Monday, July 11, 2005

Solving Coordination Problems

The new PledgeBank.com tries to solve them in a unique way. Anyone can post a pledge of the form "I pledge to X if n other people also pledge to X." Pledges range from the mundane ("Tony will sweep the street outside [his] house once a month but only if 20 other people in Somerset will too.") to the odd ("I will endeavour to get the word "Avince" into the OED but only if 14 other UK citizens will too.").

I don't think most of the people who are posting pledges have quite gotten the point, however. What this method is useful for is getting over an initial hump; getting from the equilibrium where everyone is doing *nothing* to the equilibrium where everyone is doing *something*. It attempts to eliminate the personal risk inherent in coordination with asymmetrical information.

For example, pledging that "Nicola will give 1% of [her] gross annual salary to charity but only if 400 other people will too." doesn't really make sense. Why does Nicola need 400 other people to also give to charity before she will? Isn't it a good thing to do even if 400 other people don't also give to charity? There are already well-established charities to contribute to and there is no issue of economies of scale.

A better use of the site is for pledges such as "I will refuse to register for an ID card and will donate £10 to a legal defence fund but only if 10000 other people will also make this same pledge." If just one person does this, the effect will be nil since £10 doesn't buy anyone much of a legal defen[s]e. But £100,000 can, and there is not much of a difference between defending 1 person or 10 people and 10,000 people.

I thought this one was particularly funny: "I will strive to be more of an individual and not just do what other people do but only if 400 other people will strive to be more of an individual, too, and not just do what other people do."

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