Jan 21, 2014
After moving in with my new roomies (Danny and Bethany of Beeminder), I discovered they have a fair and useful way of auctioning off joint decisions. It helps you figure out how much you value certain chores or activities, and it guarantees that these decisions are worked out in a fair way. They call it "yootling", and wrote more about it here.
A quick example (Note: this only works if all participants are of the types of people who consider this sort of thing a Good Idea, and not A Grotesque Parody of Caring or whatnot):
Use Case: Who Picks up the Kids from Grandma's?
D and B are both busy working, but it's time to pick up the kids from their grandparents house. They decide to yootle for it.
B bids $100 (In a regular Normal Person exchange, this would be like saying "I'm elbows deep in code right now, and don't want to break flow. I'd really rather continue working right now, but of course I'll go if it's needed.")
D bids $15 (In a regular Normal Person exchange this would be like saying "I don't mind too much, though I do have other things to do now...")
So D "wins" the bid, and B pays him $15 to go get the kids from their grandma's.
Of course.... it would be a pain in the butt to constantly be paying each other, so instead they have a 10% chance of paying 10x the amount, and a 90% chance to pay nothing, using a random number generator.
This is made easier by the fact that we have a bot to run this, but before that they would use the high-tech solution of Holding Up Fingers.
We may do this multiple times per day, whenever there’s a good that we have shared ownership of and one of us wants to offload their shares onto the other person. The goods can be anything, e.g. the last brownie, but they’re more often “bads” like who will get up in the middle of the night with a vomiting child, or who will book plane tickets for a trip.We find this an elegant means of assigning loathed tasks. The person who minded least winds up doing the chore, but gets compensated for it at a price that by their own estimation was fair.
Joint purchase auctionThe decision auction and variants are about allocating shared or partially shared resources to one person or the other, or picking one person to do something. Once in a while you have the opposite problem: deciding on a joint purchase.Suppose Danny thinks we need a new sofa (this is very hypothetical). I think the one we have is just fine thank you. After some discussion I concede that it would be nice to have a sofa that was less doggy. Danny, being terribly excited about getting a new sofa does a bunch of research and finds his ideal sofa. I think it is a bit overpriced considering it is going to be a piece of gymnastics equipment for the kids for the next 6 years. Conflict ensues! I could bluff that I’m not interested in a new sofa at all and that he can buy it himself if he wants it that badly. But he probably doesn’t want it that bad, and I do want it a little. If only we could buy the sofa conditional on our combined utility for it exceeding the cost, and pay in proportion to our utilities to boot. Well, thanks to separate finances and the magic of mechanism design, we can! We submit sealed bids for the sofa and buy it if the sum of our bids is enough. (And, importantly, commit to not buying it for at least a year otherwise.) Any surplus is redistributed in proportion to our bids. For example, if Danny bid $80 and I bid $40 to buy a hundred dollar sofa, then we’d buy it, with Danny chipping in twice as much as me, namely $67 to my $33.
Generosity without sacrificing social efficiency“The payments are simply what keep us honest in assessing that.”If you’re thinking “how mercenary all this is!” then, well, I’m unclear how you made it this far into this post. But it’s not nearly as cold as it may sound. We do nice things for each other all the time, and frequently use yootling to make sure it’s socially efficient to do so. Suppose I invite Danny to a sing-along showing of Once More With Feeling (this may or may not be hypothetical) and Danny doesn’t exactly want to go but can see that I have value for his company. He might (quite non-hypothetically) say “I’ll half-accompany you!” by which he means that he’ll yootle me for whether he goes or not. In other words, he magnanimously decides to treat his joining me as a 50/50 joint decision. If I have greater value for him coming than he has for not coming, then I’ll pay him to come. But if it’s the other way around, he will pay me to let him off the hook. We don’t actually care much about the payments, though those are necessary for the auction to work. We care about making sure that he comes to the Buffy sing-along if and only if my value for his company exceeds his value for staying home. The payments are simply what keep us honest in assessing that. The increased fairness — the winner sharing their utility with the loser — is icing.