There's a concept I draw on often in social interactions.  I've been calling it the "happy price", but that is originally terminology by Michael Ellsberg with subtly different implications.  So I now fork off the term "cheerful price", and specialize it anew.  Earlier Facebook discussion here.

Tl;dr:

  • When I ask you for your Cheerful Price for doing something, I'm asking you for the price that:
    • Gives you a cheerful feeling about the transaction;
    • Makes you feel energized about doing the thing;
    • Doesn't generate an ouch feeling to be associated with me;
    • Means I'm not expending social capital or friendship capital to make the thing happen;
    • Doesn't require the executive part of you, that knows you need money in the long-term, to shout down and override other parts of you.
  • The Cheerful Price is not:
    • A "fair" price;
    • The price you would pay somebody else to do similar work;
    • The lowest price such that you'd feel sad about learning the transaction was canceled;
    • The price that you'd charge a non-friend, though this is a good thing to check (see below);
    • A price you're willing to repeat for future transactions, though this is a good thing to check (see below);
    • The bare minimum amount of money such that you feel cheerful.  It should include some safety margin to account for fluctuating feelings.
  • The point of a Cheerful Price, from my perspective as somebody who's usually the one trying to emit money, is that:
    • It lets me avoid the nightmare of accidentally inflicting small ouches on people;
    • It lets me avoid the nightmare of spending social capital while having no idea how much I'm spending;
    • It lets me feel good instead of bad about asking other people to do things.
  • Warnings:
    • Not everybody was raised with an attitude of "money is the unit of caring and the medium of cooperation" towards exchanges with an overt financial element.  Some people may just not have a monetary price for some things, such that the exchange would boost rather than hurt their friendship, and their feelings too are valid.  Not as valid as mine, of course, but still valid.
    • "I don't have a cheerful price for that, would you like a non-cheerful price" is a valid response.
    • Any time you ask somebody for a Cheerful Price, you are implicitly promising not to hold any price they name against them, even if it's a billion dollars.
    • If Tell Culture doesn't work for someone, Cheerful Prices may not work for them either.
    • If a friend didn't already ask for your cheerful price, it may be good to explicitly tell them when you're naming your cheerful price rather than your minimum price.
    • Life does not promise us that we will always get our Cheerful Prices, even from our friends.

Q:  Why is my Cheerful Price not the same as the minimum price that would make me prefer doing the transaction to not doing it?  If, on net, I'd rather do something than not do it, and I get to do it, shouldn't I feel cheerful about that?

As an oversimplified model, imagine that your mind consists of a bunch of oft-conflicting desires, plus a magic executive whose job it is to decide what to do in the end.  This magic executive also better understands concepts like "hyperbolic discounting" that the wordless voices don't understand as well.

Now suppose that I don't want to hurt you even a little; and that I live in terror of accidentally overdrawing on other people's senses of friendship or obligation towards me; and that I worry about generating small ouches that your mind will thereafter associate with me.

In this case I do not want to offer you the minimum price such that your executive part, which knows you need money in the long-term, would forcibly override your inner voices that don't understand hyperbolic discounting, and force them to accept the offer.  Those parts of you may then feel bad while you're actually performing the task.  I want to offer you an amount of money large enough to produce an inner "Yay!" loud enough that your executive does not have to shout down the other inner voices.

Q:  Say more about why you'd pay extra to make my balance of inner voices be very yayful?

Some possible reasons:

  • Because I feel worried about the trade not getting around to taking place at all, if you are reluctant to name a price high enough to make you feel cheerful.
  • Because I worry about you feeling a sense of ouchness about trading with me, and I want to be sure you don't end up unconsciously avoiding trading with me in the future.
  • Because I think you're otherwise likely to name too low a price compared to my willingness to pay, and I'd feel bad about an unfair division of gains from trade.
  • Because my willingness to pay marginally more, for a marginally better thingy, is high; so I'm eager to pay more in order to have you feeling better about doing the thing, in hopes that I get a slightly better result.
  • Or I just don't want to hurt you even a little; either because I care about you, or because I selfishly don't want to worry about the guilt of worrying I hurt somebody.

Q:  Before we get too much further, is there anybody for whom this whole document is diametrically the wrong advice?

For one, anybody who tends to already set their prices so high that they end up not getting enough business to keep them busy, should not read things that they might interpret as exhorting them to go set even huger prices.  For more on this, see Michael Ellsberg's original cautions around the "happy price", and how it differs from people being exhorted to set ever higher sky-high prices on their seminars.

For two, anybody who already experiences a lot of negative emotion from ruminating on how little they receive; or who feels sad and depressed about how little they have to give; and who doesn't have any power to get more, or give more.  They should maybe not be reading this at all?  They should maybe just stop reading this whole essay immediately, because it may just make them feel sadder.  You need to have Slack to benefit from an essay about how to use Slack.

Q:  Thanks, back to other questions.  Why is a Cheerful Price not the same quantity as "the least price that would make me feel sad and disappointed about the transaction being cancelled"?

Because of loss aversion and inner multiplicity.  Once you're expecting to get some money in exchange for doing something, even if you weren't cheerful about that price, the part of you that did want the money will feel a sting of loss about losing the money.  If you're setting the standard to "minimum price that leads to a feeling of loss about losing the money" then, especially if you strongly need money, you may be setting your price way too low and might not be capturing any of the gains from trade.

Also, since your strength of feelings may fluctuate over time, you should not be trying to cut a Cheerful Price very finely; you should name a price that includes some safety margin.  If I was uncomfortable with you taking some safety margin, I wouldn't be asking you to name your Cheerful Price in the first place.  I'm fine if I end up with a little more social capital than when I started.  Nothing goes wrong if you end up feeling slightly grateful about making the trade.

Q:  For several of your desiderata above, why not ask me instead for a price such that I don't feel any ouchness about it?

Because I expect people to have a much harder time correctly detecting whether they are feeling any tiny lingering ouches, compared to noticing a positive feeling of cheerfulness.

Q:  Why is it better to ask somebody to name "a price that makes you cheerful" rather than "a price that seems fair to you"?

Well, because those two things aren't interchangeable, and the thing that I actually want is the Cheerful Price?

But in particular I'd worry that the notion of a "fair price" might lead people to name prices-that-make-them-feel-bad.  

Suppose I want to pay somebody else to do my laundry this week.  If I ask them for a fair price, instead of a cheerful price, to do my laundry, they may substitute some other "fairness"-related question like:

"How much would I be willing to pay somebody else to do my laundry?"

And this presumes several symmetries that I think should not be symmetries.  My willingness to pay is not the same as your willingness to pay.  The price you'd pay to not have to do your own laundry this week, isn't the same as the price you'd accept to do an additional load of laundry this week.

