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lessdazed comments on Rationality Quotes February 2012 - Less Wrong
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--Burning Man organizers
From the blog post:
It seems pretty easy to solve: auction off all the tickets.
The Market Economics Fairy is pleased with you! She blesses you with sparkles from her wand!
What profit does she get from dispensing sparkles?
It improves the chance that further Market Economics will happen by rewarding people who produce it. It goes without saying that Market Economics is a terminal value to the Market Economics Fairy. If she was just interested in profit, she'd be starting a hedge fund instead of going around telling people about Market Economics.
Market Economics fairy should consider starting a hedge fund anyway and investing that money into a lobby group or other means of promoting Market Economics. I sincerely doubt emitting sparkles from her wand is where her comparative advantage lies.
What do you mean? The Market Economics Fairy is way better at emitting sparkles from her wand than anyone else, and has no special talent for managing hedge funds.
Maybe, but I'm pretty sure there are substitutes: both for the role of sparkles, and manual production of them using a wand.
Well now you've proved that the Market Economics Fairy should quit her job and found a startup aimed at roboticizing sparkle production. I hope you're happy.
Very. :D
Just how much better than everyone else is she? Perhaps her comparative advantage is in creating a power company. Spend early revenue on recursively improving (ie. research that is money limited) sparkle -> electricity conversion then spend later revenue on hiring people to do FAI<Market Economics Fairy> research so she can maintain and consolidate her overall advantage as technology makes sparkle power obsolete.
Unfortunately for the rest of us the FAI<MEF> creates an environment that degenerates into a Hansonian Hell (then further into mere cosmic commons burning). If it behaved like a FAI<humanity> and did the smart thing and became a singleton the market economics fairy would disintegrate into a puff of vapor - presumably not part of her extrapolated volition. Once someone has won (secured control via overwhelming intelligence advantage) 'Market Economics' becomes nothing more than a charade. Yet maintaining an environment where market economics hold sway ensures a steady evolution towards more efficient competition which will tend toward one of two obvious local minima (burn the earth or, more likely, burn the light cone, depending on whether the leap to interstellar is viable for anyone at any point in the economic competition.)
The Market Economics Fairy must (eventually) die or we will!
(Pardon the Newsomlike tangential stream. It seems relevant/interesting/important to me at least!)
Who do you think is behind Ayn Rand?
You're missing the unstated corollary to this, or any other discussion of scalpers: 'and prices have to be "reasonable" for whatever demographic we claim to serve or would prefer to serve'.
Hence, you get discussions of young girl singers unhappy that all these icky old men are paying hundreds of dollars for the tickets to her concert, even though the market doesn't clear at the $40 or $60 her preteen fans can spare. (And if an organization does let the price float to its natural level of hundreds of dollars, then you get shocked articles in the newspaper on 'ticket inflation' and angry letters to the editor about how in their day you could get in for a nickel...)
I agree that ticketing is a difficult problem, but getting rid of scalping is easy if that's your primary objective. Pricing the externalities of event-goers is tough, especially when anti-discrimination legislation means you generally can't be upfront about it.
So there is the problem: The ideal of non-discrimination is not compatible with cases where the demographics of event-goers is itself a strong influence on the quality of the event for everyone involved.
I don't get the impression that getting rid of scalping is easy at all. What do you have in mind?
In the ancestral post, I recommend auctioning off the tickets. This ensures that the people who are willing to pay the most get the tickets, dramatically reducing the demand and increasing the risk for scalpers (if I buy a $20 ticket to a show I expect to sell out, a price decline is unlikely, and even if it happens it's probably only a few bucks per ticket. If I buy a $500 ticket to a show I expect to sell out, a price decline could wipe me out).
Now, you could still have people buying tickets at auction to sell at the door to people who weren't prepared, but that won't be a moral issue since you've already established that the tickets go to the highest bidder.
gwern rightly points out that this doesn't always deliver the best experience. The good first approaches to diversity are quotas and subsidies. They might offer burning man attendance at historical prices to people who have come previously, and then auction off a batch of tickets to new attendees, or give previous attendees vouchers which increase their bids by a set amount or a multiplier. (Content providers could even be paid for their trouble.) Whatever you decide you want to encourage, though, you're better off working with the price system than against the price system.
