indeed, we know the smell isn’t a class marker because it’s the youngest child of the rich family, a pure innocent, who notes it first. Moreover, even after the poor family know that they smell and make plans to fix the problem their bad smell remains. Why? Because they can’t wipe the shit off–a smell they can’t escape is the director telling us that they are a shitty family. A bad smell is a signal that something is rotten, something is off, something is shitty. It’s an elemental warning to the rich family.

Finally we come to the remarkable climax in which the father does something so stupid, so utterly impulsive, so completely contrary to his interest that we see immediately why he has never been able to hold down a job for very long. (The previous “no plan” scene foreshadows.) The first time I saw this scene I thought it didn’t make sense because the father could be a hero and solve all his problems by attacking the person who has probably just killed his son and daughter. Yet instead of doing the sensible thing he does something quite different. The director then metes out his punishment which is to put the father where he belongs, in a prison where he emerges only at night to scuttle around the floor stealing food like a….parasite.

It’s amazing that a film this politically incorrect, even reactionary, could win multiple awards, it’s as if The Camp of the Saints won best picture. Of course, the message had to be ignored to win but even so. I should emphasize that everything I have said is drawn from very obvious scenes. It doesn’t take Freud to understand the meaning. If you must, cancel Bong Joon-ho not me!

Perhaps readers can tell us whether Korean reviewers saw the obvious and were willing to say so.

What I’ve been watching

Graduation, a Romanian movie and perhaps the most notable film about corruption I have seen, ever.  From the director of Four Months, Three Weeks and Two Days, also known as “the Romanian abortion movie.”  Both strongly recommended.

Moana.  I had to stop watching this one.  I am not amongst those who regard Disney as a tool of Satan, but the transparent emotional manipulations are so strong in each and every scene that they distracted me from the ongoing technical marvels.  It just wasn’t worth it, and I couldn’t bring myself to care.

Malcolm X, directed by Spike Lee.  I thought this was a grave disappointment, noisy and cluttered rather than insightful, and grossly overrated.  To put my evaluation in context, I consider The Autobiography of Malcolm X to be one of the greatest American books of all time.

Bullitt, with Steve MacQueen, San Francisco crime drama circa 1968, interesting throughout.  Drama from start to finish, nothing hurried, wonderful soundtrack, always feels remarkably cinematic and reflects so many of the movie-making virtues of that era.  No one seems that surprised when a guy ends up on a plane with a gun, by the way.

Dust in the Wind, directed by Taiwanese marvel Hou Hsiao-Hsien.  One of his least scrutable movies, nonetheless memorable, and yes they are boyfriend and girlfriend.  Do keep track of which passages are said in which languages, and what is the vision of both Taiwan’s past and future.  Most of you won’t like this one, but nonetheless a landmark in Asian cinema.

Ozu, The End of Summer.  Could this be the most underrated movie of classic Japanese cinema?  It is hard for me to say more without bumping into spoilers, my only complaint is that the soundtrack is garish and unsuitable.

Conscientiousness vs. working hard

South Korea ranks second to last in terms of conscientiousness but also ranks first in the number of hours worked.  South Korea is not an anomaly.  Country-level reports of Big Five conscientiousness are unrelated to the number of hours worked.  The rank correlation between hours worked and conscientiousness across countries is negative, though statistically insignificant.

That is from “Some Contributions of Economics to the Study of Personality,” a new working paper by James J. Heckman, Tomas Jagelka, and Timothy D. Kautz.  How do you interpret these numbers?  That the notion of conscientiousness is poorly measured?  Or that “susceptibility to manipulation by incentives” is a separate quality, highly valued in a workforce, but not well correlated with “conscientiousness as we know it”?

Robert Kagan has solved for the equilibrium

Consider what it will mean if we decide that what Trump and Giuliani have already acknowledged doing in Ukraine becomes an acceptable practice for all future presidents. Sending the signal that other governments can curry favor with a U.S. president by helping to dig up dirt on his or her political opponents would open our political system and foreign policy to intervention and manipulation on a global scale. Every government in the world wishing to influence U.S. foreign policy will have an incentive to come to a sitting president with information on his or her potential political opponents.

That information might be related to investments or other financial dealings in a particular country, as in Ukraine. Or it might have to do with the behavior of a particular individual while traveling abroad — who he or she sees and what he or she does. Other governments will therefore have an incentive to conduct surveillance of political figures traveling through their countries on the off chance of gleaning some bit of information that could be traded in Washington for some favor. Nor would other governments be limited to what they can see in their own countries. They would have an incentive to dig into the lives of potential opposition politicians in the United States, through monitoring their social media and other Internet presences, their bank accounts and other personal information — as already happened in 2016, and which Trump openly welcomed then, too.

Here is the full piece.  I mostly agree, but wonder if foreign governments haven’t already been doing this for some time, but hoarding the information rather than releasing it to select American politicians (no reason to encourage them further, of course).

It would be a mistake to split up Facebook

Slate has published an adaptation from my recent book *Big Business: A Love Letter to an American Anti-Hero*, here is one excerpt:

Advocates of splitting up the big tech companies have a utopian vision of what will replace them. Whether you like it or not, we now live in a world where every possible idea (and video) will be put out there in some fashion or another. Don’t confuse your discomfort with reality with your assessment of big tech companies as individual agents. We’re probably better off having major, well-capitalized companies as guardians and gatekeepers of online channels, however imperfect their records, as the relevant alternatives would probably be less able to fend off abuse of their platforms and thus we would all fare worse.

