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[wierd]

Yes. 

At the worst possible circumstance, you save 1$/yr over not purchasing the widget. (edit due to changed proposed circumstance: After 4 years, you will have recouped the investment, and you will start saving money. ).

At the best possible circumstance, the other three tenants decide to also purchase the widget, and now you have a sizable reduction in the electrical costs.

If the widget has ancillary functions that would offset the perceived large initial investment (Does it also do some useful function? Especially something that caters to convenience or leisure activity?) then the appeal of the widget will increase, and the desirability of the item will also increase, increasing the chances that your fellow boarders will purchase one.


There is no real circumstance where you are left holding a bag with less money than before (unless you plan to leave the boarding house sometime soon), so the answer is a flat "yes."  You should purchase.

[Reelya]

Yes. 

At the worst possible circumstance, you save 1$ over not purchasing the widget. (who does not like the equivalent of free money?).

At the best possible circumstance, the other three tenants decide to also purchase the widget, and now you have a sizable reduction in the electrical costs.

If the widget has ancillary functions that would offset the perceived large initial investment (Does it also do some useful function? Especially something that caters to convenience or leisure activity?) then the appeal of the widget will increase, and the desirability of the item will also increase, increasing the chances that your fellow boarders will purchase one.


There is no real circumstance where you are left holding a bag with less money than before, so the answer is a flat "yes."  You should purchase.

You missed the point. The widget saves $4 which is split four ways, but you must pay $3 personally to run it. You lose $2 by doing so.

The other widget generates $3 of bitcoins for a cost of $4, which is split. You gain $2 per electric bill period for owning one.

At every point, the optimal individual economic strategy is to minimize the sensible widgets and buy the dumb ones. It's an analogy for how collective stupid still happens even if everyone individually has perfect information and a perfectly rational decision making process.

[wierd]

You edited your post after I posted. I edited to cover that.

At the worst case, you recoup investment after 4 years. After that, you save 1$/year for having purchased the widget. Since this is your personal property, you can take it with you if you choose to move. So, even if you choose to leave the boarding house before the 4 year break-even point, you can take it with you and then save much more on your utility bill, (though you will be paying more for having left, due to losing the value of the other boarders in splitting the bill, and suffer from that lost efficiency.)

Unless your neighbors buy an anti-widget that consumes MORE power than normal, negating its value, you wont be left holding a negative bag of money for long.

Answer is still yes. Purchase the efficiency widget.

No, do not purchase the bitcoin mining widget. (At the best case, you are defrauding your neighbors, and if they get the bright idea to also buy them, you will be cumulatively (as a group) be losing vastly more money than any one would gain exclusively.  It is a foolish choice to purchase the mining widget.

[Reelya]

I adjusted the second one a little to better match the numbers on the first one, I didn't really change the first one. I said you lose money by running it, but the house as a whole saves money. I can't see how you weren't clear on what I was getting at.

I don't even know what you're talking about now, you haven't got a clue what I'm talking about.

What the fuck do you recoup after 4 years?!? that isn't even connected remotely to anything I wrote. I didn't even specify time periods at all.

No, do not purchase the bitcoin mining widget. (At the best case, you are defrauding your neighbors, and if they get the bright idea to also buy them, you will be cumulatively (as a group) be losing vastly more money than any one would gain exclusively.  It is a foolish choice to purchase the mining widget.

You're not getting it. This is what real people do. They get the thing that makes them money, but the costs are spread out to everyone else. e.g. cheaper pollution-spewing cars.

The first widget - the one that you spend more or, but saves money, but the savings need to be spread out among other people. People do not pick this option because they have to spend more individually to do it. e.g. electric cars which cost more to run, but they overall save society money on health.

[Maximum Spin]

Humans are actually capable of modeling the decisions of other humans, and can rationally decide not to form an economic suicide pact. Nobody has an incentive to intentionally self-sabotage by causing a predictable tragedy-of-the-commons.

[Helgoland]

You have little interaction with the other tenants.

It seems like you guys are being purposefully daft.

[Reelya]

It was meant to be an analogy for society. That's why I put that constraint in.

[Reelya]

Humans are actually capable of modeling the decisions of other humans, and can rationally decide not to form an economic suicide pact. Nobody has an incentive to intentionally self-sabotage by causing a predictable tragedy-of-the-commons.

They do though. e.g. you're breathing everyone else's car smog. It's cheaper for them to spew smog than to drive a non-smog car, but individually, the costs of all the smog cars in fact exceed the benefits per-person of cheaper transport.

[wierd]

This statement:

If you buy a certain widget it that you put in your room, it costs $3 to run, but saves $4 in electricity. You will save $1 on your share of the electric bill, but have spent $3. Should you buy the widget?

It means that the initial outlay is 3$.  There are 4 tenants, including yourself. You save 1$/year on your electricity bill for having installed it. You will recover your 3$ in just a few years, and after that, you will have net savings. You dont have to talk to your neighbors at all for this outcome. They dont have to know about the widget to have this outcome.  At the worst, after 3 years time, you will be saving money regardless of adoption by your neighbors. This is an inevitable payout for having adopted, assuming utility rates dont change in 3 years.

If your neighbors also adopt (presumably, they have similar circumstances to you, being in the same housing demographic, and the device would independently appeal to them as it does you), then the savings will magnify.  Their utility use will also drop, saving an additional 4$ per additional tenant. At maximal adoption, that will save you 4$/year on the first year, resulting in free money in your pocket, if maximal adoption is reached.

