Tag: values

In trust we god

in_trust_we_god

Can trust affect the outcome of political events (war), business transactions (pricing) and economic affairs (poverty)?

This is a problem that I’ve been very interested in for many years.

A few years ago I came across papers in economics and game theory that supplied the mathematical tools that we need to analyse such problems.

So, I’ll take each area of interest 1) politics 2) business and 3) economics and explain how trust matters in each case.

1.  Politics

Can the outcome of something like war be determined by trust?

Let’s assume an army of 2 soldiers.

In a war, the benefits to each soldier can be modeled as a bi-matrix (normal-form game) as follows:

soldier 2 fights soldier 2 flees
soldier 1 fights 5, 5
–5, 0
soldier 1 flees 0, -5
0, 0
Normal form or payoff matrix of a 2-player, 2-strategy game

The first of the two numbers in the matrix represents the payoff to soldier 1.

The second of the two numbers in the matrix represents the payoff to soldier 2.

(The soldiers win something (represented by 5 points) if their army wins; they win nothing if their army loses; and they lose their life (represented by -5 points) if they do not flee and their army loses; we assume the army wins if both soldiers do not flee and loses if one or both flee).

If soldier 1 trusts soldier 2 not to flee the battlefield, the best strategy for soldier 1 is to stay and fight as well (since he will then get more benefits than if he flees).

If soldier 1 does not trust soldier 2 to stay on the battlefield (if he suspects that soldier 2 will run away), then the best strategy for soldier 1 is to run away himself (so that he does not remain on the battlefield and get killed).

So, this model shows that if two equal 2 man armies meet on a battlefield, the one whose soldiers trust each other more will win.

2.  Business (Pricing)

There is a very interesting paper by George A. Akerlof (‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’).

It tries to explain why the price of a new car in a show room is so much higher than the price of a new car in the second-hand car market.

For example, a car costing $25,000 fresh out of the showroom, might fetch $18,000 if sold as a used car in the used car market.

Akerlof’s paper tries to explain why the price dropped so sharply.

Akerlof suggests that the price drop is a result of the uncertainty surrounding the quality of the car in the used-car market.

A certain percentage of cars in a used-car market will be defective (since anyone can sell a car in an unregulated market, and unscrupulous people would have put defective cars up for sale).

Let’s say 50% of the cars in the used car market are defective.

Now, a person buying a used car a day old will only be prepared to risk paying 50% of the showroom price for the car (because of the 50% chance that the car is worth nothing).

The Price of Trust

This result has the following unintended consequence:

The more a person trusts a seller, the higher the price he will be willing to offer for a car.

I’ll give you an example of that.  (I’m sorry, but this is a bit racist).

When I was a student in North Carolina, and I was looking to buy a used car, I was given the following piece of advice by my fellow students.

They said, “Go for a car that an American is selling because they will tell you about any problems that it has.  Don’t buy a car from an Asian or an Indian unless you know them well.  They won’t tell you if there are any problems.”

I see the same effect even when doing business in India today – a lot of business happens through connections.

Price Sensitivity

It might also explain why Indians are so price sensitive.

Indians are said to be very price-sensitive, preferring the less expensive offerings over more expensive ones that promise better quality (I recall Richard Branson said that at one point while explaining why he didn’t want to enter India).

I think the price sensitivity is a result of Indians not being able to trust promises of higher quality from their countrymen.

Price becomes the only measure that Indian buyers are able to trust to when making a purchasing decision, leading to extreme price-sensitivity in the Indian market.

Hiring and ‘Brain Drain’

Even in hiring, this can have the effect of driving down salaries.

When hiring someone, an Indian firm is likely to offer a lower salary than the market, because they don’t trust in the abilities of the person being hired.

In Akerlof’s paper, he talks about a side-effect of a lack of trust.  He says that good quality cars will just stop being sold on the low-trust markets.

The applies to the job market in India as well:  Indian firms tend to offer lower salaries, which might lead to the best engineers choosing MNCs over Indian firms or leaving Indian shores altogether.

3.  Economics

I’ve described in an earlier blog how man-in-the-middle systems of government can fail to work efficiently if the man-in-the-middle is corrupt.

I’ve described in that post how resources can be wrongly allocated in the presence of corruption.

https://aiaioo.wordpress.com/2013/08/15/who-betrayed-ekalavya-2/

The result of an inefficient allocation of our resources is poverty.

For example, the Indian government has tripled defence spending in the last 10 years – through heavy borrowing – when it is possible to show that we need to allocate whatever money we have to education (see our arguments for that https://aiaioo.wordpress.com/2012/06/04/algorithms-to-combat-poverty/).

World Bank studies (that you can get off an Indian Reserve Bank website) show that corrupt governments spend more on arms (because of how easy it is to hide kickbacks from arms deals) than honest governments.

So, the economic prosperity of a country can be impacted by corruption.

Causes of Corruption

But we can ask a deeper question:  “What causes corruption?”

I’ll try to show right here that it is a lack of trust.

Take for example two players in a bidding war (let’s say that they are bidding for a government contract).

