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Will Wilkinson has a great interview with Dan Ariely, author of Predictably Irrational: The Hidden Forces That Shape Our Decisions, which is about behavioral economics and the effects of human irrationality. Listening to the interview convinced me to read the book. Ariely also has a blog, but I have not found it very interesting.

One segment (“Throwing away the keys to your own chastity belt” starting around minute 42) I found particularly interesting was the section where Ariely discusses procrastination, and specifically one mechanism to get students to procrastinate less. Ariely mentions a teacher for a class which has three papers which will not be graded until the end of the quarter. However, the teacher offers the students the ability to pre-commit to turning the papers in on dates of their choosing. Students who turn in their papers after their dates loose points for each day late they turn their paper in. Students who are completely ‘rational’ would choose dates at the very end of the quarter, but work on their papers throughout the quarter none-the-less. Unlike these students, real students, who are well aware of their inclination to procrastinate, would choose dates which are somewhat spaced out, in order to motivate themselves to work on their papers in a timely manner and thus produce higher quality work and expose themselves to less stress.

I think this is a wonderful idea. I struggle with procrastination, and I know a lot of bright students who also struggle with procrastination to some extent. Thus, I appreciate teachers who give weekly quizzes and mandatory homework, because they help me time my review of class material appropriately. This scheme would do something similar.

One potential problem is see with this scheme is that it might be a bit time consuming to administer. Keeping track of students’ individual due dates and when they actually turned them in could consume a many hours of a teacher’s time if they had to do it all manually. Luckily, it also seems like it would be fairly easy to automate. A software program could take students due dates and their actual turn in dates, and compute the loss of points for all students. The teacher would simply need to pass around a form in the beginning of the class for students to assign themselves due dates, and enter those into the program. Then as the students turn in their assignments, the teacher would enter in when each paper was received, and the program would generate point losses for every student at the end of the quarter. The system could also be set up to send out personalized e-mail reminders to the students.

I am reading Predictocracy, and I particularly liked this sentence (p. 66)

The value of experimentation accrues largely to the public , not the individual business, and businesses will hesitate to subsidize these experiments […]

Abramowicz is talking about experimentation with prediction market, but it seems to me that this applies to experimentation with institutions in general. Businesses that experiment with new institutions can create large social benefits when such experimentation is successful and others copy them. However, such businesses bear all of the costs and risks associated with such experimentation but reap only a fraction of the reward, so we should expect such experimentation to be under-provided.

To some extent, relatively forgiving bankruptcy law should encourage private individuals to produce such experimentation. The government can also directly produce some experimentation by funding basic social research into topics like prediction markets. Sadly, there doesn’t seem to be a good way to subsidize useful experimentation with institutions.

I am reading Predictocracy: Market Mechanisms for Public and Private Decision by Michael Abramowicz, about how prediction markets can be used for decision making in various places. Since I talk about governance mechanisms a lot on this blog, I intend to review the book later on.

In the mean time, here is a series of posts that Abramowicz did for The Volokh Conspiracy on prediction markets which I found pretty interesting. It includes some good-back-and-forth with Robin Hanson about Futarchy vs. Predictocracy (which I have discussed before).