We’ve found a witch; may we fine her?

Paul Raven @ 14-02-2011

Via Freakonomics, an odd story out of Romania:

A month after Romanian authorities began taxing them for their trade, the country’s soothsayers and fortune tellers are cursing a new bill that threatens fines or even prison if their predictions don’t come true.

[…]

In January, the government changed labor laws to officially recognize the centuries-old practice of witchcraft as a taxable profession, prompting angry witches to dump poisonous mandrake into the Danube in an attempt to put a hex on them.

After reading that piece, I can’t say I’ve got much pity left for AP’s struggle to monetise their business for a new era; it’s full of dumb racist clichés and stereotypes, for a start (“the land of Dracula”… that’s really the best you could do?), and extraordinarily thin on actual story. But then so is almost every other write-up I can find on the web right now – anyone out there got a Romanian connection for the local viewpoint?

But the Freakonomics mention is my real reason for posting, because – flippant as it may seem – they make an interesting point:

… if I were Queen Witch (for a day), I might frame my argument a bit differently: As soon as the government starts to punish all fortune-tellers — including macroeconomists, financial analysts, government officials, sports pundits and the like — for their wayward predictions, I will gladly join the throng. Until then: no deal.

It’s a matter of accountability: if you make a living from predicting stuff, you should do less well if your predictions are regularly wrong. Personally I’d suggest that governments aren’t in the best place to enforce that sort of accountability – it’s not really in their best interests, as they’re arguably the most consistent sinners – and that this a job for reputation economics and radical transparency. Indeed, as foresight becomes an increasingly important part of pretty much every industry and ideology, increased scrutiny of accuracy is inevitable; there’s probably a really good business model or two lurking in that idea space.

I’m not sure why the witches are so upset, though; homeopathy is a taxable “profession” in the UK, for example, and shows no sign of dropping off the map as a result. No matter what technological leaps me make, I suspect Barnum’s adage – which, appropriately enough, wasn’t even his own adage – will hold true for a long time yet…


Redefining karma and building reputation economies

Paul Raven @ 29-03-2010

An interesting and lengthy overview post from Randy Farmer and Bryce Glass, authors of the book Building Web Reputation Systems, on (unsurprisingly) the basics of building web reputation systems [via MetaFilter].

I’ll swap ten whuffie points with anyone who has the time to buy and read this book on my behalf and give me a succint 10-page precis thereof…


More thoughts on the LoveMachine

Paul Raven @ 17-11-2009

Thanks to New World Notes, we get a little more detail about Philip Rosedale’s LoveMachine system, the reputation-based closed economy we mentioned yesterday.

Cory Ondrejka was Linden Lab’s CTO until 2007, and he was instrumental in developing the LoveMachine system as it operated within the company; here he is explaining a little more about how it came together:

One of my tasks was to invent a new system for employees to give each other feedback, one that would be fun, so easy everyone would use it, and that would generate interesting aggregate information about how individuals and the company were doing.

The design that emerged was tipping.

Tipping — via an internal web tool — would be a positive-sum, transparent game, a way to publicly thank a fellow Linden for going above and beyond. Finding a crucial bug, crunching some extra numbers, helping you figure out the right person to take a question to. Think “Twitter plus $1.” The key was to make it a small amount of money, as a payment makes it real but you don’t want to distort behavior with meaningful payouts.

Tipping was designed to solve three problems: help Lindens know what their fellow employees were doing, generate aggregate data on connections within the company, and identify extreme outliers. It wasn’t clear to me if your tipping rank would be important, but it might be meaningful data if you were generally at the top or the bottom of the list.

He also has suggestions on the problems that LoveMachine – or similar systems – may need to overcome if they’re to be of genuine utility:

The challenges that emerge, of course, fall into three broad categories. First, we optimize for what we measure, so unless you know what you are measuring exactly aligns with business goals, there are going to be misalignments. At Linden, people wrote tools to make it easier to use The Love Machine by irc, chat, email, and the web. This created “pile-on voting”, where an employee would thank someone and other employees would also deliver love to the recipient. This made the amount of love received a function of the time of initial delivery and the communication channel used, which may or may not have been desired. Second, people don’t like just being numbers, they want to understand what they can do to improve, so while The Love Machine should provide additional context for peer and manager feedback, it clearly can’t replace those conversations. Finally, with a transparent system like the Love Machine, are those ranked at the top retained? Are employees who leave or who are fired near the bottom? If not, you may introduce more communication and management overhead rather than reduce it.

If there’s one thing that can be said for certain about reputation engines, it’s that they’re not going to be an easy fix. I guess we’ll only really find out if they work once someone builds one successfully…


LoveMachine Inc: Second Life founder’s reputation-as-currency start-up?