This may not seem fair, because it doesn't seem universal and symmetrical.  But to me, in context, those seem like false symmetries and mistakenly substituted questions, that might lead somebody into naming a price they didn't actually want to take, and then feeling trapped into taking it.

So I'd see this as a case where the recipe "raise the price until the thought of accepting it makes you feel a noticeable feeling of cheerfulness" may beat the recipe "try to figure out what price would be 'fair'".

Q:  Hold on, technical objection to the above:  Isn't it suspicious from a coherent-decisions perspective if the price you'd accept to do somebody else's laundry is much higher or lower than the price you'd pay to not do your own laundry?  If you have a lot of opportunities like this, it's a theorem that either you can be seen as placing some consistent monetary price on your time and stamina, or you can rearrange your choices to end up with strictly more money, time, and stamina.  I mean, suppose somebody offers you $40 to personally do their laundry that week, but you can pay $20 to get a roommate to do your own roughly-equivalent amount of laundry -

When I ask you for your Cheerful Price, I'm asking what I need to pay to make your current chorus of inner voices cheerful about taking the money, instead of them feeling slightly resentful at me afterwards.  It's fine and noble if you want to cultivate your inner voices to make your life decisions more coherent; but please do that on your own time rather than by expending my social capital.

Q:  Why is it better to name a "cheerful price" rather than "a price where both parties benefit"?  Don't we want trades to execute whenever both parties benefit from them?

First of all, it's not always better.  It's better in those special cases when one or both parties to the trade have particular desiderata, as listed above, that matter to them equally or more than the variation in price.  This will not always hold true.

More generally, though:  Part of the great economic problem is finding trades that benefit both parties.  But even after we find a trade like that, we then encounter a further problem on top: the division of gains from trade.

Let's say I want to pay you to bake me a cake.  Suppose that $40 is the absolute most I'd be willing to pay, if I had no other options, and that I wouldn't feel good about it (the inner voices are then discordant and require an executive to shout them down and accept the transaction).  Conversely, you'd accept a bare minimum of $10, and wouldn't feel good about that price either.

Then the price should fall somewhere between $10 and $40, for the transaction to occur at all.  But within that range, there's a zero-sum problem of dividing the gains from trade, on top of the positive-sum interaction of having the trade occur at all.  At a price point of $15 we're both better off, and at a price point of $35 we're both better off; but I am better off, and you are worse off, at a price point of $15 compared to $35.

If many transactions like this are taking place, we have a third, positive-sum game on top of the zero-sum second game: the game of supply and demand, the invisible hand.  You set a price on your cakes that will cause you to sell as much of your cake-baking time as you want to sell; and the more people want your cakes, the higher your price goes; and if your price is high enough, that signals others to enter the market and supply more cakes.  If we have a market price that balances a public supply function and public demand function for interchangeable cakes, all is good.  But not everything in life is exchangeable that way; and if not, there's a gains-division problem between a unique buyer and a unique seller of a unique good.

The domain of the Cheerful Price is the pricing-of-the-trade issue.  Though indeed, one of my potential reasons above for requesting a Cheerful Price was "Because I'm nervous about the trade happening at all, so I want you to name a price that makes you feel energized about getting around to it."

Q:  But if you ask somebody to name a Cheerful Price, doesn't that mean they might name a price too high for the trade to take place, even if at a lower price the trade would benefit both sides?  Or what if they just name an astronomical price?

When I ask you to name a Cheerful Price, this often - not quite always - happens when I have what I suspect is a relatively high willingness to pay.  But if your price goes so high that I no longer feel cheerful, the transaction won't actually take place at that price, and you won't get to feel cheerful about it.  So you still have some incentive to keep your quoted price to "makes me feel cheerful at all, plus some safety margin in case my feelings fluctuate, but not too much higher than that".

Q:  What if my cheerful price feels very high and I'm too embarrassed to say it?

If I'm willing to pay it, you probably shouldn't feel embarrassed about accepting it?  I wouldn't ordinarily advise other people to always directly confront their embarrassment about everything.  But "accepting money that other people are happy to pay you" is in fact an unusually good and important place to start overcoming your embarrassed feelings.

Q:  But what if you're not willing to pay the price I name?  Wouldn't that be socially awful?

Implicit in my asking you to name a Cheerful Price is a social promise that I will not hold any price you name against you.

Your Cheerful Price is a fact about you and your feelings.  It's not a statement that you think you're deserved something, or owed something, or that you expect to get that price from me.  From one possible perspective, I'm asking you to do me the favor of telling me that useful fact about your own state of mind, and you are doing me the favor of telling me.  If Tell Culture doesn't work for one or both parties to a transaction, the idiom of talking about Cheerful Prices may not serve them either.

If  I ask you "What price would make you feel cheerful about baking me a cake?" and you are feeling generally horrible and it would take a life-changing amount of money to make you feel good about kitchen work, you could say:  "Cheerful?  Probably a hundred thousand dollars.  But I'd rather do it for fifty dollars than not do it."  And that would be fine.

If your Cheerful Price makes me feel unhappy with the trade, I can tell you so.  And then we could just not do it; or I, or you, could try to negotiate the price downward to a non-cheerful but mutually beneficial price.

Q:  If you're not promising to pay my Cheerful Price and we might end up negotiating anyway, what's the point of asking me to name one?

Because there's no point in negotiating below your cheerful region, if your cheerful price is already inside my comfortable-willingness to pay?

In some contexts you could think of it as me asking you to start off with an unusually high opening bid, such that you'd feel quite cheerful if I just accepted that bid.  Which I'd do because, e.g., I expect that, compared to my trying to save a fraction of the price I'm guessing you'll name, your non-sadness and/or eagerness to deal with me again in the future, will end up more important to me.

Q:  Wait, does that mean that if I give you a Cheerful Price, I'm obligated to accept the same price again in the future?

No, because there may be aversive qualities of a task, or fun qualities of a task, that scale upward or downward with repeating that task.  So the price that makes your inner voices feel cheerful about doing something once, is not necessarily the same price that makes you feel cheerful about doing it twenty times.

Also in general, any time you imagine feeling obligated to do something, you have probably missed the point of the Cheerful Price methodology.

That said, you should probably check to see how how you would feel about repeating the transaction - it might turn up a hidden sense of "I'll do this for you once because I'm your friend", where your friend was hoping to pay you enough that they weren't expending social capital at all.  Similarly, you might want to check "How much would I charge this person if they weren't my friend?", not because your Cheerful Price for one person has to be the same as your Cheerful Price for somebody else, but in case your brain's first answer was mostly the friendship voice glossing over real costs that the other person is actively requesting to compensate you for.

