Hacker News Reader

Comment by VMG | Hacker News Reader

Even when the reward is tiny, people will try to optimize the process as much as possible.

It would also be great if people provided internet content out of altruism and didn't want any compensation for it, but it doesn't work that way. A lot of websites can only survive by putting up web-ads, even if the compensation is pretty low.

View on HN

That's not a given. Here's an example: A daycare center was getting tired of parents not picking their kids up on time. So they implemented a fee - something small like $5 for late pickup. The result is that even more parents left their kids late! The social pressure of not annoying the daycare employees had been replaced with a monetary transaction: $5 for late pickup, not a bad deal.

If you start paying people tiny amounts of money to run a Tor relay, they will calculate that it's not worth it and they will stop doing it.

The second doesn't follow from the first. At most, you could say that people MAY calculate that running a tor relay is no longer worth it, but you could also say that without bringing up the (almost completely unrelated) daycare example.

The "problem" with the daycare is simply that they needed to either raise their prices or hire more employees willing to work a few extra hours to get overtime pay.

This isn't a problem at all, they have actually found another source of revenue for their company with a service their customers value and are willing to pay for.

Of all places where I would expect someone to be oblivious to this I find the fact that it's on a site focused on entrepreneurship and nurturing start ups to become profitable hilariously ironic.

The fee wasn't supposed to be a price, it was supposed to be an additional incentive to show up on time. But instead it replaced the previous incentive instead of adding to it.

Then they simply need to increase the fee until leaving their kids there is not worth it to them. This stuff is economics 101. Raise the price and the demand for being late will decrease.

They have literally blundered their way into a source of revenue, fail to see it as an opportunity and are resentful of it.

If the fee wasn't supposed to be a price then they shouldn't have made it a price. If they really hate money as much as it sounds they could instead give tardy parents 3 strikes before banning them from the daycare altogether.

Strictly, economics 101 says that if you raise the price the quantity demanded will decrease. Demand is a curve.

Yes, it has been about 13 years since I took econ. Since children are integers and are in daycare in quantities between 1 and 30ish per employee it's possible to increase the price to the point where it either covers the cost of the employee's OT or the quantity of demand is zero.

Certainly the case.

I think you're missing the point of the example, though. It's not "OMG there is no solution for this daycare" - there is, as you say, an obvious economic solution. It's that it is interesting (and relevant) that the different kinds of incentive don't stack, which is contrary to the naive assumption. Therefore, if the proposed mechanism cannot come up with sufficient money, it might actually make the situation worse - this may not be a "every little bit helps" situation.

So... why did raising the price from $0 to $5 increase the demand?

It increased the quantity demanded because of a weird artifact of human psychology that isn't typically covered in economics 101. There is a discontinuity in the demand curve as the relevant norms change.

If the fee wasn't supposed to be a price then they shouldn't have made it a price.

Yes, that's what I'm saying. If we replace the altruistic motivation with a monetary one, and we don't have enough money to incentivize people, they will just stop. They won't take the altruistic motivation plus the monetary one.

A daycare is not a place where people take care of your kids for free because they empathize with your need for childcare, It's a business which provides a service customers pay for. The responsibility customers have to pick up their kids on time is directly tied to how much it's going to cost them "feeling bad about being late" can be thought of as a cost in this example. All this example shows is "not feeling bad" is worth more than $5 and all they need to do to "solve" this new source of revenue is to raise the late fee until fewer people are late to pick up their kids than when there was no price at all. But what they really ought to do is raise the price until they reach an optimal profit per late child.

It's plain to see that altruism isn't enough to keep enough tor nodes going. I've never even considered running one until now because of the real costs and risk it incurs upon me. Now I'm actually considering it because it might be worth it. This is a good thing and there are more people willing do to something for money than people willing to do something out of the kindness of their heart to people they will never meet or interact with in any way.

OK I think you're missing what I said. The incentive is not altruistic impulse + money, it's altruistic impulse OR money. So far most of the Tor nodes really are run on charity!

Here's what I said up above

"As it stands I wouldn't be surprised if the majority of nodes were operated by various national intelligence agencies simply because they have vastly more incentive to do so than anyone else. Potentially being able to profit from this changes things dramatically and gives people who wouldn't consider themselves stakeholders actual reason to 'sell' their bandwidth to the tor network."

It's possible that most of the nodes aren't run for altruistic reasons at all. And are in fact run to datamine the network to discover the identity of people using it.

Paying people won't affect the people who are doing it for altruistic reasons alone, their price is already met. It's just an added bonus for them. But it will have the affect of bringing in additional people who wouldn't have considered it before. The only problem with the daycare's solution is the fact they didn't charge enough to offset the "cost" of feeling bad about being late. To the customers it was a worthy exchange.

Similarly, the tor coin needs to have a value that will offset the 'cost' of feeling bad about not contributing to the network which I know is extremely low.

Paying people won't affect the people who are doing it for altruistic reasons alone, their price is already met.

In the example, the parents picking up their kids on time beforehand were doing so for altruistic reasons alone. When the choice became framed economically, parents started picking up their kids on time less often.

You say they need to raise the fine, but the point here is that it's not economically feasible to raise the reward for running a Tor node indefinitely. The max amount paided out for running a node may be less of an incentive than the existing prosocial incentive to do so.

Again, that paper is interesting because in that specific case the results were counter-intuitive. In the overwhelming majority of instance a financial reward is an incentive.

Parking fines work because people respond more strongly to the monetary incentive than to stern looks. Paying doctors high wages works because monetary incentives work better than handshakes from patients. You don't get a paper published for that, because it's obvious.

And what's interesting about this experiment is that it's not an aberration. This has been replicated over and over and over again, for nearly 40 years. These contingent motivators -- if you do this, then you get that -- work in some circumstances. But for a lot of tasks, they actually either don't work or, often, they do harm. This is one of the most robust findings in social science, and also one of the most ignored. https://www.ted.com/talks/dan_pink_on_motivation/transcript I'm linking to a TED talk transcript because it makes the point better than I can.

Running a TOR node is not what I would call a "creative endeavor". It consumes electricity and bandwidth, and is a legal risk if it is an exit node.

>In the overwhelming majority of instance a financial reward is an incentive.

I don't believe this is true. I know numerous studies have shown that, for example, software developers enjoy their work less and feel less in control of it the more they are paid to work on it.

This case does not necessarily apply to Tor nodes, since one does not really do any persistent "work" when running one. But the concept of monetary incentive is definitely not nearly as shallow as you make it out to be.

I think you may be misinterpreting the studies. Generally speaking, there are very few people on the planet that are demoralized by being paid a lot.

Demoralization can happen when the social situation emphasizes pay as the only reward. The problem isn't that the pay is not an incentive, but the lack of social rewards acts as a disincentive.

If I tell you that I love the quality of the lemonade you are making for customers and I want to give you a raise so you will be happy to work longer hours making such great lemonade you will feel very appreciated and motivated.

If in the exact same situation I tell you that we need more lemonade and I know you don't want to work more but I am going to give you money so you need to do it, you are going to feel very differently. Its not that the money wouldn't have been an incentive, its that it is presented as if that is all you care about, which means your personal character and work ethic are being ignored. Very demoralizing.

Where's that daycare?

The market rate in my area is $15 for each 10 minute increment, with contract termination after a certain number of incidents.

Reply on news.ycombinator.com