18 Jan 2018

My talks tomorrow at UC Davis and UC Berkeley

I'm presenting my paper tomorrow (Friday) at these times and places:

11:00 @ 1017 Wickson (ESP), UC Davis

16:30 @ Blum B100 (info), UC Berkeley

The evolution of the Dutch drinking water sector (with Bene Colenbrander)

Abstract: Dutch drinking water companies now deliver safe affordable water to the entire population, but this result was not planned. It emerged, rather, from an evolutionary process in which various pressures on the commons resulted in changes to drinking water systems that addressed old concerns but uncovered new problems. Our analytical narrative traces this problem-solution-new problem pattern through four eras in which a common-pool dilemma is addressed by a private-good solution (1850-1880), a club-good solution (1880-1910) and public good solution (1910-1950) before returning to a private-good solution in the last 1950-1990 era. Actions, like the dates just given, were not always exact or effective, as the process was shaped by changing social norms regarding the distribution of costs and benefits from improved water services. This Dutch history, while unique, supplies insights for improving drinking water services elsewhere.

Published! 2047 Short Stories from Our Common Future

I got involved in this project when Tanja Rohini Bisgaard, its founder, answered my call for authors for Life Plus 2 Meters with a call of her own:
Thirty years ago, the United Nations created a vision for our common future: one Earth, where we could all live together without damaging the planet for future generations.

In this short-fiction anthology, ten authors look another thirty years into the future, giving their perspectives regarding how we might—or might not—adapt to the changes around us in the year 2047.
I was pleased to write a short story about the origins, rise and eventual fall of the Sisson family of Visalia, California -- a family that worked hard but was finally beaten by falling ground water levels.

You can read my chapter directly here, but I recommend that you buy the book: It's $8 paperback/$4 Kindle (go here for UK site and other buying options) and has another nine chapters!

16 Jan 2018

Published! Group cooperation and public goods

Back in grad school, I was doing experimental economics in the lab to test whether water managers who worked together were more cooperative than random students. The experiments were based on a "public goods game" in which each player in a random group of four decided to help themselves or help others in the group. Players were anonymous to each other because they were hidden behind computer screens, but there was a clear benefit to all from cooperation, just as there was a clear benefit to the individual "freerider" who took advantage of others' cooperation.

My results were surprising to anyone who believes that "public servants" focus on the group rather than themselves, as the water managers were no more cooperative than the students. Economists would not be surprised, as they would assume public servants behave just like other people. Skeptics would laugh at the idea of cooperation, of course, as they tend to think as follows:
SOCIAL scientists tell a story about a peasant called Vladimir. One day God comes down to him and says: “I will give you one wish. You can name anything you want and I will grant it to you.”
Vladimir starts to celebrate, but then God lays down a condition. “Whatever you choose,” He says, “I will give to your neighbour twice over.”
Vladimir frowns and thinks. And then he clicks his fingers. “I have it,” he says. “Lord, please take out one of my eyes!”
Taking such a diversity of opinions into account, I was glad to add some data to the discussion.

These experimental results were central to my dissertation ("Conflict and cooperation inside an organization"), and the chapter on the experiment ("Water managers are selfish like us") was improved and published as a chapter [pdf] in a handbook on experimental environmental economics.

After doing those experiments, I got excited about testing other questions regarding cooperation within and across groups. I was mostly interested to try to find the line where people acted strategically regarding their cooperation decisions in a group, i.e., when did it make sense to freeride and when did it make sense to cooperate. In a small group, for example, it may be harder to freeride because others could observe your actions more easily than they could in a larger group. (These ideas date back to Olson's 1965 Logic of Collective Action, so I wasn't innovating on hypothesis as much as testing one.)

In the end, I decided to test a few ideas:
  1. Would students in groups of 20 cooperate less if their grades were "curved" such that grades depended on relative performance, as opposed to depending on absolute performance? My hypothesis is that group size would be too large to induce strategic (more defection) behavior.
  2. Would students cooperate more if their earnings depended on how well they did compared to everyone else not in their group? My hypothesis was that such "in group" cooperation incentives would have a positive impact.
  3. How would my four treatments compare on impacts? My hypothesis is that the four could be separately ranked, thus providing some empirical advice.
I conducted most of the experiments in 2007 and got useful responses but never got 'round to sending the paper into a journal. Fast forward to 2016, and I got a call for papers on strategic behavior and cooperation. I sent in the paper, made lots of very significant and useful changes in response to referee comments (yay peer review!) and got published.

You can download the paper here until 19 Jan, along with all the other papers in the special issue. After that point, you should email me if you want a copy or download it from here.

Oh, and what about the hypotheses? On #1, there was no real difference in cooperation, so "curve grading" will probably not reduce cooperation, efficiency or output among students or workers. If you have experience for or against, then please comment!

On #2, there was a big difference when students were rewarded to relative performance compared to everyone outside their group/team. This "in-group" result is no shocker, but it's important in reference to any firms or bureaucracies that might want to set up teams. The other part goes with #3.

For question #3, there was a clear ranking of "in group" cooperating the most, followed by curve grading/absolute grading, with the fourth treatment (how well you do compared to members in your group) having the lowest cooperation. This ranking is useful -- as the paper discusses -- in thinking of ways to structure regulatory, pollution or collective action incentives.

Bottom line: Read my paper if you want to think more about how people do (not) cooperate in small groups, organizations or bureaucracies.