Q:  I question the whole concept of a Cheerful Price between friends.  I don't think that's how friendship works in the first place.  If I'm willing to bake you a cake because I'm your friend, bringing money into it would just make me feel icky.  If it was more money I'd just feel ickier.

You have mentally arranged your friendships differently from how I arrange them!  But your feelings are also valid, and you should clearly signal them to anybody who starts talking about "cheerful prices" at you.  Tell them explicitly that's not how friendship works for you!  They offered you a Cheerful Price in the first place because they wanted you to be happy.  They don't want you to feel icky.

Q:  Just reading all this already made me feel icky.  When I bake you a cake, you're not expending social capital, we're being friends -

In that case, you should not read the rest of this post.  It's a cognitive hazard to you.  Leave immediately.

...

Uh, are they gone now?

Q:  Yeah, they're gone.

Really?

Q:  No, they're still reading, but now with an additional sense of offense that you think they're too low-status to withstand the weight of your words.  Obviously, only low-status people could possibly be damaged by reading something.

Sigh.  There are many things I wish I could unread, cough-Gray-Boy-cough.  "Just stop reading things that are damaging you" is an important life skill which has commonalities with "Don't leave your hand on a hot stove-plate if that hurts you" and "Speak up when people are touching you in ways you don't like."  

Q:  Fine, but there's nothing more you can do at this point to warn them off.  So, what would you actually say to somebody who claims that, when they bake you a cake, you're not "expending social capital" to get the cake, because them doing you a favor can actually strengthen your friendship?

I'd try to explain that economics is about "limited resources" rather than, I don't know, things that are easy to quantify, or things that are standard and interchangeable, or whether people feel like they're losing something in the process of a trade.  The fact that somebody won't willingly bake me an infinite amount of cake is enough to call that a limited resource, even if they didn't feel bad or lossy about baking one cake.

And that finite cake limitation is enough to make me worry about what I'm losing when I ask a friend to bake me just one cake, even if they don't feel bad or lossy about it the first time.  Because I'm the kind of person who ends a computer RPG with 99 unused healing potions, that's why.  And because I grew up relatively isolated, and I don't have a good sense of how much I'm losing when I ask somebody to bake me a cake.  I don't trust my ability to read someone's reactions if I ask them to bake me a cake.  I don't trust my ability to judge whether that will strengthen the friendship or weaken it.

So in reality, I'm not very likely to end up friends in the first place with somebody who's made sad by my asking to quantify the cost to them of baking a cake.  I can't tweak my state of mind far enough to encompass their state of mind, or vice versa.

Q:  Okay, but as you admit, some people, maybe even most people, would rather not put financial prices on things at all, in their friendships.  They'd rather just do favors for each other without a felt sense of trying to keep track of everything.  Why did you claim back up top that those feelings were valid, but less valid than yours?

I was speaking mostly tongue-in-cheek.  But in fact there are coherence theorems saying that either you have consistent quantitative tradeoffs between the things you want, or your strategies can be rearranged to get you strictly more of everything you want.  I think that truly understanding these theorems is not compatible with being horrified at the prospect of pricing one thing in terms of another thing.  I think that there is a true bit of mathematical enlightenment that you get, and see into the structure of choicemaking, and then you are less horrified by the thought of pricing things in money.

Q:  Fine, but why is it not valid to let people go on feeling whatever they feel without demanding that they be enlightened by coherence theorems right now at the cost of doing violence to their emotions?  Who's to say they're not happier than you by living more the life of a human and less the life of a paperclip maximizer, while both of you are still mortals in the end?

Well, sure?  Hence it being "mostly tongue-in-cheek" rather than "slightly tongue-in-cheek".

Q:  Despite your pretended demurral, I get the sense that you actually hold it against them a bit more than that.

Fine, to be wholly frank, I do tend to see the indignant reaction "How dare you price that in money!" as a sign that somebody was brought up generally economically illiterate.  I mean, if somebody says, "Sorry, I haven't attained the stage of enlightenment where explicitly exchanging money stops making me feel bad", I'm like, "Your feelings are valid!  I'm still human in many ways too!"  But if they say, "There are some things you can't put a price on!  How dare you!", I'm like, "This low-decoupling indignation engine will probably have a happier childhood if I rudely walk away instead of trying to explain how the notion of a 'price' generalizes beyond things that are explicitly denominated in money."

Q:  On a completely different note, I worry that the notion of a Cheerful Price is unfair to people who start out poorer, because it will take less money to make them feel cheerful.

Generally speaking, when I ask somebody to name a "cheerful price", I'm trying to prompt them into naming a higher price so that I can avoid the fear of ouching them and/or do more transactions with them in the future.  Giving people more money is rarely less fair to them?  But if I try to probe at the implicit sense and worry of "unfair" that you're raising as a concern, I might try to rephrase it as something like:

"If you tell somebody they have to accept as fair the least price that makes them cheerful, they might accept a lower price than they could have gotten - a price that would be an uneven division of gains from trade, or a price below the going market rate - and this is more likely to happen to people who start out poorer."

And I agree that would be unfair.  If you can get more for your skills or your goods by going above the lowest price that makes you comfortably cheerful, go for it.

That said, if I'm asking everybody in the room their Cheerful Price to do my laundry, and the poorest person present names the lowest Cheerful Price, I think that's... actually everything working as intended?  The effect is that the person with the lowest prior endowment is the one who actually gets the money and feels cheerful about that; and the Cheerful part means they get more money (I hope) than if I asked everybody present to name their price without specifying the Cheerful part.

My current cheerful price for "Please write me a short story about the following" might be above $10,000 today.  In 2001 it might have been $100, back when $100 was 1/20th of the cost of the car I was driving.  The end result of this 10,000% increase in how much money it takes to make me happy, as I've accumulated more money... is that now people who'll write you a story for $100 get your money, instead of me.  That seems a good phenomenon from the standpoint of financial equality; it causes money to flow from people who have more money towards people who have less money.

But on a more personal level, if I ask someone to name an amount of money that makes them feel cheerful and energized, I expect and hope that this causes more money to flow from me to them.  If the technically defined "cheerful price" is less than the person otherwise thinks they can get from a payor, then by all means, they should tell me:  "Don't worry!  I set my standard fee of $X high enough that I already feel cheerful."  And then I won't feel worried about paying too little and everything will be fine.

Q:  Technical objection:  Surely if you're asking everybody in the room to name their Cheerful Price for something, you should pay the lowest bidder the second-lowest bid, not pay the lowest bidder their actual bid?