Would public hostility really result in lower profits than just selling at the market equilibrium price? If I did not know about the actual amount of scalping that happen, I would be very suprised to learn that tickets are priced so far below equilibrium.
The public hostility is clearly a negative of some kind; whether it actually reduces net lifetime discounted income or some metric like that, you'd have to ask an economist.
But the artists clearly do want to avoid the true prices being in any way ascribable to them. An example: I read in an article somewhere of the lawsuits against Ticketmaster where apparently one of the revelations was that high powered acts were able to quietly demand shares of Ticketmaster's 'fees' - this price increase was not perceived as a price increase by the act, but as Ticketmaster's fault. They took the blame in exchange for the act using their services, basically. I would guess that Ticketmaster gets a bigger percentage of the 'fees' than they would get in a straight ticket price increase; this difference would represent Ticketmaster's compensation for taking the heat. (And there was another bit, about acts demanding larger fractions of the tickets, which they would quietly sell at premium prices - but without the public opprobrium accompanying official prices that high.)
This post seems relevant.
Hostility might not be the only risk. If you want to have fans for an extended period, you'd do well to attract young people-- and they're likely to not have as much money.
Latest news: Burning Man blames game theory for their failure to understand basic supply and demand, hugely underprices tickets, 2/3 of buyers left in cold, Market Economics Fairy cries.
That's not a fair assessment of the organizers' skill level.
They seem to have a nice firm grip on the effect of fixed supply, fixed price, and increasing demand:
What they didn't predict was that the expectation of scarcity would further increase demand, creating a positive feedback loop. In their words:
So, they understand supply and demand (they just made a bad factual estimate of demand), and they didn't really understand game theory - but after they made their mistake they publicly admitted it, asked around to see what they did wrong, and proposed strategies for mitigating the mistake.
Why are we mocking them again?
I gather they didn't know how huge the demand would be this year.
Burning Man's problem might be a good topic for LW to kick around. Suppose you have pretty good abundance, how do you ration access to excellent social venues without having barriers that do damage to the venues? Is this even possible?
In this particular case, not all attendees appear to be equally valuable to the event/other attendees. Giving priority to people who've organized cool things in the last few years may make sense.
Yes, this was my reaction - 'let the price float, and give transferrable vouchers to the people who do the most awesome stuff; if they object, well, that's why the vouchers are transferrable'. It's not much different from what they're already suggesting, telling the lucky ones to distribute excess tickets among people they like.
I don't understand, won't pricing the tickets higher just cause people to be disappointed that the tickets were too expensive for them, instead of there not being enough?
It'd probably lead to a roughly equal amount of personal disappointment once the dust settles, but less disruption to the community. Major projects, the kind that the newsletter's alluding to when it talks about collaborations, aren't cheap; members of the camps that put them on usually spend at least their ticket price on supplies, to say nothing of labor. That implies that there's enough loose money floating around those projects that an increase in ticket prices wouldn't be an insurmountable hurdle.
Of course, it may very well be such a hurdle for those burners who've joined the event as spectators; principle of inclusion aside, though, those participants aren't as valuable to the organization or to each other as more committed folks. If there's concern over raising the bar too high for marginal theme camps to participate, the organizers could divert some of the excess funds into grants or reduced-price tickets for that demographic.
I get the impression that this line of thinking looks too cold-blooded for the Burning Man organizers to take to heart, though. Hence the rather strained attempt at casting the problem in terms of "Civic Responsibility" and "Communal Effort".
It will allow people that were willing to pay the market price actually buy the tickets. If there is sufficient demand then maybe a Burning Man 2 festival makes economic sense, or increasing the supply of tickets for Burning Man itself.
We live in a world of limited resources not of good wishes. Good wishes lead to dead weight losses. I don't see a possible scenario where price control is a good idea - LAW of supply and demand.
If there is some societal interest that the market fails to protect here (is Burning Man a fundamental right applicable to a certain type of person?) If so, then we should have a BMPA (like the EPA) formed to regulate the event.
Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries. - Ayn Rand
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