12 Jan 2018

11 Jan 2018

Environmental and Natural Resource Experiments -- free downloads for one week

Strategic Behavior and the Environment has published a special issue on Experiments on Environmental and Natural Resource Policies, and all articles are free to download until 19 Jan.

(You need to register to download from that URL or any of the links below...)

I'll discuss my paper next week here, as there's some interesting background and context to add.

SBE 7:1-2 - Table of Contents

Stephan Kroll and Jordan Suter, Introduction to the Special Issue: Experiments on Environmental and Natural Resource Policies

Todd L. Cherry and David M. McEvoy, Refundable Deposits as Enforcement Mechanisms in Cooperative Agreements: Experimental Evidence with Uncertainty and Non-deterrent Sanctions

Joshua M. Duke, Kent D. Messer, Lori Lynch and Tongzhe Li, The Effect of Information on Discriminatory-Price and 
Uniform-Price Reverse Auction Efficiency: An Experimental Economics Study of the Purchase of Ecosystem Services

Orsolya Perger, Curtis Rollins, Marian Weber, Wiktor Adamowicz and Peter Boxall, Tradable Disturbance Permits for Old-growth Forest Conservation: Experimental Evaluation of Implementation Options

David Zetland, Exploring Group Cooperation in the Provision of Public Goods

Julian Jamison, David Owens and Glenn Woroch, Social Learning about Environmental Innovations: 
Experimental Analysis of Adoption Timing

Rohit Jindal, Joe Arvai, Delia Catacutan and Dam Viet Bac, To Cheat or Not? 
Results from Behavioral Experiments on Self-monitoring in Vietnam

For other issues or for subscription information, please visit www.nowpublishers.com/sbe.

Review: Digital Gold: Bitcoin, the Inside Story

I've been following bitcoin since I first tried to mine coins in 2010 (alas, I gave up when I couldn't get the software to work. Newbie mistake). Since then, I have been tracking the idea as an economist interested in how an entrepreneurial ecosystem develops through excess, crash and recovery. (I have a few bitcoins, but "hodl" as trading in and out is a fool's game.)

Bitcoin and the blockchain protocol are fascinating creations. Bitcoins are merely sets of digits. The blockchain makes them valuable by limiting their number (no copy and paste) and assigning their ownership (creating property rights). Satoshi Nakamoto (a person, I think) explained how to mine bitcoin and assign their ownership via the blockchain in a nine-page 2009 whitepaper [pdf] that anyone interested in the technology should read.

Many people have heard of bitcoin and many new crypto currencies (e.g., ether, litecoin, bitcoin cash, monero, etc.) due to the astronomical increase in their prices and the volatility of those prices. Yesterday, the price was $15,000 per BTC; now (22 Dec) it's around $12,000, down 40 percent from a few days ago. It may be up or down by the time you read this. Crypto is the new widowmaker...

So if you're curious about crypto, then you might want to read Natheniel Popper's 2015 book, Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

I don't actually have much analysis or comment on this book, nor will I summarize the plot, as the entire thing is a fast-paced read that begins in 2010 and covers the major events (the crash of MtGox and takedown of Silk Road among them) with lots of personal details on the people who supported bitcoin to change the world as well as those who just wanted to make a fast buck. I enjoyed the book for its insights into the complexities of "making a new market" out of thin air computer code and all of the ways that people guessed right or wrong on the way.

If there is any lesson in the book, it's "don't be greedy" as many of the men in the book (not a single woman plays an important role) were unable to see their weakness or listen to others advising caution. That perspective is as true today, when there are hundreds of new crypto business models vying for our attention, money and future.

Bottom line: I give this book FIVE STARS. Crypto (digital currencies and blockchain ledgers) are here to stay. You don't need to get rich off them to benefit from their value, so don't kill yourself trying. Just try to understand how they work, and use them if they make sense to you.
I'll add essays of interest here.

Krawitz (2014): "The interplay of these three defenses makes Bitcoin into a kind of wave that rewards those who ride it and drowns those who resist it."

NYT (2018): "Everyone Is Getting Hilariously Rich and You’re Not"

von Minckwitz (2018): The Revolution is just starting

9 Jan 2018

Published! Life Plus 2 Meters, Volume 2

This second book in the series offers 34 "visions" of how we might (not) adapt to life in a climate-changed world.

You can download the PDF for free or pay for the Kindle ($1) or Paperback ($4) versions. (You can get Volume 1 for roughly the same costs.)

This non-profit project has been very fun but also a lot of work, so I am going to stop here.

I am very grateful for the project's kickstarter supporters, Leiden University College for subsidizing some of the costs, and the 33 other authors who were so creative at thinking about the future.

Please enjoy the book, think about the stories and recommend it to your friends and family. Climate change is coming here and we need to cooperate to reduce our risks and protect our quality of life.

4 Jan 2018

Innovations for a better world

There's a contest to select the best idea, out of nine, for "The Hague Innovator's Challenge"

These ideas are from local people, but they can be implemented anywhere in the world.

Here are the ideas:
  • The Healing Pod
  • Very Important Electric Transport Services
  • Cheaper driving lessons, less pollution and fewer traffic jams
  • A trust-based network of disaster responders
  • A game that quickly generates ideas
  • The Open Insect Farm
  • Connecting Africans to local and western health professionals
  • Fungi for smart building panels
  • Co-operative sustainable urban logistics
You can vote here until 15 January.

The robotic future

I don't see any barrier to this slaughterbot scenario coming to pass, which is terrifying.