Uhhh... possibly?  I'm not actually sure that this logic works the same way when you're asking people for Cheerful Prices - I think you're already asking them to nudge the price upwards from "the lowest they'd accept", which means you don't have to give them the second-price of the auction in order to ensure they get any gains from trade.  It's a more friendly idiom in general - you're asking them and trusting them to tell you the truth about what won't make them say "ow".  And despite that example of the laundry, the whole thing seems more useful for individual interactions than auctions?  But you may still have a point.  I'll have to think about it.

Q:  Now that I think about it, this whole document seems to be written like the cheerful price is always something that the payor requests the payee to name.  Why would it always be like that?

I wrote from that perspective because it's the perspective I usually occupy - at this stage of my life, I'm usually looking for more ways to trade away money for what I want, not looking for more ways to trade away other things for money.

And since not everybody can afford to offer us our Cheerful Price, in interactions between friends, there's nonzero reason to not just rush ahead and name a cheerful price before being asked.  Or to avoid misunderstandings and possible resentment about you expecting too much, you should say "This is my cheerful price" rather than "This is my price", if the other person didn't already explicitly say "Please name your cheerful price."

But sure:  Some people who are in the habit of unilaterally underpricing themselves, to the point where they're undertrading, even though they have pricing power to ask for more, might do well to take the initiative on their side to think "What would I need to be getting to make me cheerful about more interactions here?"  And this is true whether the trade is for money, or not.

Or some people who are in the habit of underpaying, and not getting all the things they want, even though they have more to offer, might do well to think, "Would I still feel cheerful about paying much more for X, if I got more or faster or better X?  Is there some way to give more and get more?"  And this is true whether the trade is for money, or not.

Some people may benefit from switching perspectives to ask about cheerful prices with respect to some internal bargains between the voices in their head; to apply the same perspective to one-person transactions, not just two-person transactions.

But to repeat the warning from above:   If you have nothing more to give, or no pricing power to ask for more; then thinking about what it would take to make the bargain cheerful, may only make you sadder.  And this is true whether for outer bargains, or inner bargains.

Life does not promise us that we will always get our Cheerful Prices, even from our friends, and not even from ourselves.  Not every trade produces so much gain to divide, even among many good trades worth making.

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It's sometimes hard for me to figure out exactly where my "cheerful price" is. So when I'm "negotiating" with people I trust, I often list a couple of prices, that are some set of:

  • I definitely would not do it at this price (without it being a favor/ social exchange)
  • The lowest price I think I would do it at. 
  • My Satisfied Price: I am happy to do the thing for you! This is what I normally get paid for similar jobs
  • My Cheerful Price: I am excited to do the thing for you! This is more than my average, and I am actively happy about the opportunity!
  • My Ecstatic Price: My Cheerful Price is definitely lower than this. I would be ecstatic if you paid me $100 / hr to do laundry. This is an amazing deal for me. 

This can help because finding the ONE SPECIFIC NUMBER that is your Cheerful Price feels daunting.  But feeling out a range helps you narrow it down.

For example: "You want my blegg?? Well I definitely wouldn't give it to you for $10. But if you offered me for $500 I'd think it was my lucky day and you were crazy. Normally I give people bleggs for about $100. I've never gotten more than $200 for a blegg, and I was really happy about that, so.... $200?"

And honestly I feel more comfortable giving someone that whole set of information than just throwing out $200.  

 

5Vladimir_Nesov20dThere is no fundamental reason for Cheerful Price to be higher than what you are normally paid. For example, if you'd love to do a thing even without pay, Cheerful Price would be zero (and if you can't arbitrage by doing the thing without the transaction going through, the price moves all the way into the negatives). If you are sufficiently unusual in that attitude, the market price is going to be higher than that.
8weft19dYes, you are correct that the Cheerful Price could be less than my normal wage. But this is not usually the case for me. People aren't usually asking my Cheerful Price to eat some ice cream, or something similarly pleasant. And unfortunately we don't live in a world where my regular wages are above my Cheerful Price.

Wow this was dope. Great to read a LW post from you Eliezer.

Let me try to use the idea a little, and figure out what my cheerful prices are for a few things right now.

  • Commenting substantively on someone’s Google doc (in a relatively rare case where I wouldn’t just do this for free): $200
  • Build flat-pack furniture for someone: $300/hour
  • Play Baba Is You (levels from the level editor) for 30 mins: $40
  • Leave the room and be elsewhere for 10 minutes: $75
  • Have a 1-hour call with a random person on a topic of their choosing: $500

...I notice I have an especially high premium on “do something right now”. My prices are much lower for “do it sometime this week”.

And of course, if you’ve read the post, you know these aren’t my fair prices, just what fills me with cheer.

But building flat-pack furniture is ADULT LEGOS! 

I cannot deny the blinding truth of your sentence. But I am tired and also do not quite want the responsibility of not breaking some small but necessary part of someone else’s furniture.

I do really like this essay. It's generally a good idea, and there are a lot of situations where I would find this idea useful.

One thing I want to dive into a little bit here is this:

 

Fine, to be wholly frank, I do tend to see the indignant reaction "How dare you price that in money!" as a sign that somebody was brought up generally economically illiterate. 

I do think there are things, especially in terms of social interactions and between friends, that really shouldn't have a price on them, because they're things that only make sense if they're already net-positive actions that make everyone happy without money being exchanged, and once you're paying someone you create uncertainty about that.  If I invite you to come to a party, I want you to come if you want to come and not come if you don't, I really wouldn't be interested if the only way for both of us to be cheerful about you coming to my party would happen if one of us gave money to the other for the privilege. There are ways around it (if I have a bunch of people over and they want to chip in for pizza or whatever I certainly wouldn't be offended), but for the most part I only want those kind of things to happ... (read more)

2Oliver Sourbut9dInteresting thought. Could I crudely summarize the above contribution like this? It has the interesting corollary that Where does the discrete downside come from? The following is pure speculation and introspection. I guess we have 'willing price ranges' (our executive would agree in this range) and 'cheerful price ranges' (our whole being would agree in this range). If we all agree (perhaps implicitly) that some collective fun thing should entail $0 transaction, then (even if we all say it's a cheerful price) some of us may be cheerful and others merely willing. It's a shame but not too socially damaging if someone is willing but pretending to be cheerful. There is at least common knowledge of a reasonable guarantee that everyone partaking (executively) agrees that the thing is intrinsically fun and worth doing which is a socially safe state. On the other hand, if we agree that some alleged 'collective fun thing' should entail $nonzero transaction, similarly (even if we all say it's a cheerful price) some of us may be cheerful and others merely willing at that price point. But while it's still consistent that we all executively agree the thing is intrinsically fun and worthwhile it's no longer guaranteed (because it's consistent to believe that someone's willing price excludes $0 and they are only coming along because of the fee). Perhaps even bringing up the question of a fee raises that possibility? And countenancing that possibility can be socially/emotionally harmful? (Because it entails disagreement about preferences? Especially if the collective fun thing is an explicitly social activity, like your party example.) Further speculative corollary