Each has the choice to give a bribe or not to give a bribe.

Player 1 is more likely to give a bribe if player 1 does not trust player 2 to not offer a bribe to the government official.

It’s the same decision matrix that I have used for the case of the 2 soldier army.

So you get it?

Everything depends on trust.

Philosophy

I am probably way out of my depth on this, but the ancient Greeks seem to have had two views on the supreme ideal that man should strive for.

According to the Wikipedia article on Dialectics:

“The Sophists taught arête (Greek: ἀρετή, qualityexcellence) as the highest value, and the determinant of one’s actions in life.”

But there lived in Greece a man who disagreed with that notion:  ”Socrates favoured truth as the highest value, proposing that it could be discovered through reason and logic in discussion: ergo, dialectic.”

But the above models seem to suggest that truth (honesty) results in trust (you know that the guy next to you is honest and won’t lie about the quality of a car or bribe a government official to get ahead of you).

And what the Akerlof paper shows is that trust rewards and promotes quality.

In other words, the two Greek concepts of quality (of the values mankind must uphold for its own good) are probably one and the same.

Related Posts:

1.  Framework for evaluating values

2.  What traffic can reveal about society

3.  Who betrayed Ekalavya?

4.  Can economics change the world?

5.  Is there an algorithm to combat poverty?

6.  Why dance is undervalued

7.  Is 5 very far from 4?

Related Far-out Posts:

1.  Splitting the Truth into Precision and Recall

2.  Does AI have Buddha nature?

[The image in this picture was taken from a circulated Facebook post.  The copyright owner of the image is unknown at this time and if anyone knows him/her I’d like to make sure they’re ok with my using the image and acknowledge them].

How algorithms can ‘shape’ our world – Kevin Slavin

In our first blog post of the year, we’d like to share a talk by Kevin Slavin.

It is about how math (especially algorithms) has ‘transitioned from being something that we extract and derive from the world to something that actually starts to shape it.’

One of the posts we most enjoyed writing last year was related to this:

It was about algorithms to combat poverty.

We also wrote about how math might someday shape our values.

Frameworks for evaluating values

I recently came across a very interesting 2001 paper by Daphne Koller that dealt with influence diagrams and how they could be applied to game theory.  I came across the paper while doing some background reading on a talk on decision making in accordance with our core values by a friend of mine, Somik Raha.

Influence diagrams are a formalism (very similar to probabilistic graphical models) that are used for making decisions.

What Somik Raha has attempted to do is come up with a framework for making decisions while also taking one’s values into account (either as constraints or as inputs into the decision model).  To do that he proposes extensions to influence diagrams.

What I found interesting when I thought about Daphne Koller’s work and Somik’s together, is that they could possibly give you a framework to evaluate your values.

Koller’s formalism reduces to a game theoretic model, which can be evaluated to determine the outcome of the decisions made by a group of people.

Plug in a formalism based on Somik’s ideas and you just might be able to create a way to quantity the benefits of values.

The Importance of Values?

I have been thinking a bit about values these days because there has been a horrific gang rape in Delhi, and there have recently been numerous incidents of bad driving where friends of mine have been injured in Bangalore.  Then there is corruption.  Our society seems to be quite happy with inequality and vast differences in the distribution of wealth.  It make me wonder if our values are to blame.

I have often wondered whether some of our problems originate in our value systems and whether the value systems that we consider sacrosanct in India are really very good ones.

Let me take just a couple of values that most Indians would consider to be very good values

  1. Non-violence
  2. Obedience

and let’s discuss them in more detail.

  1.  Non-violence

This value appeals not just to people in India.  You see variants of the value of non-violence appear in Tolstoy’s writings and in Semitic religions, as you can see from the Bible (“turn the other cheek”) and the Quran (“give alms to one who begs from you, even if he comes on the back of a horse”).

The issue with this sort of value is that it makes a person (and those around him/her) extremely vulnerable to injustice.

In India, we restrict the liberty of women – in their choice of clothing, company and lifestyle – for fear that they could be in danger if they violated societal norms.  This shows that none of us want to fight society or cross swords with someone who might make disparaging comments about personal choices.

Moreover, possibly as a result of the value of non-violence, very few Indians if any are taught fighting skills in school.  So, even if a person really wanted to act, say to protect a friend, he or she might not really have the skills to take down an aggressor.

So, instead of protecting and standing up for people who might be vulnerable, we become their tormentors and make their lives more miserable, just so we don’t have to get our hands dirty, or because we don’t have the skills and strength to do squat.

I’ve written about how bribes are openly collected by traffic policemen.  It should be very easy to put a stop to such behavior if you’re willing to fight.

If non-violence is not a core value, then how do we protect people from tearing each other to bits?

We could start with a question like:  non-violence for what purpose?  (turning it into an extrinsic value)

If the answer is something like, “so that the weak feel protected”, why not make protecting the weak our core value?

I’d prefer teaching kids values like “Don’t ever turn your back on a bully” rather than values like “Don’t fight anybody, and just come home safe, child!”

