The sharing economy is a wonderful thing and I love it. I love being able to not own a car and borrow one at will. I love being able to meet new people by sharing some extra square footage in my apartment. I love being able to share the books I own with anybody who wants to read them.
There’s only one thing that’s left to be solved in this magical sharing economy and that’s the other part of sharing … which is caring! The last time I lent somebody my copy of Kundera, it got returned to me all wrinkly as though it’d been out in the rain. At least I got it returned but a part of me just felt a little bit bad. For the sake of not sounding like a prude, the last time I rented a car from Enterprise I did park a little close to the curb and watch my passenger scrape the bottom of the door: metal against cement.
Yikes. Don’t worry. It’s just a rental.
Good systems and bad systems are all complex
When there’s a system that seems like it’s got the right goals and ideas, I start thinking extra hard about what extra mechanisms can be introduced to really make the whole thing run smoothly. A couple years ago, I bought a house with two other people. Having three people on a mortgage is generally unheard of and not going to lie, we’ve had a lot of challenges along the way. At the same time, sharing a house that’s better than what we could otherwise live in seems like a great goal that is worth the extra effort of figuring out the kinks. We introduced all sorts of mechanisms like paying ourselves rent, stepping up to responsibility with options of either cash or labor, sharing common tools with one another and building up as big of a reserve as possible. We still have problems that plague owners vs. renters though. Who cleans up when there are many other people to blame? Why should I be the one who has to fix the fence? Can’t I just take the take the extra tools for myself since nobody seems to be using them? Who takes the initiative when there’s an opportunity for improvement?
Recently, I also became involved with helping refactor a much-loved but ailing bookstore. To make up the cost, we first shared the space with other better-funded groups. This helps the bookstore tremendously financially but will they care about the bookstore as much as it’s current operators? or are they just here to share in the social capital that’s already been built up. The next idea for the bookstore is to fulfill a membership model similar to a library. How can we put in mechanisms that will allow people to care for a borrowed book the same way one would care for a book they own?
Owning before sharing
I’m much influenced by my former MIT advisor and mentor Andy. He once asked us: “If Jack and Jill are fighting over the same toy that Jill was playing with, what does dad do?” Of course, the immediate answer that we all responded with is that Jack and Jill have to share. But that wasn’t the answer.
Instead, Andy quipped that someone first has to own (probably Jill).
I didn’t mull over the universality of that statement at the time. Now that I’m musing about mechanisms that can actually make the sharing economy work so that everybody also cares, this suddenly becomes much more relevant. What I extrapolate is that before we can all learn to share, we have to know what it means to own. It’s simply hard for somebody to empathize with how to share if they’ve never owned before. I confess. I’ve never owned a car.
In the mean time, what will happen if everybody grows up in an economy that only shares? What if we are so good at putting together systems to offset maintenance costs associated with sharing that nobody ever understands how to own first? The logical progression will be that everybody will forget what it means to empathize with a physical object. Since there will be no owners in this hypothetical sharing economy, there won’t even be an owner to empathize with!
But I think I’ve come up with a solution: Make sure there are plenty of mechanisms to both own and share. Well, I didn’t really come up with the solution but I observed the solution. Ever since Avis acquired Zipcar, I’ve found less reason to rent. Aside from the fact that the prices have gone up, there’s also no owner to really empathize with (which somehow for me was Robin Chase). On the other hand, I’m using RelayRides more and more. In particular, I often borrow from the lady who owns the Subaru in Central Square. It’s not a flashy shiny car but her prices are low and I know the car is hers.
If I ever own a car, I’ll be glad to know that there’s mechanisms for me to share it with people who care too.
The rise of the sharing economy
Sharing companies go mainstream. http://www.reuters.com/article/2013/06/21/us-summit-sharingeconomy-idUSBRE95K0X920130621 June, 2013.
Does the sharing economy have a shadow-side. http://www.fastcompany.com/3013272/does-the-sharing-economy-have-a-shadow-side June, 2013.
Last Sunday, Szym and I spent nearly the entirely afternoon arguing about the Two Envelope Paradox. Mostly, I thought it might be a good to do a blog post on it because we spent so long on it. Also, I think there might be a message here that just shows how unorganized data on the Internet is.
We came across the two envelope paradox on Wikipedia. Go take a look.
You have two indistinguishable envelopes that each contain money. One contains twice as much as the other. You may pick one envelope and keep the money it contains. You pick at random, but before you open the envelope, you are offered the chance to take the other envelope instead.
"It can be argued that it is to your advantage to swap envelopes by showing that your expected return on swapping exceeds the sum in your envelope. This leads to the absurdity that it is beneficial to continue to swap envelopes indefinitely."
The absurd argument can be illustrated through an example.
"Assume the amount in my selected envelope is $20. If I happened to have selected the larger of the two envelopes, that would mean that the amount in my envelope is twice the amount in the other envelope. So in this case the amount in the other envelope would be $10. However if I happened to have selected the smaller of the two envelopes, that would mean that the amount in the other envelope is twice the amount in my envelope. So in this second scenario the amount in the other envelope would be $40. The probability of either of these scenarios is one half, since there is a 50% chance that I initially happened to select the larger envelope and a 50% chance that I initially happened to select the smaller envelope. The expected value calculation for how much money is in the other envelope would be the amount in the first scenario times the probability of the first scenario plus the amount in the second scenario times the probability of the second scenario, which is $10 * 1/2 + $40 * 1/2. The result of this calculation is that the expected value of money in the other envelope is $25. Since this is greater than my selected envelope, it would appear to my advantage to always switch envelopes."
The biggest flaw in the argument which results in the false conclusion that it *always* makes sense to switch envelopes (btw, this problem is not to be confused with the Monty Hall problem) is the poor modeling of the scenario. It's important not to divorce the mathematical description from what's naturally happening. "Wait a minute! Once I've switched envelopes once, I know what's in the other envelope and there is no need to keep switching!"
Does the mathematical description reflect that phenomenon? The paradox only seems to occur because the math does not accurately describe the situation. To illustrate that point, consider a completely different game:
You're happy with an envelope of money on your desk. Everyday, a man shows up at your door with two indistinguishable envelopes that each contain money. One contains twice as much as what you already have. The other contains half as much as what you already have. You can sit on the money you have. Or, you can switch your envelope with the man.
It would appear that I have either the option of sticking with my $20. Or, I have a chance of getting $10 * 1/2 + $40 * 1/2 = $25. The mathematical conclusion is that I should always choose from the man at my door. There doesn't seem to be any paradox.
So then it seems that the same math is describing two completely different scenarios. That would be bad because math is supposed to be a great language.
As an exercise, the first game should be modeled exactly according to the decision being made. There are two envelopes containing $a$ and $2a$ dollars. After taking an envelope, I either have $a$ or $2a$ in my hand. Switching envelopes can be modeled as what one can gain. Half the time, I'll have a chance of gaining ($2a$-$a$). Half the time, I'll have a chance of losing ($a$-$2a$). Mathematically, switching can be modeled as: 0.5*$a$ + 0.5*(-$a$) = 0. It doesn't matter if I switch or not.
Now go back to that Wikipedia article and learn some Bayesian probability!
Edit: Apparently, the viewpoint of gaining vs. not gaining is the non-probabilistic approach that Raymond Smullyan took. Even neater.