Curation notice: I already said in a different comment that this post is dope. For this curation notice let me be more specific about why I think that:

  • Cheerful prices seem to me like an actively useful piece of social technology, as I've seen them used successfully in the wild several times amongst rationalists. I'm glad there's now a clear write-up of them.
  • Explaining social technology clearly in terms of microeconomics is really valuable and hard to do well. In particular, this post engages with lots of reasons that people have a hard time using basic microeconomic intuitions in their personal life, and gives advice about when it is and isn't the right idea. I felt like I grew stronger at grokking microeconomics by reading the post, even as a person who regularly uses money and taxes and bets and trades in his personal life.
  • The Q&A is both thorough and very fun. Eliezer's dialogues are always really fun, I liked when it went meta, it felt like a pretty real and honest dialogue to me.

Thanks for the post Eliezer :)

I think many people view friendship as a form of alliance. Ally friends perform favors for each other as a way to tie tighter bonds between them and signal that their goals are aligned. I want to bake you a cake for exactly $0 because baking a cake will help you and I want what's best for you so helping you directly helps me. So in the future, after I bake you your cake, you of course will drive me to the airport because that would help me and you want what's best for me right? It's not a direct scratch-my-back-and I'll-scratch-yours exchange of favors, it's developing a strong alliance between our interests. We can then rely on that alliance for mutual assistance in the future. The two most common danger ally-friends are on the lookout for are 1) over-reliance by their friend; and 2) mere burden shifting from their friend.

  1. Over-reliance is when Bob always asks his lawyer friend Alice for legal advice and for her opinion on complicated topics. Alice spends hours of her time (that she could otherwise use to bill $400/hour) on these favors yet Bob doesn't provide her even half of the value that she gives him. Bob's reliance on Alice is still efficient, it's much easier for her to d

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7Ericf18dI think this is getting at an important distinction. The question I would be asking is "what's the BATNA" (best alternative to a negotiated agreement)? If Bob is going to pay someone to do a task, asking a friend for their cheerful price makes sense. If Bob is otherwise going to do the task himself, or leave it undone, then it doesn't. In cases where it is customary to pay a stranger to complete a task (Legal advice, web design, drive to the airport, even baking a cake or DJing a party) asking for someone's "cheerful price" builds up the relationship because it shows respect for the time the other invested to acquire their skill (or at least acknowledges the inconvenience of the request. In cases where it is not normal to pay a stranger (turning down their music, sanitizing a package - wtf!, etc.) bringing cash into the relationship damages it There are a bunch of other things (washing the dishes, picking up lunch, doing laundry) that could fall into either of the above categories, depending on the norms of the group.

Q: Technical objection: Surely if you're asking everybody in the room to name their Cheerful Price for something, you should pay the lowest bidder the second-lowest bid, not pay the lowest bidder their actual bid?""

I chuckled when I got here, because I had just had this thought myself.

It seems like it can't be correct to always do this, because the second-lowest bid could in fact end up above the asker's willingness to pay. However, under the assumption generally made in the post -- that any happy price from anybody you're asking for one will likely be under that threshold, and often way under -- the second-lowest-bid heuristic seems like it could be a good thing to at least consider.

3smountjoy20dI think the usual solution there would be for Eliezer to set a reserve price (to avoid the problem of the second-lowest bid exceeding his comfortably-willing-to-pay range).

One problem: a high price can put more stress on a person, and raising the price further won't fix that!

For instance, say that you leave a fic half-finished, and someone offers a million dollars to MIRI iff you finish it. Would you actually feel cheerful and motivated, or might you feel stressed and avoidant and guilty about being slow, and have a painful experience in actually writing it?

(If you've personally mastered your relevant feelings, I think you'd still agree that many people haven't.)

I don't know what to do in that case.

If someone follows what this post proposes people wouldn't offer EY a million dollars for MIRI but ask him: "What's your cheerful price for finishing the fanfic."

If there's no price that would make him cheerful then he might say: "I'm already working on it when my creative engines are going and I don't think additional money would solve the issue" or something similar. 

3GuySrinivasan19dAt a high enough price I would be ecstatic to subcontract to a life coach who will work with me to get it done with a minimum of aversion.

I just want to make sure everyone here knows that HPMOR is complete. If you’ve been holding off reading it until it’s done, it’s okay, you can now finally read it.

2ChristianKl19dThat depends on your model about how much a life coach would help. I'm not sure what EY's experiences with life coaching happen to be.
2GuySrinivasan19dI was referring to me! I thought back over my most aversive things and I believe a life coach would have helped me get through all but two with relative ease. Not like butterflies and rainbows, but enough that for an aversive thing now I'd be quite happy to make it happen given, y'know, lots of cash. To be clear, I'm not talking about a once-a-week therapy session, I'm talking about someone sitting with me 8 hours a day.

To me this post may very well be a good example of some of the things that make me uncomfortable about the rationalist community, and why I so far have chosen to engage with it very minimally and mostly stay a lurker. At the risk of making a fool of myself, especially since it’s late and I didn’t read the whole post thoroughly (partly because you gave me an excuse not to halfway through) I’m going to try to explain why.

I don’t charge friends for favours, nor would I accept payment if offered. I’m not all that uncomfortable with the idea of “social capital” as a whole—I grew up partially with Portuguese culture where people will, for example, fight to pay the bill at a restaurant, because it turns out to be pretty good to be known as the guy who’s done favours for everybody in the village—but generally speaking, if I’m not willing to do a favour for a friend, then no amount of money will change that fact. At the point where you’re paying me, it ceases to be a favour, and it becomes a business transaction. Business transactions between friends are fraught.

I think a lot plays into this.

