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What computer science can teach economics (2009)

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Re: What computer science can teach economics (2009)

#11

Post by vegabook »

grillvogel wrote: post #6

i love how CS people always assume everyone in every other field is just slacking off waiting on the programmers to assist them with their elite knowledge about things no one else has considered

Computer Scientists in my experience are quite respectful of a number of other fields, including mathematics, most engineering disciplines, physics, even philosophy (logic) and psychology (big in stats), and most recently, biology. Computer Scientists have a "no-bull" mentality, because ultimately the output of their endeavours has to work on an unforgiving and brutally honest machine, unlike economics, where the output need only persuade others in the field, who have a vested interest in perpetuation of credibility of the discipline, leading to the suspicion, by others, of alchemy.

Re: What computer science can teach economics (2009)

#13

Post by mafribe »

vezzy-fnord wrote: post #4

The article is mostly about game theory, which has been a staple of economics for quite a while. That said, I would be very wary of jumping to such endeavors simply because a particular branch of mathematics appears to supply a useful vernacular for a particular economic problem. More often than not, it leads to a situation where instead of offering new perspectives on problems, you simply repeat the same Walrasian e…

   The article is mostly about game theory, 
   which has been a staple of economics for 
   quite a while.
I suggest to read the article more carefully. It's about applying the study of computational complexity to game theory. When you approach conventional game theory from this angle, things become interesting: e.g. where conventional game theory says a Nash equilibrium exists, the complexity angle suggests that the market won't find the equilibrium, because the laptop can't (for example the problem might be NP complete), and the laptop is much faster than the market.

Re: What computer science can teach economics (2009)

#14

Post by mafribe »

grillvogel wrote: post #6

i love how CS people always assume everyone in every other field is just slacking off waiting on the programmers to assist them with their elite knowledge about things no one else has considered

   assist them with their elite knowledge about 
   things no one else has considered
Did economists consider how computationally hard it was to find Nash equilibria before CS folk?

Re: What computer science can teach economics (2009)

#15

Post by bachmeier »

mizzao wrote: post #3

Economics is a highly inbred field, which makes it very difficult to transmit cross-disciplinary information. The recent popularity of machine learning in the field might be a rare exception. Economists only cite other economists. One of my colleagues put it this way: if you write a paper that is interesting to economists, and an economist finds it and does some follow-up work, that paper will get all the citations f…

> Economics is a highly inbred field, which makes it very difficult to transmit cross-disciplinary information.

I disagree. Economists pull in work from many other fields: statistics, math, computer science, political science, sociology. Kahneman and Granger are recent Nobel Prize winners that didn't have a PhD in economics.

> The recent popularity of machine learning in the field might be a rare exception.

Not really. Economists were applying neural networks in the 1990's, just as one example. The problem is that these ideas often fizzle out because they weren't designed for economic data and it turns out that they don't provide much value.

> Economists only cite other economists.

That's the real issue. The field of economics is very closed. It's even worse than you describe. Not only do you have to cite papers written by economists, you have to cite the right economists, or the referees will stop reading and write a negative report. Getting new approaches into economics is easy if you have connnections within the editorial process that rejects more than 90% of submissions.

Re: What computer science can teach economics (2009)

#16

Post by mizzao »

bachmeier wrote: post #15
mizzao wrote: post #3

Economics is a highly inbred field, which makes it very difficult to transmit cross-disciplinary information. The recent popularity of machine learning in the field might be a rare exception. Economists only cite other economists. One of my colleagues put it this way: if you write a paper that is interesting to economists, and an economist finds it and does some follow-up work, that paper will get all the citations f…

> Economics is a highly inbred field, which makes it very difficult to transmit cross-disciplinary information. I disagree. Economists pull in work from many other fields: statistics, math, computer science, political science, sociology. Kahneman and Granger are recent Nobel Prize winners that didn't have a PhD in economics. > The recent popularity of machine learning in the field might be a rare exception. Not reall…

> Kahneman and Granger are recent Nobel Prize winners that didn't have a PhD in economics.

I don't know about that--it was really a chore to christen the field of behavioral economics, previously considered to be "psychology".

Re: What computer science can teach economics (2009)

#17

Post by TeMPOraL »

curuinor wrote: post #2

H. Simon was among the founders of artificial intelligence and a very important microeconomicist, and I have often thought that these disciplines are not fundamentally different. What problem does backpropagation solve? Credit assignment. What problem does the market solve? Credit assignment. How do they do it? Localization of computation.

