Carissa Sevar: "What if it's you?"

lintamande: "Done and done, give me five red, I promise I won't trade with myself all day long. Gregoria, twelve red for....thirteen green -"

"Am I allowed to change my preference-weightings -"

"Obviously not."

"Keltham, am I?"

Keltham: "Definitely no."

lintamande: Gregoria hands over thirteen imaginary green. Meritxell turns around and hands eight of them to Tonia for blue. She looks supremely in her element and she's talking several miles a minute, withdrawing any trades the other girls don't agree to instantly.

Keltham: ...you would think they would somehow teach kids about this sort of principle before they let them have investment accounts let alone allocate years of training to wizard school.

Keltham will wait until they have ended up in a multi-agent-optimum; one of the many possible multi-agent-optima, which happens to have a lot of imaginary jellychips in the possession of Meritxell; such that, indeed, it is not possible to make all the students including her better off, by taking some of those away from her and looking for a more evenly distributed optimum.

lintamande: It takes a while because Meritxell refuses so many trades but they get there eventually. 

Keltham: Keltham shall now observe to them that, if Meritxell has 12 green and prefers two blue to three green, and Gregoria has 12 blue and prefers two green to three blue, then all of the trades "5 green for 7 blue", "6 green for 6 blue", and "7 green for 5 blue", are mutually beneficial, but differently divide up the gains from trade.

There's a lot of different ways for jellychips to be arranged such that they can't be moved around without making at least one player worse off.  For example, Meritxell could have all the chips, and nobody else could have any.  Then any other way of arranging the chips will make Meritxell worse off!  So that's one of the many possible global optima.

Different paths through the mutually beneficial trades will take you to different global optima.  So long as all the trades are mutually beneficial, you won't end up worse off than if you never traded, at the end; but you might end up much worse off than if you'd traded more carefully.

Keltham is a bit surprised that they didn't more quickly see the way in which this game resembled real life, since they seem pretty good at mathematical comprehension of the sort of structure that this game has in common with real life.  But that will come with having more than one day's practice with parsing up games and real life into the pure abstract structures and simple mathematical properties they have in common - with parsing up real life as a shadow of Law, that is then recognized at once when incarnated in some much simpler game.

lintamande: All of what Keltham's saying makes sense to them! 

Ione Sala: Ione wonders, in the back of her mind, if there's some way to actually go between worlds that way - by understanding real life as an instance of Law, and then sort of going through that Law to end up in a different instance of real life...

You know what, she's going to stop thinking that now.  Thinking things in the back of her mind has gotten her into enough trouble already.

Keltham: Well, now that they've seen the problem of dividing gains from trade in a simpler form, re-encountering it as a more mathematical structure, have they got any new ideas about how to decide how many blue jellychips to accept for how many green jellychips?

lintamande: "...it depends what the other person will accept?"

"You want to be keeping the books," Meritxell says. "Then everyone knows you'll be doing the most favorable trades you can and if they don't want to trade with you they're just out of luck. Or have some other kind of - asymmetric reason you can say 'I'm holding out for better' which they can't."

Keltham: "They could, in fact, have mostly stopped trading with you, and traded with each other instead, until the game was almost ready to end.  And even then, if you'd tried to make trades too sharp, they could have just said no and offered you more even ones; and if you refused those trades, well then, the game ends without being multi-player-optimal."

"Even if you make your mutually beneficial trades very slanted in your own favor, people can't end up worse off, from trading with you, compared to if they didn't trade with anyone at all."

"They can end up worse off by trading with you, compared to if they'd traded with other people instead."

"So they walk away, and find other trade partners, if you try to capture too much of the gains from trade for yourself."

"This, too, is a lesson with a mathematical structure that appears in both this game and in real life."

lintamande: "Sure, but it's costly to go around trying to find possible trade partners. In practice if you own the books you get the bulk of the gains from trade."

Keltham: Then some book-owners are going to really lose out once Keltham figures out cheaper roads and bicycles; so Keltham thinks, but also meta-thinks fast enough not to say out loud.  He is not quite sure of his larger social situation, and maybe he is better off quietly not pointing out certain winners and losers just yet.

"Dath ilan has some excess wealth beyond bare living needs," and, now that Keltham thinks about it, probably a much more structured investment scene, "which a hundred thousand annoyed customers can easily use to pay the startup costs of a new company that makes whatever you make, and contracts to sell it more cheaply for the first ten years to its founding customers.  So 'I'm the only trade partner around' does play less well there."  If he emphasizes the part with the vast wealth Golarion won't have for a while, that'll maybe sound less threatening to anybody reading these reports, compared to if they realize that roads will apply the same market pressure.  "Does Cheliax have a lot of places where, say, there's only one seller of food...?"

lintamande: "...not food, because outside of cities everyone grows their own food," says Tonia, "and lots of them bring it to the city to market."

"Only one shoe-seller, though."

"And even cities might have only one fifth circle wizard who can cast Teleport for you, or one fifth circle cleric who can Raise Dead."

Keltham: "Well, I can see how the fifth-circle wizard could end up quite wealthy that way, but surely a shoe-seller must be much wealthier still.  After all, while most people probably don't use Teleports, everyone needs shoes, and the shoe-seller can charge whatever they want for them."

lintamande: "...you don't have to have shoes," says Tonia.

Keltham: "I bet the fifth-circle cleric wants shoes, though, so maybe the shoe-seller can set shoe prices incredibly high and capture all the money the cleric got by Raising Dead."

lintamande: "Well if he can Raise Dead he can also cast Mending on his own shoes, or buy them secondhand off someone else, or go disguised so the shoeseller thinks he's just a random laborer."

