On The Margins

Wednesday September 01, 2004

[ Telecommunications ] Does Technology Trump Regulation ?

The short answer is "No," and the slightly longer answer is "No, not in the short term," where "short term" depends.

A post on EconLog (edited by Arnold Kling) about "Telephone Fees", ends with the following question:

Why aren't we able to kill regulations when they become technologically obsolete?

That the main mission of the regulation is to keep up with technology remains a point to be settled. (See my notes on the "unbundled network element" aspects of the 1996 telecom act: 1, 2, 3. Also see my telecommunications category for more on related issues.)

The arguments that blame the slow rate of regulatory change on inherent bureaucratic intertia have their own place and validity. However, . . .

Regulations define the rules of the game.

If you change the rules of the game more than is warranted, people will go play some other game with more stable rules or they will refuse to play the game. If people stop playing there won't be any game, and in commerce and economics, we know what happens when people refuse to play !

So, even when we have a more efficient and perfect bureaucracy (if one could ever exist), "validity" of regulation (which cannot be determined based only on technological criteria) needs to be balanced against its "stability" (which is required as a minimal insurance for protecting investment in assets that take advantage of it).

2004-09-01 14:12:57.0 -- ; Permalink ; Trackback.

[ Mathematics ] The Mathematics of Elections

Should software and servers matter in breaking election ambiguities?

Well, it all depends on what sort of ambiguity we're talking about. Here, I'm certainly not talking about hanging chads. I'm talking about ambiguities that may arise because of the election method used.

Some election ambiguities require computational power, others may take you to the Supreme Court. Let's focus on the first type of ambiguity, for the moment.

The mathematics of elections is quite simple when everyone has a chance to vote only for one of the candidates, i.e. when no allowance is made for the voter to fully specify and assign his or her preferences to each and as many of the candidates as he or she wishes. In such an election, all we need to do is add the votes for each candidate. Whoever has more votes wins. No puzzling ambiguities are left.

Kenneth Arrow, the distinguished Stanford economist, who has also written the forward to the anniversary edition of Chester Barnard's classic (about which I've written earlier) has a famous theorem (Arrow's Impossibility Theorem) which effectively says there are no ideal methods for elections.

Arrow gives several criteria for "ideal" elections, the most controversial of which is the "Independence from Irrelevant Alternatives Criterion" (IIAC).

IIAC says, effectively, that removal or addition of a candidate should make no difference unless that candidate was or will be the winner (against all other candidates).

Arrow shows that it is impossible for an election method to satisfy all of his criteria. So, according to Arrow's theorem, even if voters had a chance to fully specify their preferences, it would make no difference.

The trouble is that the IIAC is not necessarily a valid criterion.

As noted in ElectionMethods.org, IIAC is too strong a criterion and near-ideal election methods do exist. The Condorcet election method is one such near-ideal election method:

The proper method of counting ranked votes is called the Condorcet election method, named after the French mathematician who conceived it a couple of centuries ago. The main idea is that each race is conceptually broken down into separate pairwise races between each possible pairing of the candidates. Each ranked ballot is then interpreted as a vote in each of those one-on-one races. If candidate A is ranked above candidate B by a particular voter, that is interpreted as a vote for A over B. If one candidates beats each of the other candidates in their one-on-one races, that candidate wins. Otherwise, the result is ambiguous and a simple procedure is used to resolve the ambiguity.

Well, it is the resolution of this ambiguity at a national (or any other large-scale) level that may require some use of computing power.

ElectionMethods.org discusses Basic Condercet (BC) and Schwartz Sequential Dropping (SSD) for resolving the ambiguity. It includes a software implementation for the SSD method for solving cyclic ambiguities.

BC method drops the weakest defeat (from the cyclic series of defeats) until there's a candidate that is unbeaten. This may cause strategy issues. Parties may have clone candidates, i.e. multiple candidates running for the same party.

The SSD method has been described in ElectionMethods.org, where links to software and other useful information can also be found.

Personally, the Beatpath Winner (BW) method appears to me to be adequate in resolving cyclicity in a Condercet voting result. It's equivalent to the SSD method of resolving ambiguities. In the BW method of resolving cyclic ambiguities, if A defeats B through a "path" (chain of defeats) and B defeats A through another path (in the cycle), the two paths (chains) are compared to see which one has the weakest defeat in its sequence of defeats. The candidate which has the strongest defeat paths (chains) against all other candidates is the winner.

Condercet method of elections seems like a very reasonable method. The reason it has not been popular in the U.S. is probably because people are very conservative and don't want surprises. Furthermore, the strategy outcomes are hard to predict. It really unleashes a marketplace for votes and makes results much more difficult to predict. Another reason could be that Condercet will be truly bad for the two-party system. Finally, with more parties having a chance, there is also the question of political stability. In the absence of political stability, economic stability may also be a rarity. So, I would expect there may issue some arguments from institutional economists against Condercet.

2004-09-01 11:56:44.0 -- Comments [5] ; Permalink ; Trackback.