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bogus comments on Open thread, Jan. 26 - Feb. 1, 2015 - Less Wrong Discussion
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Sublinear pricing.
Many products are being sold that have substantial total production costs but very small marginal production costs, e.g. virtually all forms of digital entertainment, software, books (especially digital ones) etc.
Sellers of these products could set the product price such that the price for the (n+1)th instance of the product sold is cheaper than the price for the (n)th instance of the product sold.
They could choose a convergent series such that the total gains converge as the number of products sold grows large (e.g. price for nth item = exp(-n) + marginal costs )
They could choose a divergent series such that the total gains diverge (sublinearly) as the number of products sold grows large (e.g. price for nth item = 1/n + marginal costs )
Certainly, this reduces the total gains, but any seller who does it would outcompete sellers who don't. And yet, it doesn't seem to exist.
True, many sellers do reduce prices after a certain amount of time has passed, and the product is no longer as new or as popular as it once was, but that is a function of time passed, not of items sold.
Snowdrift.coop is essentially trying to solve the same problem in a different way. Instead of changing the product price as more units are sold, they ask folks to finance its fixed component directly, using a game-theoretic mechanism that increases total contributions superlinearly as more people choose to contribute. (This boosts the effectiveness of any single user's contributions through a "matching" effect). However, there is no distinction between "earlier" vs. "later" contributors; they're all treated the same. The underlying goal is to generalize the successful assurance-contract mechanism to goods and services that do not have a well-defined 'threshold' of feasibility, especially services that must be funded continuously over time.
I don't think Snowdrift understands why communism failed (or economics in general).
Not sure how communism is relevant here. Snowdrift.coop's mechanism is entirely private and voluntary, and assuming that it works properly, it's incentive properties are superior to typical charities or governments.
To quote from Snowdrift's site:
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That remains to be seen. Its incentive properties are basically "winner take all". Maybe they should have called the project Snowball, not Snowdrift.
How is this wrong? Kickstarter, IndieGogo and similar projects have boosted the funding of FLOSS software and CC artworks/educational works significantly. Snowdrift.coop is simply an extension of that model.
The 'winner take all' properties of Snowdrift.coop are overstated. If you think a project is raising 'too much', you're free to compensate by reducing your stake, although this will nullify the incentive effect of your contribution. There is no way of escaping this - the same change in incentives happens on Kickstarter when "the goal" is reached. Here, the "goal" of contributions is fuzzy and entirely determined by funders' choices.
It's an interesting idea but I'm not sure it has the psychology behind crowdfunding right. It seems to be constructed to minimize the risk donors carry in the event of a failed campaign, and to maximize the perceived leverage of small donations; but it does that at the expense of bragging rights and fine-grained control, which might make a lot of donors leery. I think you could probably tweak it to solve those problems, though.
It also does nothing at all to solve the accountability issues of traditional crowdfunding, but that's a hard problem. I wouldn't even mention it if they hadn't brought it up in the introduction.
(Also, that's some ugly-ass web design. I get that they're trying to go for the XKCD aesthetic, but it's... really not working.)
Yes, crowdfunding is mostly based on trust, not accountability. But a service that's funded continuously over time (the Snowdrift.coop model) ought to be inherently more accountable than a single campaign/project.
Yeah, it's more accountable than Kickstarter funding, but not more accountable than Patreon funding.
I think it's been constructed to maximize democracy -- the crowdthink determines the flow of money. I can't tell if the author considers the inevitable snowballing to be a feature or a misfeature (or even realizes it will happen).