Paul Raven @ 16-11-2009

Love, Second Life styleOh, to be a CEO of a tech start-up… they can get bored of their projects even faster than the public can, y’know. Actually, that’s a little unfair – Philip Rosedale, the man behind Linden Lab, hasn’t lost interest in Second life so much as he’s looking for a new fish to fry with his new company, LoveMachine Inc. [image by Mrs. Bones]

What does LoveMachine do? Apparently it’s developing a system of the same name that was used by Linden Lab as a points-based incentive tool:

Linden employees gave and received “love” for a job well done. If an employee was well-received amongst his or her peers, their accumulated love currency was redeemable for a cash bonus at the end of the month. Similar to social capital systems like Whuffie Bank, it appears that LoveMachine may become a reputation currency system for businesses.

Interesting to see another outfit chasing after reputation economies as a potential business model… and restricting such a system to the limited and manageable confines of discreet organisations makes sense, as closed economies are inherently easier to manage. I expect they’ve heeded Bruce Schneier’s advice on reputation economies, too:

You’ve all experienced a reputation economy: restaurants. Some restaurants have a good reputation, and are filled with regulars. When restaurants get a bad reputation, people stop coming and they close. Tourist restaurants – whose main attraction is their location, and whose customers frequently don’t know anything about their reputation – can thrive even if they aren’t any good. And sometimes a restaurant can keep its reputation – an award in a magazine, a special occasion restaurant that “everyone knows” is the place to go – long after its food and service have declined.

Details of the LoveMachine plans are understandably sketchy at the moment. However, Rosedale and company have got a public worklist of jobs that they need a contractor to take on, and – if you live in the San Francisco area – they’re looking to hire. [hat tip to Fabio Fernandes]


Virtual economies, virtual reputations and virtual business suits

Paul Raven @ 09-10-2009

Metaverse office space?Once the hype over Second Life died out, virtual worlds kinda disappeared from the high-profile headlines. But there’s still plenty of stuff going on in the metaverse, not least its use as a test-bed for theories to apply in reality. [image by Ramona.Forcella]

Economics is a popular choice; we’ve reported before on the bank runs and currency collapses of EVE Online, and now Edward Castronova – author of Synthetic Worlds, which should be your first port of call if you’re even vaguely interested in metaverse economics – is leading a team who’re examining the economy of EverQuest II. [via SlashDot]

Researcher Edward Castronova, professor of telecommunications at Indiana University, said researchers can learn almost anything about human society in games as they really are human societies.

However unlike real society they can be observed and tweaked.

“We can do controlled experiments in virtual worlds, but we can’t do that in reality,” said Castronova.

“Controlled experimentation is the very best way to learn about cause and effect. We are on the verge of developing that capacity for human society as a whole.”

[…]

After studying 314 million transactions within the fantasy world of Norrath in “EverQuest II,” including trading in-game goods like armor, shields, leather, herbs and food, the researchers were able to calculate the GDP of one of the game servers (the back-end computer that hosts thousands of players in one world).

As more people opened accounts and flocked to Norrath, spending money on new items, researchers saw inflation spike more than 50 percent in five months.

Game economies are, much like real economies, predicated on more than just a currency. Reputation scores are a big part of game economies (and many social networks, too), but the problem with “karma” systems is that they’re usually implemented in a way that renders them pointless, and which leads to the formation of in-game “mafias” [via BoingBoing]:

There can be no negative public karma-at least for establishing the trustworthiness of active users. A bad enough public score will simply lead to that user’s abandoning the account and starting a new one, a process we call karma bankruptcy. This setup defeats the primary goal of karma-to publicly identify bad actors. Assuming that a karma starts at zero for a brand-new user that an application has no information about, it can never go below zero, since karma bankruptcy resets it. Just look at the record of eBay sellers with more than three red stars-you’ll see that most haven’t sold anything in months or years, either because the sellers quit or they’re now doing business under different account names.

A different (though related) kind of reputation will be bothering the business crowd, however, and the Gartner firm of analysts is convinced that in less than five years, 70% of businesses will have issued avatar dress-codes to their employees [via SlashDot]:

“As the use of virtual environments for business purposes grows, enterprises need to understand how employees are using avatars in ways that might affect the enterprise or the enterprise’s reputation,” said James Lundy, managing vice president at Gartner, in a statement.

“We advise establishing codes of behavior that apply in any circumstance when an employee is acting as a company representative, whether in a real or virtual environment.”

This puts me in mind of a recurring motif in William Gibson’s novels, where he repeatedly makes the point that the most powerful and resource-rich virtual environments will be the ones that look subtle and understated, while the low-budget hucksters will dress to impress with excessive bling and extravagant eye-candy. The subtle grunge and mundane decay of reality is harder to simulate than grandiose overstatement; as in real life, it’ll be wise to tread lightly around the ostentatious.

Not interested in playing games or doing business in the metaverse? Well, you could always go learn to speak a dying language.


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