I was reading your comment, and when I thought about always betting a dollar, my brain went, “That’s a good idea!”
So I asked my brain, “What memory are you accessing that makes you think that’s a good idea?”
And my brain replied, “Remember that CFAR reading list you’re going through? Yeah, that one.”
So I went to my bookshelf, got out Dan Ariely’s Predictably Irrational, and started paging through it.
Professor Ariely had several insights that helped me understand why actually using money seemed like such a good idea:
Interacting within market norms makes you do a cost-benefit analysis. Professor Ariely discusses the difference between social norms and market norms in chapter 4. Social norms govern interactions that don’t involve money (favors for a friend), and market norms govern interactions that do (costs and benefits). The professor did an experiment in which he had people drag circles into a square on a computer screen (judging their productivity by how many times they did this in a set period of time). He gave one group of such participants an explicitly stated “50-cent snickers bar” and the other a “five-dollar box of Godiva chocolates.” As it turns out, the results were identical to a previous experiment in which the same amounts of direct cash were used. Professor Ariely concludes, “These results show that for market norms to emerge, it is sufficient to mention money.” In other words, Professor Ariely’s research supports your first (4.) - “A dollar feels more important than it actually is...” This is the case because as soon as money enters the picture, so do market norms.
Money makes us honest. In chapter 14, aptly titled “Why Dealing With Cash Makes Us More Honest,” Professor Ariely explains an experiment he conducted in the MIT cafeteria. Students were given a sheet of 20 math problems to solve in five minutes. The control group was to have their solutions checked, and then were given 50 cents per correct answer. A second group was instructed to tear their paper apart, and then tell the experimenter how many questions they got correct (allowing them to cheat). They were then paid 50 cents for every correct answer they claimed. Lastly, a third group was allowed to cheat similarly to the second group, except that when they gave one experimenter their score, they were given tokens, which were traded in immediately thereafter for cash through a second experimenter. The results: A) The control group solved an average of 3.5 questions correctly. B) The second group, who cheated for cash, claimed an average of 6.2 correct solutions. C) The third group, who cheated for tokens, claimed an average of 9.4 correct solutions. Simply put, when actual, physical money was removed from the subjects’ thought process by a token and a few seconds, the amount of cheating more than doubled, from 2.7 to 5.9.
In short, using money to back a prediction a) forces us to think analytically, and b) keeps us honest.
Thank you for the idea. Now I just need to find an ATM to get some ones...
Hello, my name is Daniel.
I’ve wanted to join the rationality community for a little while now, and I finally worked up the courage after a brief but informative discussion with Anna Salamon, CFAR’s executive director (who was as kind as I was nervous).
I’m working on finishing up a B.S. in Electrical Engineering, and I plan on continuing to a doctorate in some branch of decision or control theory. I also study philosophy, fiction writing, and computer science.
Since becoming aware of rationality in general, and Eliezer Yudkowsky’s way of making everything make sense, I’ve gotten pretty heavily into cognitive psychology and metacognition.
To be frank, I understand that I’m a rank amateur in the field of rationality in general, but I’m looking forward to trying to get better. So if you’re downvoting me, or even upvoting me, explaining why in a comment or message would be extremely helpful, so I can take the time to reinforce my positive cognitive pathways, and prune my negative ones.
See you in the threads!