I think it's more general than that. Both backpropagation and the market introduce a feedback loop. That's the source of the behaviour. You can see similar phenomena in other closed-loop systems. That's why I think control theory is one of the best things humans invented ;).

Re: What computer science can teach economics (2009)

#18

Post by clavalle »

yellowstuff wrote: post #10
clavalle wrote: post #5

>Finally, he says, it may be that where the Nash equilibrium is hard to calculate, some approximation of it — where the players’ strategies are almost the best responses to their opponents’ strategies — might not be. In those cases, the approximate equilibrium could turn out to describe the behavior of real-world systems. I often think about how death and pain affect economic decisions. Someone who is poor and must b…

You're right, there have been several economics studies showing that poverty causes stress which makes it more difficult to make decisions that are "rational" in a classical economics sense, such as sacrificing in the short-term for a long-term pay off. Searching "behavioural economics poverty" turns up a lot of good articles, here's an overview: http://www.economist.com/news/finance-and-economics/21635477...

That is interesting but seems to put too much onus on the poor individual.

>poverty makes people feel powerless and blunts their aspirations

What if it is more than a feeling? What if they are not irrational but seeing quite rationally what transactions await them?

Let's assume that two sides of a potential transaction are rational, and further assume that each side will maximize the value they have after the transaction. The poor person comes to the table with a value of 100 units but that they cannot eat and cannot be transferred directly for edible widgets -- lets call them time units. They must trade for 25 edible widgets or starve. You can buy each edible widget for one liquid currency unit. They sit across from a person that can pay them in liquid currency units for their time units knowing they can make 120 liquid units using those time units. That person knows they're poor and at risk of starvation if they do not trade their time unit for liquid units quickly. Being cold, rational actors they start the negotiation low. 1 liquid unit for all 100 time units. The poor person will starve anyway and thus refuses. Negotiation continues until they hit the magic number of 25 liquid units and an agreement is struck. The poor trades 100 time units to the person that can make 120 liquid units with it for 25 liquid units...they lose, but don't lose it all through death. The employer makes a profit of 95 liquid units.

Let's run through the same scenario with someone who's not desperate. The employer needs that employee knowing they can make 120 units with those time units in their possession. With no other players in sight, they might negotiate all the way up to 119 liquid units for those time units knowing they will profit. The employer's profit is 1 liquid unit and the employee gets 94 more than the poor person who was facing a complete wipe out if they refused the offer.

Competition changes things obviously and this is a simplistic model but the fundamental point is that one is negotiating against loss and is willing to take any loss above total loss while the other is negotiating to increase value. The second can afford to have aspersions and has every reason to feel like they have a good measure of power -- while the other is truly powerless and they live at the whim of others and have no rational right to have aspirations because they have no way to improve their negotiating position nor any expectation for that to change since every transaction they enter into is to reduce loss rather than increase their possessed value.

Re: What computer science can teach economics (2009)

#19

Post by evanpw »

mizzao wrote: post #3

Economics is a highly inbred field, which makes it very difficult to transmit cross-disciplinary information. The recent popularity of machine learning in the field might be a rare exception. Economists only cite other economists. One of my colleagues put it this way: if you write a paper that is interesting to economists, and an economist finds it and does some follow-up work, that paper will get all the citations f…

My favorite example of this kind of thing (from medicine): someone re-discovers the trapezoidal rule for integration, names the technique after themselves, publishes in a Diabetes journal, and gets hundreds of citations [1].

[1] https://www.reddit.com/r/math/comments/1xfa8p/medical_paper_...

Re: What computer science can teach economics (2009)

#20

Post by icebraining »

clavalle wrote: post #18
yellowstuff wrote: post #10

Earlier quoted context omitted.

You're right, there have been several economics studies showing that poverty causes stress which makes it more difficult to make decisions that are "rational" in a classical economics sense, such as sacrificing in the short-term for a long-term pay off. Searching "behavioural economics poverty" turns up a lot of good articles, here's an overview: http://www.economist.com/news/finance-and-economics/21635477...

That is interesting but seems to put too much onus on the poor individual. >poverty makes people feel powerless and blunts their aspirations What if it is more than a feeling? What if they are not irrational but seeing quite rationally what transactions await them? Let's assume that two sides of a potential transaction are rational, and further assume that each side will maximize the value they have after the transac…

Yes, a non-poor person has a better BATNA, therefore they can demand more from the other party. But I think the studies show that the poverty has an effect even beyond that.
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