This will be my last post until Labor Day. I will be spending as little time online as possible, reading books instead, spending time with family and friends and working on World After Capital. I will be disabling all notifications on my phone and checking email only twice a day. Given all the craziness here in the US and elsewhere in the world, I have been spending too much time on news and I am looking forward to this break to dial things down.
Last Uncertainty Wednesday, we saw how diminishing marginal utility of wealth provides an explanation of risk aversion via Jensen’s inequality. Why would it be then that lots of people seem to like small gambles, like a game of poker among friends. One possible explanation is that the utility function is locally convex around your current endowment. So this would look something like the following:
In the immediate area around the endowment (marked with dotted lines for two different levels) the utility function is convex, but for larger movements it is concave.
In the convex area someone would be risk seeking. Why? Well because Jensen’s inequality now gives us
U[EV(w)] ≤ EV[U(w)]
Again, the left hand side is the utility of the expected value of the wealth, whereas the right hand side is the expected utility, meaning the expected value of the utility. Now the inequality says that someone
As has been widely reported, in the last few months ICOs have raised significantly more money for blockchain startups than has come from traditional venture investors. This can be seen as a sign of the long discussed unbundling of venture capital. The idea is that while VCs bundle capital, advice, governance and possibly services (e.g., help with recruiting), technology may make it possible to separate out these different functions. Today I want to focus on “governance” which is the least understood, and I believe most difficult to accomplish, of these functions.
What is governance? The word, like “government,” comes from the Greek word for “to steer.” It stands for the decision making bodies and processes that steer a company, a protocol, or a country.
Why is governance needed? Because we (a) cannot in advance specify the right course of action for all possible Continue reading "ICOs and Governance"
In my draft book World After Capital, I write that humans having knowledge is what makes us distinctly human and gives us great power (and hence great responsibility). I define knowledge in this context as science, philosophy, art, music, etc. that’s recorded in a medium so that it can be shared across time and space. Such knowledge is at the heart of human progress, because it can be improved through the process of critical inquiry. We can fly in planes and feed seven billion people because we have knowledge.
There is an important implication of this analysis though that I have so far not pursued in the book: if and when we have true General Artificial Intelligence we will have a new set of humans on this planet. I am calling them humans on purpose, because they will have access to the same power of knowledge that we do. Continue reading "Preparing for Superintelligence: Living the Values of Humanism Today"
Last Uncertainty Wednesday, I introduced Jensen’s Inequality. I mentioned briefly that it explains a lot of things and today we will look at the first one of these, which goes by the name of risk aversion. This is simply economists way of saying that most people prefer a smaller guaranteed payment over a large but uncertain one. We will now see that this follows directly from diminishing marginal utility of money via Jensen’s inequality.
So what is this “diminishing marginal utility” of money? Well it is generally assumed that the more money you make, the less an additional say 100 dollars will mean to you. This seems, for most people anyhow, a pretty safe assumption. If you are currently making $1,000 per month then getting an extra $100 per month let’s you have a lot more benefit than if you are already making $10,000 per month. But of course
In my draft book World After Capital, I write about how digital technology has given us the possibility to leave the Industrial Age behind and enter the Knowledge Age. In an early chapter on Optimism, I argue against economic, historical and technological determinism. These are all theories in which an external force determines the shape of society, instead of the decisions made by us humans under the guidance of a set of values.
The memo written by a Google employee, is a good reason to add “biological determinism” to this list of false determinisms. Biological determinism argues that certain features of society are the necessary result of some underlying biological process. From there, biological determinism often goes on to argue against efforts to change society with sometimes outright and sometimes veiled claims that such a change effectively goes against (human) nature.
Here is the outline of the Continue reading "The Fallacy of Biological Determinism"