The utility question is weather or not it is OK to wait 3 years before you see a real return.

Again, if the widget has an ancillary function (Is convenient, or improves quality of living), then chances of adoption will increase.


The bitcoin miner on the other hand, simply costs more to operate than it returns. It is an economically poor decision, regardless. Your example tries to beg the question that it is default to consider this appealing.  I see it as a simply inefficient investment, regardless.

[Reelya]

"costs $3 to run" it's right there in the quote you printed. And of course it's the only interpretation that makes sense for a non-trivial thought experiment.

And what ... how are you arguing against what I meant in the first place? If your interpretation was wrong, then you change you're interpretation, not double-down on the wrong interpretation. You're not answering the question I asked if you just make up your own fake interpretation and answer that - you're not addressing the question itself at all.

If someone asks a hypothetical, which you failed to understand completely, it doesn't seem rational to stick to your mistaken interpretation after the person clarified what they were asking.

[wierd]

4$ -3$ = 1$.

If you divide that by 4 tenents, you save .25$ a year.  You just moved the break even point from 3 years to 12 years. Presumably, the device will still be operable after 12 years, as this is a consumer appliance that sits in a utility closet, and is electrically powered. (Compare, my central air conditioner is more than 20 years old, and sits outside in the wind and rain.)

[Reelya]

no it's costs $3 to run, saving $4 for the house. $1 each saved, and you incur an additional $3 cost per time-period. I didn't specify how long a time period was.


It costs "X to run" which means that operating the device costs $3 during the period in which you saved the money. But you have to split the savings 4 ways, leaving you individually out of pocket in each time period. There is no "break even" point. you're not understanding the maths.

[Maximum Spin]

They do though. e.g. you're breathing everyone else's car smog. It's cheaper for them to spew smog than to drive a non-smog car, but individually, the costs of all the smog cars in fact exceed the benefits per-person of cheaper transport.

I'm not, bro, I live in a forest. Maybe you should try living somewhere that isn't Beijing?

Okay, more seriously, most people would simply disagree that the individual cost exceeds the perceived benefit. You don't get to make that decision for other people. If they genuinely felt that the cost exceeded the benefit, they would start to make change, which has happened before and is why LA is currently habitable again.

[wierd]

What?  No.

Firstly, you are not factoring in that your power use is also divested amongst the tenants. It costs 3$ to operate, but you only pay a fraction of that if the other tenants dont adopt.  

Secondly, the device saves more money than it costs to operate. This guarantees a break-even point, regardless of how many ways you slice up the added efficiency. The number of ways you slice it just increases the time it takes to reach that point.

Here, let's work it out.

This device costs 3$ per interval period to operate, and there are 4 tenants, yourself included. So, your cost to operate the device is .75$ per period. The device saves the building 4$ per period, which if we divide the savings among the tenants, gives you a 1.00$ savings. We can subtract our share of the cost (.75 cents) from the net savings (1.00$ each), and save .25$ per period.

Again, I said if the device seems appealing to you, others will also find it appealing.  This is especially true if the device does something other than just sit there and hum in a special way. (Perhaps it makes life more convenient in some way?)  If the value of that convenience exceeds .50$, you break even in value; You are just paying for that ancillary feature.

If more tenants adopt, then the savings increase.

[Reelya]

 Smog reduction in LA isn't because of individual choices sacrificing for the greater good, it's because California as a state enacted stricter emission standards. Government action is a different thing from choices made by individuals.

What?  No.

Firstly, you are not factoring in that your power use is also divested amongst the tenants. It costs 3$ to operate, but you only pay a fraction of that if the other tenants dont adopt.  

Secondly, the device saves more money than it costs to operate. This guarantees a break-even point, regardless of how many ways you slice up the added efficiency. The number of ways you slice it just increases the time it takes to reach that point.

I'm not following you here. I specifically stated that the operating costs is exactly $3 per time period. Where are you getting the logic that you only pay a fraction of the cost if the other tenants don't adopt. For each energy-saver widget it costs $3 to run one.

if you have e.g. 10 widgets connected then you'd pay $30 a biling period to have them. It would cut $40 off the power bill. But you only get $10 of that saving yourself. So your e.g. monthly expenses just rose $20. you don't seem to be understanding this, which is very basic Game Theory ala the Prisoner's Dilemma.


When you say 'you only pay a fraction of that if the other tenants don't adopt' you're in fact making up new rules that weren't part of the question. So you're not in fact answering the question.

The point of the numbers is that it's not personally beneficial for any individual to get the energy-saver widgets, however if everyone got the widgets, they'd all be better off. But at any point if you personally got rid of your widgets, then you'd save money for yourself, so cheating is incentivized. This is an analogy for pollution, or really any other phenomena where individual selfish actions cost society as a whole more than what the individual gains.

~~~

And the flipside was the "energy waster widget", which is the exact inverse of the energy saver. This one uses $4 of electricity and generates $3 worth of bitcoins. It's just the inverse of the first type. In this case running one costs you personally an extra $1 in electricity (the other people pay 3/4 of the electric bill), for $3 gained. A $2 per month profit. So getting one would be smart for anyone. In fact, each and every widget you get of this type increases your personal monthly profits by $2 meaning there's never a good reason for anyone in the boarding house not to keep buying more and more of them, if you're all going off purely rational self interested single decisions.