Turning a favour into a transaction means it starts being judged based on market norms rather than s... (read more)

1Kenny1dI think it's important to keep in mind a few things about this (or any other 'weird' social rule/trick/technology/norm/etc.): 1. It doesn't have to be used all the time, let alone frequently, often, or even at all! 2. It doesn't have to replace any other form of trading favors (i.e. exchanging social/friendship capital)! It seems like you're imagining a world, or even just a single relationship/friendship, where each person is frequently, or always, using cheerful pricing instead of all of the existing social/friendship favor trading forms. But I'd be surprised if you couldn't think of any examples where this would work better than the 'social norms' you'd otherwise use. Have you never asked a friend for a favor that involved their professional expertise? That seems like an excellent scenario for this kind of thing – to me anyways. Whereas, under 'social norms', this might require considerable exchanges of social/friendship capital, even with the 'professional' friend offering a 'friend discount', asking them to name a cheerful price signals that you value your friend's expertise and their time, and at a significant premium too. And more too that you're willing solicit a price from them that's higher than they're willing to pay. Regular favors also have the problem of being hard to reject sometimes. I'd expect this to be even more useful when the favor directly requires some kind of financial cost to the friend as well. I've often found that, even when there seems like there might be some kind of mutually beneficial exchange possible, the 'transaction costs' of not having a norm for simply paying for things with money can swamp the (potential) positive gains to both parties. I find a similar dynamic to be at work even when a friend agrees to do a favor 'for free' (i.e. for $0) – their commitment to do the thing is also something like you being their employer, e.g. you can reasonably be upset if they fail to do what they agreed to do. I also don't g

Man Iove how much of a departure this is from "shut up and multiply". In many ways it's "stop multiplying and feel things". I would really love to see the synthesis of these two views (which is in many ways a "practical virtues ethics vs. practical utilitarianism thing")

2dreeves13dInteresting! It hadn't occurred to me that this could be read as any kind of repudiation of "shut up and multiply". My previous comment on this post takes at stab at reconciling Cheerful Prices with my own extreme shut-up-and-multiply way of thinking.
3Matt Goldenberg12dAhh interesting, I replied with a potential counterexample to your attempted reconciliation, curious about your thoughts!
3dreeves12dGood thought experiment! I replied in the form of another Yudkowsky vignette. :) Summary: "Infinity" is a perfectly coherent Cheerful Price for, say, something sufficiently repugnant to you or something very unethical. (But also you must have a finite Cheerful Price for anything, no matter how bad, if the badness happens with sufficiently small probability.)

What kind of interactions do you have that make this a frequently applicable concept? The only reason to get a good or service from a friend rather than a stranger professional is if it is in some way more efficient. Even disregarding the fact that asking for things from friends is generally less efficient because of the potentially fraughtness, this doesn't happen much for me. If I ask a friend to make me a cake, it's because I already know it is positive sum. If I want cake qua cake I go to a cake shop. The only examples I can think of where it would be ... (read more)

I used it this afternoon to pay a housemate to sterilize the contents of a package. They said $5.

3adamzerner19dDo any other examples come to mind? I'm finding it difficult to think about without, say, 5 concrete examples to latch on to.
  1. What’s your cheerful price for not drumming your fingers on things when you’re in the living room
  2. What’s your cheerful price for being responsible for background music at our party tonight?
  3. What’s your cheerful price for keeping your mask on until you enter the house, rather than take it off near the house?
  4. What’s your cheerful price for cleaning up the kitchen as soon as you’ve been cooking in there, rather than some point later that same day?
  5. What’s your cheerful price for driving me to the airport at 5am on Monday?
5Ericf19dMy responses: 1. Bleep you 2. $20 and creative control. A great use of the concept. 3. Bleep you 4. Bleep you 5. A generally understood example that even normies wouldn't have a problem with. Another good example.

I was trying to come up with examples where the exchange was very small. I agree the three you don’t like were ways of resolving often unimportant preferences and can sound petty. 

That said:

  • For the first one I know at least two people with PTSD-like symptoms who have requested something similar from me, which wasn’t petty. I expect that they’d feel more comfortable if they could offset the cost with money, rather than feeling like they’re paying an unknown, possibly large amount of social capital (indeed one of them was severely disruptive to me, and I never really brought it up).
  • For the second, I think that people have different standards for thinking about microcovids and such, and I have exchange great deals of money in this way. I wouldn’t think much of it if someone asked me that, likely we're already exchanging dollars for microcovids.
  • This one is the one I most identify with! Clean surfaces are a big quality of life improvement for me, and I’d happily pay for it.

For the last, you say that even normies wouldn’t have a problem with it, but I think it’s plausible my mum would be upset if I offered to pay her to drive me to the airport.

5adamzerner19dThanks! This has definitely helped me to think about the concept of cheerful prices. Here's my current position. I do see the value in avoiding the situation of "I'm paying you to do X, you accept, but are secretly annoyed about it". By paying instead X + cheerfulness bonus you avoid it. However, 1. I don't have much IRL experience with rationalists, but I would expect that if you buy into the idea of exchanging money in these sorts of scenarios, that you'd also buy into the idea of Tell Culture [https://www.lesswrong.com/posts/rEBXN3x6kXgD4pLxs/tell-culture], at least enough such that you can have some back and forth and avoid the "but are secretly annoyed about it" part. 2. Even if I'm wrong about (1), isn't the cheerfulness bonus too large? "Cheerful" and "excited" seem like they really overshoot "don't have secret feelings of annoyance". Maybe a "non-begrudging/non-reluctant/non-sour price" would make more sense. In practice, I expect that the payer would often feel resentment about paying cheerful prices. "Ugh, do I really have to keep paying this person $100 to clean up the kitchen?"
7Ben Pace19dSolid points. 1. While in my experience the rationalists have some of the best conversational norms for communicating about conflict and costs and disagreements, I would not say that the rationalists I meet have solved these problems, to the extent where there are not costs that are very difficult to do conscious accounting of. So from one perspective, I’ll take all the tools I can get, and this seems like it may help with some such situations. 2. That said, I think you’re right that the cheerfulness bonus is probably too large in some of my examples. The actual cheerful price for the one I have in mind would’ve been... I feel confused, somewhere between $50 and $500. Still, I think it would’ve been a bit high for them. But my fair price would’ve been lower. I guess I’ll look for opportunities to use cheerful prices with the people I know. I’ll see if I can find at least three occasions to use it in the next few weeks.

"Buying expertise" seems like a good candidate. A friend might prefer to pay me to fix their computer, instead of taking it to a shop, because they know I won't tell them they need an expensive frobnitz unless they actually do. My cheerful price might be higher than the shop's, but it could easily be worth it. A similar situation probably applies to car mechanics.

4ChristianKl20dThe ebay price is reasonable if the person is clear about wanting to sell the item. There are cases where a person owns something that they don't regularly use. It would be a valid question to ask: "What's your cheerful price for selling this to me?"
3Zian18dThere's a cost to figuring out that someone is trustworthy. You could think of it this way : Cost of finding a friendly assisting intelligence + normal cost of a good or service >> cheerful price (pun intended)

One cautionary note is that once you invoke this idea, I feel like you're indicating willingness to pay the person some amount to do the thing, if you can both agree on a reasonable (cheerful or just satisfactory) number. 