2.  Obedience

Indian parents love to boast that their child is “such an obedient child!”

Is that a good thing?

Obedience is different from politeness or respect.  The latter are mutual but the former is one way.

So, the politics of obedience creates a hierarchy of subservience.

In India, Parents expect complete obedience from Children.

The Police expect complete obedience from People.

The Politicians expect complete obedience from Police.

Teachers expect complete obedience from Students.

Managers expect complete obedience from Employees.

The creation of the hierarchy (through expectations of obedience) can be very dangerous in many ways.

1.  It can stifle creativity and problem-solving ability.  There is a bias against ideas flowing up a hierarchy because those higher up the hierarchy claim their place above those required to be obedient to them on the premise that they are somehow superior to those below them.  A good example is how parliament will not accept that people have a right to demand a bill against corruption (members of the Indian parliament claim that parliament is supreme in a parliamentary democracy – not the citizens that the parliamentarians represent).

2.  It can leave young people ill-equipped to defend their personal spaces.  I read in a paper on rape that many rapists approach victims by testing their boundaries.  They make comments and otherwise violate the intended victim’s personal boundaries.  If these are not strongly resisted, the probability of an assault becomes greater.  Another strategy used by rapists is to move their intended victim to a new location where they are more vulnerable. It is very important for people to be conditioned so that they do not obey an order by an attacker to relocate under any circumstances.

3.  The hierarchies perpetuate the power of stronger (bigger, older or richer) parties by providing social sanction to their dominant position, and so hinder social mobility.

4.  The obedience hierarchy could allow a few people at the top to amass too much power. It might have, for example, prevented cops from disobeying those in power during the Gujarat riots.

5.  Obedience means valuing rules above truth.  Obedience implies not challenging the rules or the status quo.  So there is little scope for discovering if the rules really are good ones for everybody.  People often defend something they assert with a “because I said so.” – that is, you are expected to believe them because of their authority, and not because they can substantiate their assertion.

Obedience as an absolute value is not entirely harmless.  It could be dangerous to us as a society because corrupt politicians can use the pliability and obedience of people around them to get away with evil (remember the activist who was hacked to death on the orders of a corporator from Bangalore, the journalist who was burnt to death in Uttar Pradesh, or the shutdown that the former Chief Minister of Karnataka State ordered when he was about to be investigated for corrupt dealings?).

I’d love to replace “obedience” with something else, perhaps “honesty” and “trustworthiness” and “pride”.

Summary

I understand that we as Indians are very proud of our values but I’ve tried to argue that our values need to be re-examined.

Personally, I’d love to see the day when we replace all our values with just the value of trustworthiness.

Trustworthiness as a value would mean we’d fight for each other.  It would mean we’d protect the weak.  It would mean we’d be on time.  It would mean we’d be honest.  It would mean we’d be capable and skilled and strong.  It would mean we’d be proud of each other.  It might mean we’d never lose another war.

Reading Koller’s and Somik’s work you get the feeling that one day you might be able to evaluate the comparative benefits of two sets of values, and pick the better one, using plain math.

And hopefully, by showing them mathematical proofs, you can convince people to change their values and pick better ones for themselves.

Did anything really happen to silicon values?

I recently came across an article on the Silicon Valley by Bill Davidow.  The article was titled “What Happened to Silicon Values?

Below is a snippet from the article …

<snip>

When I arrived at Hewlett-Packard in 1965, the company was already a $300 million giant. The company was focused on delivering advanced technology of great value, then servicing and supporting the customer to make sure he derived value from what he bought. Customers trusted Hewlett-Packard. I remember one customer who so trusted the salesman who took care of his account that he let the sales rep purchase what he needed. That period of trust went on for a long time. The salesman told me his secret: He never bought anything for the customer that the customer did not really need.

</snip>

At one point in his article, Bill wonders if the restrictions that Apple builds into its products might be not in keeping with Silicon Valley values (because they deprive customers of choice).

He says: “Apple controls our virtual landscape, bounded by iTunes to the north, the iPhone to the south, the iPad to the east, and the iPod to the west, giving it increasing power to deprive customers of choice.”

I wondered about that for sometime.  Then I realized that giving people certain choices need not always be (depending on what those choices are about) the best thing to do.

For example, Apple products’ limited choices make them easier to use.  Customers should not be burdened by unnecessary choices, and consequently be at risk of making bad ones.

The best service to the client is when you help them make the right choices.

I think that Bill’s anecdote about the HP salesman underscores the selfsame point.  The HP salesman was actually making all the choices for the client.  And it was in making those choices correctly, disinterestedly and fairly and in not leaving the client to her/his own devices that the HP salesman made his highest contributions to the client’s success.  In that respect, the HP story is exactly the same as Apple’s.

I remember having worked at Sun Microsystems as an engineer in the 90s.  Sun was very passionate about open systems – about architectures that people could mix and match at will.  They went down because no one really had a need for or a will to pay for openness for openness’ sake, or for free will.

So, I don’t think anything has happened to the values of the Silicon Valley.