Intellectual Property's Ungrateful Hitchhikers

I'm going to discuss an ethical and decision-theoretic intuition that underpins my support for intellectual property rights, and which seems to be absent, or unintuitive, among anti-IP libertarians. (See the discussion linked in yesterday's post for lots of good examples.)

But first let's consider a puzzle in decision theory. This one is known as Parfit's Hitchhiker and, as best I can tell, comes from Derek Parfit's book Reasons and Persons, though the term "hitchhiker" didn't come up in a search of the book.

It goes like this (well, my version does anyway): Assume you're lost in the desert, with nothing of value on you. You're approached by a superpowerful, superintelligent being we'll call Omega. It is willing to take you back to civilization and stabilize you -- but only if you will withdraw $5 from your bank account and give it to Omega once that's over with. (Yes, such a being might have reason to do this.) It has no enforcement mechanism for if you don't pay.

But here's the catch: Omega can scan you in detail and find out if you're really intending to give it the $5 when you're safe, rather than -- I don't know -- reasoning that, "Hey, I'm already safe, I've already got what I need and all, and you know, this Omega thing is powerful enough anyway, I think I'll just keep the $5." And if it finds that you wouldn't give it the money upon reaching safety (i.e. you don't have a decision theory that outputs "pay $5 to Omega" given that you are safe), then it just won't take you back and you can die in the desert.

At this point, a lot of you might be recoiling in horror: "What? Keep a measly five dollars when this thing saved my life? Are you ****in' nuts?" Yeah -- you're the people with the intuition I was referring to at the beginning -- the one that I have, and the anti-IP libertarians don't seem to. More about that in a minute.

Those of you who didn't recoil in horror may be thinking something like, "Whoa whoa whoa, I don't like dying. See, I would just make a contract -- or heck, even a simple promise -- that I will give Omega the $5. Since I feel honor-bound to abide by my promises, of course I would pay, and wouldn't have such diseased thoughts" as I referred to above. But I didn't make it that easy: note that Omega doesn't ask you anything and can't even receive your messages. Its decision is based entirely on what you would do, given that you know the details of the situation.

Here's the neat thing to notice: you will never find yourself in a position to be deciding whether to take that final step and give the Omega-like being $5 unless you adhere to a decision theory (or "ethic", "morals", etc.) that leads you to do things like "give Omega $5 for rescuing you at least in those cases where it rescued you conditional on expecting you to give it that $5" even when you already know what the Omega-like being has decided, and that decision is irreversible.

(I know, I know, I'm doubling up on the italics. Bear with me here.)

Conversely, all of the beings who come out alive have a decision theory (or ethic, etc.) which regards it as an optimal action (or an "action they should do", etc.) to pay the $5. Omega's already selected for them!

Now at this point, those of you who don't have the recoiling intuition I referred to, or are still worried I'll derive implications from it you don't like, may insist that this is a contrived scenario, with no application to real world -- you can't make your decisions based on what capricious, weird, superpowerful agents will do, so why change your decision theory on that reasoning?

And there is something to that belief: You don't want to become a "person who always jumps off the nearest cliff" just because there's some rare instance where it's a good idea.

But that's not what's going on here, is it? Omega makes its decision based upon what you would do, irrespective of what decision process led you to do it. So for purposes of this scenario, it simply doesn't matter whether you decide to pay that $5 because you:

- feel honor-bound to do so;
- feel so grateful to Omega that you think it deserves what it wanted from you;
- believe you would be punished with eternal hellfire if you didn't, and dislike hellfire;
- like to transfer money to Omega-like beings, just for the heck of it;
- or for any other reason.

So, then, is it normal for the world to decide how it treats you based on (a somewhat reliable assessment of) "what you would do"? Yes, it is, once you realize that we already have a term for "what you would do": it's called your "character" or "disposition" (or "decision theory" or "generating function").

Do people typically treat you differently based on estimations of your character? If you know where they don't, please let me know, so I can go there and let loose my sarcasm with impunity.

So, to wrap it up, what does Parfit's Hitchhiker have to do with intellectual property? Well:

- Omega represents the people who are deciding whether to produce difficult, satisfying intellectual works, conditional on whether we will respect certain exclusivity rights that have historically been promised them.

- The decision to rescue us is the decision to produce those intellectual works.

- The decision to pay the $5 represents the decision to continue to respect that exclusivity once it is produced "even though" they're "not scarce anymore", and we could choose otherwise.

The lesson: if you don't believe that the Omegas in your life "deserve", in an important sense, to be paid, you won't find yourself "rescued". We are where we are today because of our beliefs about what "hitchhikers" should do, and we miss out on rescues whenever we decide to become ungrateful hitchhikers. (Edit: that should probably be phrased as "... whenever we decide that it's right for hitchhikers to be ungrateful.")

(Note: this post was heavily influenced by Good and Real, Chapter 7, and by this article on Newcomb's problem.)