Like if I'm kind of inclined to bake you a cake for free, and you ask for my cheerful price and I tell you - even if you don't take up the offer at my cheerful price, I'm definitely not going to make the cake for free now. That would be bad business.

Strongly disagree with this. The honest cheerful price is sometimes $0, and if that's true you should say $0, and presumably then do the thing given you were asked for your price. 

It's bad short term profit maximization but if you were purely doing short term profit maximization you never would have been inclined to bake the cake for free in the first place. 

3philh10dThis doesn't parse as disagreement - Eukaryote only said that asker should be willing to pay a nonzero amount, not that a nonzero payment should actually happen. So, according to my read of Eukaryote (and also according to me): * "My cheerful price is $0" / "great, will you do it for $0?" - fine. * "My cheerful price is $0.01" / "oh, hm, I don't actually want to pay a cent for it" - not cool. * "Honestly I'd have done it for free as a favor, but since you ask my cheerful price is $5" / "oh, okay, will you do it for free?" - not cool. * (Edited to add:) "Honestly I'd have done it for free as a favor, but since you ask my cheerful price is $5" / "hm, I don't want to pay $5, but will you do it for $2?" - fine.
2hamnox16dThat's a possibility, sure, but not an overriding one. Consider the case that your happy price is $5. It's worth it to you to do for free if your friend wants a cake, as it is a small cost for the sake of a friend. How you balance the costs and benefits of maintaining a relationship is up to you. Y hates baking, and out of typical-minding expected it to be more like $40 when she asked. She can, at that point, just ask you to do her a personal favor on the scale of $5. How scrupulously you follow up on favours and IOUs is also up to you.

As defined, I think my cheerful price for many purposes would be extremely high, like 50$ for giving you the cup of coffee I just bought from the Starbucks across the street. However, it just seems rude to name a price that high to a friend, my instincts to not offend a friend are driving the price I would say downwards, maybe you are trying to not expend friendship capital by asking me for my cheerful price, but naming a high price feels to me like I'm expending friendship capital. And in fact there might be some part of me that resents you for asking me ... (read more)

1Kenny1dAll advice is bad advice for someone (generally)! But I wonder if maybe part of this is due to overly focusing on the specific trade being proposed? Everything you wrote seems absolutely germane to answering someone's question to you about your cheerful price! And, or so I'd suspect, anyone that would ask you for your cheerful price for something would very much want to know all of this info – so that, for one, they'd no not to ever ask you for a cheerful price again. I would think that asking for anything, even if you're cheerfully willing to do it when asked (i.e. not obviously more than once) for 'free' ($0), 'friendship capital' is still being spent/exchanged. More generally, is it possible to even interact with a friend at all without (constantly) exchanging friendship capital? (I'm not sure! But I'm leaning towards 'no'.) I might also be biased because the most salient related example that's most fresh in my mind is someone that would try to 'overpay' (i.e. pay me something like my cheerful price) for something I'd done for them – because they had effectively imposed it upon me (and definitely without my knowledge, let alone consent). Were that person to have asked me for my cheerful price for my 'service', I could have told them what it was, especially if it was higher than what they would have been willing to pay (and it would have been almost always).

I'm too lazy to go find the citations, but other people have pointed out two objections to this concept, and I find them compelling:

  1. A norm of exchanging cash for assistance makes it very difficult for "the poor person" to get assistance when they have a bad day and, for example, just need someone else to do the dishes that night. 1a. Financial situations can change, and "the poor person" next year might be the same human as the one offering cash today.

  2. Open-ended transactions build relationships. By paying for the favor, that closes the transaction. 2

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2TAG20d1. is also the flaw in using willingness to pay as the criterion of wanting something.
4Ericf20dAlways gotta convert $ to utils before analyzing "willingness to pay" from people with even a 20% difference in wealth, income, or ready cash. At least if you want to answer questions about "is this market serving all stakeholders well?" and not just "what is happening?"
1jmh20dWillingness or ability?
1TAG20dExactly!
0MikkW19dA norm of exchanging "democracy dollars" (UBI coin) [https://www.lesswrong.com/posts/iYXk9pASYbMzxu2dR/a-democratic-currency] would alleviate this issue, since everybody is entitled to a regular supply of UBI coin, preventing people from getting locked out. If you're still too poor after you've used your supply of UBI coins, that's because you've already been taking a good bit more than you've been giving in return.
1Ericf18dAre DD fungible for "can pay my taxes $"? By definition of a tradeable good, yes. How much friction is there in that trade? From the linked post, it looks like very little: you just go to the bank and sign over your 100 DD and get whatever the exchange rate gives you in $USD.
1MikkW18dYes, they are fungible for dollars by design. But personally, I'd rather do the dishes in return for DDs than the same value in USD, because I suspect that such a preference can be justified using Functional Decision Theory (related to the fact that the expected value of being a random person in a society that uses mainly DDs is better than the expected value of being a random person in a USD society), and also because I have a strong preference for being friends with the type of person who maximizes DDs rather than maximizes USD. So if you don't want to be doing the dishes tonight, you better not sell all your DDs for cash
1Archimedes14dI really like the idea of this sort of currency but I feel like if it's easily fungible for dollars, then it loses power as a separate concept and is subject to the market forces of Wall Street trying to make $$$ from manipulating it some way or another. Of course, whenever multiple currencies exist, there will always be exchanges whether official or black market. However, I think there should be careful thought about what sorts of friction or limitations should be in place to preserve the intent of the currency. Maybe you only allow it to be associated with real individual people and possibly have caps on balances or transactions but maybe that would make things worse somehow. Hard to say without serious study.

Q: Despite your pretended demurral, I get the sense that you actually hold it against them a bit more than that. Fine, to be wholly frank, I do tend to see the indignant reaction “How dare you price that in money!” as a sign that somebody was brought up generally economically illiterate. I mean, if somebody says, “Sorry, I haven’t attained the stage of enlightenment where explicitly exchanging money stops making me feel bad”, I’m like, “Your feelings are valid! I’m still human in many ways too!” But if they say, “There are some things you can’t put a pric

