You are currently browsing the monthly archive for May 2008.

My brain has a limited capacity to store knowledge. In the past, I frequently needed to think about a particular topic and remembered finding valuable resources for it, but didn’t remember enough to find them again. The internet alleviate this problem. It is easy to write stuff down on the internet, and then find it again later.

Right now I use Google Notebook. When I find information on a topic I am or might be interested in, I write it down or link to it and describe it. If I have a preexisting note I add the information there; if I don’t, I start a new one. That way, when I decide to revisit the topic, I can search and find sources that I have already come across. When I find a paper that I might want to read later, I write a note to myself, so that I can find it later if I decide to read it.

Here’s a typical note, from my “Investment” notebook:

Online banking, higher rates than capital one
offering 4.1% when capital one was at 2.96%
offshore bank maybe a little sketchy

also high CD rates for large sums 100k – 7.5%
not FDIC insured key

some skepticism about it

I found some interesting information online on banking, that I thought might be useful in the future, so I wrote it down for the next time I have to make a related decision. I wish I could do this with my school-real life note taking and store it on a computer where it is searchable.

I also occasionally look though my notebooks without a specific goal in mind. I do this for a couple reasons; 1) I can correct misspellings and errors, 2) sometimes it inspires me to look to go and read something or spend time thinking about an idea I had, and 3) leafing through it helps me remember what resources I actually have in there, which is important if I don’t want to start from scratch next time

I suspect that I will stop using Google Notebook soon because Google has seemingly stopped updating the application. Google has removed the application from their menu bar in Gmail. The search feature is also somewhat limited; for example, if I search for ‘auction’ it doesn’t do the regular Google things like also searching searching for ‘auctions’.

I don’t know what software I should use. I do know that Zoho has a Notebook (though it doesn’t seem to have a search feature!), and Second Brain seems interesting (though it doesn’t seem focused around note taking), but I haven’t played around with any software for an extended period.

Do other people do this sort of thing too?

There are many ideas floating around for reforming existing institutions so that they produce significantly better outcomes. The three ideas for reforming governing institutions that I know of are Predictocracy, Futarchy, and Professional Voting; I am sure there are more, and I know there are a lot more for reforming other institutions. However, there is a noticeable lack of experimentation with type of idea. Does it make sense not to experiment? Let’s do a few back-of-the-envelope net present value calculations to see if it does or not.

Let’s say that we judge Futarchy to have a 1% chance of working. Let’s also assume that if we experimented with it now it would take 30 years for the benefits to appear, that it would save everyone in the country $100/year (a conservative guesstimate, remember this is contingent on Futarchy “working”), and that the total investment would be about $100 million (surely a massive over guesstimation). Using a discount rate of 10%/year, the Net Present Value of a $100/year stream appearing after 30 years is $57 (I did the calculations). There are 300 million people in the country so the total Net Present Value is ( 1% x $57 x 300 million ) – $100 million = $70 million. So even under these calculations, the expected benefit of researching Futarchy is massively positive. Not experimenting is huge loss.

The thing that makes this investment so good is the fact that there are a lot of people in the country. Finding an institutional reform that makes peoples lives better provides a massive public good, but costs a fixed amount to find. In these calculations I have only included the people in the country, the expected benefit is an of magnitude larger if we consider the benefits to everyone in the whole world.

I thought that Cass Sunstein’s EconTalk podcast on worse case scenarios had an interesting discussion of discount rates (this section starts at about minute 55 and it is about 9 minutes long). He argue’s that there’s a difference between discounting lives and discounting money because money has opportunity cost; you can invest money and make it grow, whereas you cannot do the same thing with lives. that we should not have a discount rate in our pure preferencesHowever, Robin Hanson dissented.

I tend to side side against discount rates in our pure preferences. Even if people act like they have discount rates in their pure preferences (note the lack of charities trying to help the future), as Hanson points out, perhaps they would if they understood how easy it is to help the future.

I have noticed something about myself in the last year or so, I fear being proven wrong. When I see some study on a topic about which I have a prior opinion, I get a light dose of fear. To give a more specific example, after I finish writing a post for this blog, I consider reading it over in order to revise it. My immediate reaction to that suggestion is to fear that my belief that I have written an eloquent post is wrong. Ironically actually discovering errors does not cause me much pain.

This seems like a clear case of confirmation bias, and being biased is bad. Bias leads to costly mistakes, like writing bad posts and making unwise investments. Luckily, I have come to recognize this feeling of fear relatively easily, and recognizing it helps me to identify when I might be prone to confirmation bias and to lookout for possible disconfirming evidence. This feeling of fear is my own special marker for confirmation bias.

When I recognize the feeling, I know that I should think carefully about my choices about what evidence to seek. I make sure not to avoid looking at evidence simply because it might force me to change my beliefs, and I often try to actively seek possible disconfirming evidence.

I am sure I don’t always notice my fear, and overcoming even light fear can be difficult, but I am glad that confirmation bias has a relatively clear marker. I don’t know if other people get this same fear emotion, but I wouldn’t be surprised if it is a general phenomena.

The Commodity Futures Trading Commission is calling for public comments on possible regulation of “Event Contracts.” As I understand it, this is good news for prediction markets; there is a lot of uncertainty about the regulatory status of prediction markets, and this seems like it would clear that up. A clear regulatory framework would pave the way for real-money prediction markets. At least, as long as event contracts are not regulated out of existence. It is my impression that this is a very good thing, so I am very excited.

I will be submitting comments via e-mail (, and I encourage others to do the same.

The gist of my comments is going to be that I see the potential for prediction markets to help regular people, who don’t have access to a lot of data and analysis, make decisions. For example, prediction markets about the future of renewable resource technologies could help engineering students determine whether they should invest resources in learning about those technologies. Prediction markets about the economic future of specific geographic areas could help young workers decideĀ  where to move to get good jobs. Therefore, I would like to see the prediction markets relatively unlimited.

via Midas Oracle