Imagine, for instance, that instead of the current Facebook we had seven smaller companies all performing comparable social networking services, perhaps with some form of interconnectability or data portability. The negative sides of social media, which are indeed real, probably would be worse and harder to control.

It is unlikely that such a setting would result in greater consumer privacy and protection. Instead, we would have more weakly capitalized entities, with less talent on staff and weaker A.I. technologies to take down objectionable material. Probably some of those companies would be more tolerant of irresponsible user behavior as a competitive lure. Fake accounts would proliferate, and social networking sites such as 4chan—often a cesspool of racism and rhetoric that goes beyond the merely offensive—would comprise a larger and more central part of the market.

As for privacy, these smaller Facebook replacements would be more susceptible to hacks, foreign surveillance and infiltration, and external manipulation—the real dangers to our privacy and well-being.

There is much more at the link.

My Conversation with Larissa MacFarquhar

This was a really good one, here is the text and audio.  The opening:

TYLER COWEN: I’m here today with the great Larissa MacFarquhar. She is a staff writer for the New Yorker, considered by many to write the very best and most interesting profiles of anyone in the business. She has a very well-known book called Strangers Drowning. The subtitle is Impossible Idealism, Drastic Choices, and the Urge to Help. It’s about extreme altruists. And she’s now working on a book on people’s decisions whether or not to leave their hometown.

Here is one excerpt proper:

COWEN: If you’re an extreme altruist, are you too subject to manipulation by others? If you care so much about so many other people, and those people actually can be harmed pretty easily at low cost, does this mean that you, the extreme altruist, you just go through life being manipulated?

MACFARQUHAR It’s funny you say that because one thing that I have noticed about the extreme altruist . . . You know what? I don’t want to call them extreme altruists. I think they’re people with a very strong sense of duty.

The people I met were very, very different from each other, but one thing they had in common is they really, really barely cared about what other people thought. They had to feel that way because almost everyone they met thought they were at best weirdos, and at worst dangerous megalomaniacs. So they were unconventional in their degree of duty but also in many other ways.

COWEN: They didn’t care at all what people thought about anything they did like how they dressed or . . . ?

MACFARQUHAR: Things like that. I don’t mean they didn’t care about anything about what people thought because obviously —

COWEN: In this context they didn’t care.

MACFARQUHAR: Obviously they cared about making other people’s lives better. But yes, in terms of opinions of themselves, they were much less sensitive to that than most of us.


COWEN: Your view on how much you should be lied to if you have dementia — is that the same as what you would propose for a sibling or a child, someone you loved and knew?

MACFARQUHAR: With dementia?

COWEN: Right. Would you be consistent and apply the same standard to them that you would want for yourself?

MACFARQUHAR: Ohhh, I don’t know.

COWEN: I would say don’t lie to me, but, in fact, for others, I would be more willing to lie to them than I would wish to be lied to myself.

Try this part too:

COWEN: If during a profile, when you describe people’s looks, are you worried that you are reinforcing stereotypes?

MACFARQUHAR: No. But I have —

COWEN: But isn’t there a thing, looksism?

MACFARQUHAR: Well, of course.

COWEN: There’s sexism, there’s racism, and looksism — people who look a certain way, you should make certain inferences. Is there any way we can describe people’s looks that doesn’t run that danger?

MACFARQUHAR: Probably not. But I’ll say two things about this.

First is, I think there is far too much emphasis on describing people’s looks. Because the thing about humans is that their faces are unique, so you can describe somebody, but you’re never going to be able to call up an exact picture in a reader’s mind about what the person looks like. So what you’re doing is not really describing what they look like — what you’re doing is evoking something which, I guess, the malign form of that is looksism.

But I’ve started avoiding describing what people look like, not because it results in looksism — though I’m sure that’s true — but because, unconsciously or not, it puts the reader in a position of being outside the person, looking at them.

And also, from me:

COWEN: Could the same person be both, say, a Rwandan killer in the 1990s and an extreme altruist? Or is that a contradiction?

Definitely recommended.

Can Token Curated Registries Actually Work?

A Token Curated Registry (TCR) is a mechanism to incentivize the creation of high quality lists in a decentralized setting. TCRs are becoming popular in the token space. As part of advisory work on mechanism design for the startup Wireline, I wrote a research note on TCRs. I am not as enthused as many others. Here are some takeaways:

Token Curated Registries can work but there is no guarantee that voters will coordinate on the truth as a Schelling point so care needs to be taken in the design stage to imagine other Schelling points. The less focal or more costly it is to discover the truth, the more vulnerable the mechanism will be to biases and manipulation via coordination or collusion.

To understand whether a TCR will work in practice attention needs to be placed on the information environment. The key practical issues are the cost of acquiring high-quality information and the value to an applicant of getting on the registry. Put simply, TCRs are likely to work when high quality information is available at low cost. Vitalik Buterin’s examples of Schelling points were (wisely) all of this kind. Extensions of the Schelling point model to TCRs which are trying to surface information that is much more uncertain, variable and disputed need to recognize the limitations.

It will often be more important to put effort into lowering the cost of acquiring high quality information than it will be to modify the particulars of the mechanism. If high-quality, low-cost information is available many mechanisms will work tolerably well. If high-quality, low-cost information isn’t available, perhaps none will.

Read the whole thing at Medium.

And do check out Wireline. Wireline isn’t going to Mars but it is creating what could be a significant and very useful protocol to find and connect software services to quickly produce decentralized applications that can scale on demand.