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7ChristianKl20dI think it's more complicated then that. A person might be okay with getting asked "What's your cheerful price for doing the laundry for me?" but not "What's your cheerful price for having sex with me?".
9gjm20dI think it's more more complicated than that. For some people, some things will have no Cheerful Price in the sense defined in this article, because a CP is meant to be a price at which no part of their mind is on balance unhappy about doing the thing, and if there's some bit of you that really really doesn't want to have sex with me[1] and that bit of you isn't interested in money, then no amount of money will remove the ouchiness of the transaction. That might produce the same "how dare you? some things are too sacred to be bought and sold" reaction as if I'd asked you your CP for baking me a cake, but I don't think it's the same underlying cause. You may be absolutely on board with the idea that people exchange things for other things, even with friends, there may even be other people you would trade sex for money with because you don't particularly want to have sex with them but wouldn't hate it if you did, but you may still, specifically, find the prospect of having sex with me aversive[1] enough not to be OK with being asked your price. But there are surely also people for whom sex is just a particularly-strong example of something Too Sacred To Trade Explicitly, and who might respond with "actually, I'd have been happy to have sex with you if you'd just asked me the right way, but now that you've made it transactional the idea repels me". [1] It's OK. I don't actually want to have sex with you either. :-)
6weft20dI expect most people on LW to be okay being asked their Cheerful Price to have sex with someone. But e.g. even contemplating "Cheerful Price to kill my dog" throws an error and causes large psychic damage. (Otoh, I fell asleep pondering my Cheerful Price for various random things, and I think it's about $100k for my dog to stay with my ex instead of me) (Edited: replaced torture thought experiment)
7DavidHolmes18dI find this a surprising assertion. It does not apply to me, probably it does apply to you. Ordinarily I would ask if you had any other data points, but I don't want to take the conversation in this direction...
6Matt Goldenberg20dI pondered the dog thing for a second before realizing that I wouldn't be cheerful even at trillions of dollars, because I would still be sad about my dog being tortured. This may be a way that "cheerful price" is much less psychologically damaging than "willingness to pay" (indeed Eliezer points towards this in the article). I suspect the same is true of many people being paid to have sex with others. (Also, I think there's supposed to be a norm about using torture in thought experiments, so there's that).

Oh my goodness I love this. I'm actually so philosophically on board that I'm confused about treating Cheerful Prices as single real numbers. In my homo-economicus worldview, there exists a single price at which I'm exactly indifferent and then my cheerfulness goes up smoothly/continuously from there. It feels very arbitrary to pick something on that continuum and call it "the" cheerful price I have.

(My answer is to turn the nerdery up to 11 and compute a Shapley value, etc etc, but let me save that for another time or place. Jacob Falkovich and I have bee... (read more)

3Matt Goldenberg12dWhen I think about cheerful prices, I don't think this necessarily fits my experience. For instance, in this comment [https://www.lesswrong.com/posts/MzKKi7niyEqkBPnyu/your-cheerful-price?commentId=ipTXY389dMP7Fhgb4] , I talk about how even at absurdly high prices, I wouldn't be cheerful (even if I thought it was "worth it") because I would still be sad about the thing I was paying for.
3dreeves12dThat reminds me of this delightful and hilarious (edit: and true!) thing Eliezer said once:
3Matt Goldenberg11dYeah I mean it's pretty clear to me when I'm talking about things that make me "cheerful" that my feelings are fairly scope insensitive

Should the development of projects like LessWrong be funded by people working at their cheerful prices?

Nope. There is little hope in optimizing such that people working on most important projects (LW, most startups, etc) are not paying any personal costs in order to do them. Being a hero is not easy, and it feels naive to say something like "what if everyone was cheerful 100% of the time". Cheerful prices allow certain positive interpersonal interactions to happen rather than not happen, but it doesn't seem worth it to do for jobs.

I think fair prices are important goals, and even sometimes prices-where-you-feel-you're-getting-a-great-deal. But I think cheerful prices are probably too high a bar.

Warning: autobiography and emotions ahead, I have to disclaimer this due to the anxiety I will describe later, or else I will feel I'm wasting someone's time. Thank you for understanding.

From early on I learned to hate money and especially business transactions regarding debt or interest. It felt very, very wrong. I early on chose to take the mantle of "never give a loan if you will be perturbed or think less of someone should they not be able to repay it, and if you do need to take, then pay it forward tenfold. Most of all, never expect th... (read more)

A few practical remarks, that I believe should be resolved if this were to be implemented generally. How do you deal with people who are not cheerful to have spent the time thinking about their cheerful price, and having the deal not occurred. As you wrote, they may have imagined that the price will be pay and enjoy this thought, they probably need to do this to ensure that the price is cheerful, and so it may hurts a little bit. Worse, if you speaks to a room, then you are essentially asking a bunch of people to do a quote, that's actual work, because th... (read more)

1Kenny1dOof – I'm not sure this is even generally true, but that's a really depressing point! I think there are in fact, in the U.S. anyways, exceptions to literally being required to file a 1099 for every thing that you pay money for someone to do for you. I don't think, e.g. paying an allowance to your children based on their performance of chores, requires it. And there's usually exceptions for tax reporting/filing for small sums too. That seems like a contradiction in terms. It doesn't seem right to consider something a 'correct price' if it didn't in fact cover real costs you would have incurred to provide the service or sell someone a product. Have you considered explicitly including those costs in your prices?

But within that range, there's a zero-sum problem of dividing the gains from trade, on top of the positive-sum interaction of having the trade occur at all.  

I think one of the points of this article is that it's not zero-sum. There are ways to divide the gains in a way that strengthens the relationship between both parties and if the person who wants to initiate the trade ask for a cheerful price it's likely that the transaction strengthens the relationship if it happens.

Obviously, only low-status people could possibly be damaged by reading something.

Sigh.  There are many things I wish I could unread, cough-Gray-Boy-cough.

That was savagely funny and then suddenly horrifying in two lines.

Q: Technical objection: Surely if you’re asking everybody in the room to name their Cheerful Price for something, you should pay the lowest bidder the second-lowest bid, not pay the lowest bidder their actual bid?

Uhhh… possibly? I’m not actually sure that this logic works the same way when you’re asking people for Cheerful Prices—I think you’re already asking them to nudge the price upwards from “the lowest they’d accept”, which means you don’t have to give them the second-price of the auction in order to ensure they get any gains from trade. It’s a mo

... (read more)

This is a great post – thanks!

I was also very pleasantly surprised to see who had written it! Does this mean you've returned from the wasteland (Facebook)?

I think this is a great concept generally. However, I can't think of many situations where I'd personally be able to come up with a "cheerful price" where I'd be happy to do something that I wouldn't do for free.

For example, if a friend asks me to bake a cake or drive them to the airport, I wouldn't be more cheerful doing that for, say, $1000 than for free. I'd probably be less cheerful since I know that's a ridiculous price, even if they wanted to pay it. Maybe that's just because I have enough money that a one-off extra $1000 wouldn't have a meaningful i... (read more)

I can see scenarios where both participants in a trade would benefit from interacting via Cheerful Prices. I'm trying to think if it's a concept that still works even if one party does not fully buy into it. If I don't feel comfortable thinking about a Cheerful Price to give you, would I be spending some social / friendship capital that I have with you?