[EM] RE : Re: Range voting, zero-info strategy simulation (raphfrk)

[raphfrk at netscape.net]

 > From: abd at lomaxdesign.com
 > Subject: Re: [EM] RE : Re: Range voting, zero-info strategy simulation (raphfrk)
 >
 > At 05:12 PM 11/1/2006, raphfrk at netscape.net wrote:
 >
 > >This is why insurance companies exist. People pay say 1%
 > >of the value of a thing in order to insure against a risk
 > >that is say 1 in 200 of happening. The expected benefit of
 > >the insurance is less than the cost, but it is still worth
 > >getting.
 >
 > It would be more accurate to say that people are willing to pay to avoid risk, and sometimes they are willing to pay more than the expected cost of the risk. Insurance is like gambling in some ways.
 >
 > The insurance company is the House. It is also making the same bet on the other side. It is willing to accept a large risk for a small positive expectation. Plus it gets to invest the reserves....
 
 Actually, it isn't accepting a large risk. The service it
 provides is to combine risks, so that the effective risk
 is reduced. However, there are some exceptions. For 
 example, if a major disaster occurs, all those single 
 houses cannot be considered independent risks.
 
 > (You have to have reserves to play this game. But the reserves can be invested, they do not have to be sitting in a no-interest checking account....)
 >
 > Yes, risk aversion is a known behavioral pattern. It is not necessarily rational, which is why I object to "it is still worth getting."
 >
 > Sometimes it is, sometimes it is not. If you can absorb the loss, it is *not* worth getting by any rational standard.
 
 I agree, this is why I don't think health insurance should
 cover minor treatments. For example, your insurance may
 cover say $40 per doctor visit which is pointless insuring.
 
 OTOH, if the cost is a $50k-$100k operation then it should
 be covered.
 
 The counter argument is that you know if you get the 
 insurance, you will visit the doctor more and that is 
 what you want. It works similar to paying in advance
 before going into a theme park and then all the rides 
 are free.
 
 There is another thing that health insurance provides, it
 allows people to not have to think about their health.
 Thus, they don't want to be given statistical breakdowns
 of risk/reward. (as you point out).
 
 I would like to be able to insure my life for a certain amount
 per year. However, most people would be horrified, they 
 don't want to have to make such a decision.
 
 However, this means that when the insurance must provide
 all possible treatments, irrespective of price.
 
 This means that the insurance contract is alot more complex,
 as it has to cover exceptions. Under my scheme, companies
 could just say "We will provide cover if the treatment is 
 expected to increase your lifespan by at least 1 year for every
 $100k we spend."
 
 There would have to be a similar condition for quality of life 
 too. However, defining that is hard ... maybe they need an
 industry standard.
 
 There would also have to be a rule for pre-existing conditions.
 Also, the premiums that must be paid would have to either
 be frozen or limited in how fast they can increase once
 a condition is detected.
 
 >
 > There is one argument for insurance. If you are going to worry, worry is bad for your health. If you can't find a way to avoid worrying, one could consider insurance as a palliative treatment for your anxiety disorder....
 >
 > Or insurance is worth getting if for some reason you expect higher than average losses. Which might be fraud, under some circumstances.
 
 This is the whole self-selection effect. Insurance
 companies have to assume that they are getting
 worse than average risk customers. This means that
 they have to increase their premiums, but that means
 that the people who get insurance are even worse and
 so they have to increase their premiums even more.
 
 The end result is that the companies have to price
 insurance based on (near) worst case results.
 
 This is why things like group schemes work. If the
 people in the group scheme are there for some reason
 other than getting insurance (like it is connected to
 their job), then the companies can charge premiums
 closer to average risk as people can't self select.
 
 >
 > >In any case, on the topic at hand. I think that
 > >there would be people in an election who wouldn't
 > >vote perfect strategic because they are afraid that
 > >their least favorite will win.
 >
 > And this is good. I suspect that if you do a risk analysis, you'd find that optimizing the average value of the election would indicate not voting pure favorite-win strategy, as long as there is another candidate reasonably close in preference.
 
 However, the sims show that the expected value is
 higher if you use one of the strategic schemes.
 
 Another type of sim would be one that takes into account
 the potential problems if the elected official is bad for
 other people.
 
 This would mean that the utility of a candidate is equal
 to the utility to the voter plus some fraction of the
 utility to society.
 
 For example,
 
 U = 0.95*Uv + 0.05*Us
 
 Uv = voter's utility
 Us = average social utility
 
 This would take into account the effects of things
 like filibusters and also public protests and hard
 feelings in society.
 
 The voter would know Uv with much higher accuracy
 than Us.
 
 Another way of looking at it is that Uv is the utility
 to the voter of the candidate, assuming that the 
 candidate doesn't cause major social problems when
 he tries to implement his ideas. By including Us,
 it includes these effects as well.
 
 Another option would be to include a function that 
 incorporates the rms of the difference between the
 final result and the voters' preferences.
 
 
    Raphfrk
 --------------------
 Interesting site
 "what if anyone could modify the laws"
 
 www.wikocracy.com   
 
   
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