A non-conspiratorial explanation of oil's price history

As you're probably aware, oil this year surged to $147 a barrel and then fell to, as of today, about $40 -- over a 2/3 drop in less than six months. And its peak was over a 100% increase from the previous year. With a lot of the decline shortly before the election, this roller-coaster ride has prompted quite a lot of conspiracy theories.

Well, recently on another (private) forum, I summarized the significant reasons why oil acted like that, without reference to any conspiracy. I'll repeat it here:

1) China was buying a lot of oil and stockpiling it. Unlike the general "growth in emerging markets", this actually came as a surprise to a lot of speculators, which is why it was such a fast rise instead of a gradual one since 2000. China was doing this in order to burn less coal and make the air cleaner for the Olympics. Now that that's over, a significant source of demand is gone.

2) Because of the credit crunch, speculators were significantly less able to borrow and bid up the price of oil. Once it hit, they had to significantly unwind their positions.

(Now, I'm all for the right of people to make speculative purchases; however, what we had there was *far* from a free market. For one thing, the government's bailing out of banks that had hedge funds doing the speculating, eliminated the strong negative downside to hype-based, stupid speculation. Also, a lot of the *naked* shorts and longs were very corrupt where if one party lost money, the brokerage would act like it can't find the original contract and try to reverse the sale. Things like this artificially amplified the price premium due to hype [as opposed to rational estimations of future developments] and crowded out wiser investors.)

3) The global economic downturn significantly revised investors' estimates of future oil demand.

4) The president's, and then congress's, termination of the ban on offshore drilling also significantly changed expectations about future oil availability. These helped prod oil down.

"Cynical comment left elsewhere" of the day

I've been pretty fed up with the combined favoritism and outright stupidity in the financial system these days. This has led me to guess that any exchange involving a promise from a large, old (and therefore probably protected at all costs by our Overlords in Washington) corporation is going to, less and less often, be treated as something they have to *sigh* actually honor. With Sears and K-Mart reinstituting layaway (in which you make installment payments and then, after the last, receive the product), I figured this would be just another promise you can't trust anymore.

Well, a former happy customer of layaway services, calling herself "Princess of Swords", didn't seem to notice this trend and so disputed my prediction in a discussion on a Megan McArdle post. (UPDATE: previous link was to the wrong site.) Here, I post my response, in which you'll start to understand the basis for my pessimism:

******

Princess_of_Swords: Thanks for taking the time to detail your experience with the intricacies and standard practices prevailing with respect to layaway at the time you availed yourself of it.

Now I'm going to explain to you how it works in the real world.

In the real world, an obligation no longer means anything.

-GM was obligated to pay pensions. They didn't even bother to internally classify them on the same level as a bond, until forced to by law.

-Insurance companies are obligated to pay when disaster strikes. They fight as hard as they can to avoid paying, even for plain vanilla cases.

-Individual consumers buy things on credit, deferring the first payment for a long while. They are routinely caught not having saved for that big first payment.

-Securities brokers engage in naked short-selling of stocks, which obligates them to produce actual ownership of that stock at a later date. Yet as we've seen recently, they've ended up flooding the market with fake stocks and then casually aver that they "can't locate your stocks" and offer to reverse your purchase as if it were no big deal.

-Gift card issuers are unilaterally stealing money from gift card owners on the grounds that "they need it" because they're in financial trouble, despite having obligated themselves to treat the gift cards as equivalent to cash.

-AIG got a massive bailout from the Fed, but, we were assured, they would be obligated to pay a hefty penalty interest rate and start immediately and orderly unwinding their enterprise. Well, the Fed went back and cut their payments in exchange for nothing, thus debasing the Fed's assets (and thus the dollar). And AIG has done virtually nothing to liquidate its assets.

You get the point. I just don't care how you think things used to work back then. We are in a new world, where only us responsible commoners have to keep our word.

GM Watch: Ve haf vays of making you sell us tires!

Very strange story on CNN's Money today. It looks like GM Daewoo got a court order requiring two tire makers to keep selling tires to Daewoo, a GM owned subsidiary.

Huh? Now, why would GM need a court order to get someone to sell them car parts? Here's the key part of the story:

Hankook Tire Manufacturing (000240.SE) and Kumho Tire (073240.SE) stopped supplying tires to GM Daewoo's main Bupyeong plant at 0400GMT Friday, calling for an additional 12% price hike on top of a 5.5% rise agreed with GM Daewoo in March.

Only having read this article, it's hard to know the full story. Did Hankook and Kumho agree to sell the tires at a certain price and then reneg? Or did the agree that the tires *could* be hiked by at least 5.5%, and upon later reflection realized they couldn't justify selling the tires except at 12% more?

The former seems unlikely, since it would have made more sense for GM to just pay the extortion and sue to get the money back later, rather than take the hit to production described later int the article (without percentages). But then, the latter seems unlikely too, because what is the point of such an agreement?

I guess it all comes down to the intricacies of Korean law, and the tight relationship between businesses, unions, and government.

But having to sue to get your tires? Sorry, it just makes GM look that much worse.