Keltham: "Yes, people often do have a lot of other trades they could make, or other people they could trade with, if somebody else tries to capture too much of the gains from trade.  You want to give them some incentive to stick around, and keep playing the game."

lintamande: "Sure. The shoeseller mostly picks his prices but he doesn't have absolute power or something." Absolute-power: a simple two-syllable word in Taldane.

Keltham: "Does he not?  He can just put up a sign saying the price is now a hundred million billion gold pieces.  Nobody can stop him."

lintamande: "The costs of finding some other solution are high but they're not that high. He gets to capture almost all the gains-from-trade as long as the gains-from-trade are smaller than the cost of going to the next town over or something for a cobbler. But in practice they are, so he gets to capture almost all the gains-from-trade."

Keltham: "All right, if that's really true, I'm now a bit confused.  If I imagine how much value everybody in a town gets from having shoes, compared to not having shoes at all, it seems like it should be an amount more than ten times greater than the amount to set up a new cobbler's business.  And how is the cobbler capturing most of the gains from trade when he's selling shoes to the cleric, who might be deriving ten thousand gold pieces of value from being able to wear shoes at all?"

lintamande: "The cleric buys his shoes in the city, when he gets called into the city on important cleric business," says Tonia. "And how would you set up a new cobbler's business, you don't know how to make shoes, and if you tried he'd just lower his prices until you starved, and then go back to raising them."

Keltham: "Okay, so... you don't actually have the thing, where everybody getting ripped off would pool some money, start a new cobbler in business, and refuse to buy from the other guy for a while even if he lowered his prices."

lintamande: "Pool what money," says Tonia. 

Keltham: "The money that everybody in an entire city would have otherwise needed to buy overpriced shoes."

lintamande: "Twenty households in a village. The poor half haven't got any savings. The rich half have a couple of family heirlooms they'll sell if it's a drought, and a healing potion for if the woman's dying in childbirth and the cleric's out of town, and they don't even use it if the baby's dying, no one's so rich to use healing potions on babies."

Keltham: Keltham closes his eyes for a second and reminds himself that afterlives are a thing and you can talk to the people in them right now.  It's not like the babies are being cryosuspended.

Keltham: "A village that size shouldn't have its own shoemaker, then, unless shoes wear out really fast.  You buy shoes in town when you go there to sell whatever you make, or the person who buys whatever you make in the village, brings shoes over to sell when he travels to pick it up.  Or am I wildly off-base on how that would have to work?"

lintamande: "...that is a town, twenty households."

Keltham: Twenty families is a RELATIVELY LARGE GROUP HOUSE.

"Pretend I just said city, instead of town, then."

lintamande: Tonia shrugs. "I don't know how it works in cities."

"Shoesellers compete in cities," Meritxell says. 

Carissa Sevar: "But eighty, ninety percent of Chelish people live outside the cities," Carissa says. It's true in Taldor and she looked up whether it was true in Cheliax, too, because it might be an important difference if it were different, and Cheliax keeps but doesn't publish statistics on that and it's also true in Cheliax.

Keltham: "No, I mean, does a town of twenty households have one person who's a shoemaker."

lintamande: "Yes," says Tonia. "He doesn't only make shoes, he works in the fields at planting and harvest time just like anyone who can walk, and tans leather for the shoes but also for anything else you want leather tanned for, but yes, the town has a shoemaker, because it's too far from a city for people to go there for shoes. People farther out come to the town for the shoes."

Keltham: "And this person is much richer than everyone else in the town because he can charge whatever he wants for shoes?  Serious question, I am actually trying to grasp how Golarion works here."

lintamande: "No. He can charge whatever shoes are worth to people but that isn't enough to make him rich because no one else has much to spare so shoes aren't worth all that much to them. He's richer than people who have to buy shoes from him, mostly. And then he just gets spread out more ways because more of his kids live." Unless he kills some but Tonia has learned they don't do that in Taldor.

Keltham: "I have a sense that there's some breakdown of communications here, and I hypothesize that maybe it's a missing concept of consumer surplus as distinct from usual market prices being what defines gains from trade.  As we would put it, the consumer value to you of shoes isn't the amount you'd usually pay for shoes like that in a market, it's the amount you'd pay not to be forever forbidden from wearing shoes ever again, if there was some powerful anti-shoe magic otherwise about to afflict you, and you had to pay a fourth-circle wizard to counterspell it before it took effect.  In dath ilan, we'd usually expect the consumer value of an item to be noticeably higher than the selling price.  The distance between consumer value and selling price is the consumer surplus, the amount of the gains from trade that goes to the consumer."

"The market price of shoes should settle somewhere not too far from the costs of making leather and going to cobbler lessons, not settle at nearly the absolute maximum price that anybody around would pay to be allowed to ever wear shoes again.  So people are noticeably better off because of shoemakers existing at all, rather than being only a tiny bit better off because the selling price of shoes is so astronomical that it cancels out almost but not quite all of the real benefit that people get from shoes."

"Or, that's how we'd expect it to be in dath ilan."

lintamande: ".... if there were some powerful anti-shoe magic about to take effect you'd still only have enough food to maybe make it to spring if you're lucky, and nowhere near enough to pay a fourth-circle wizard for anything," says Tonia. She's not sure this is a productive argument but she's pretty sure it's not a revealing one.

Keltham: "I want to ask about a generous fourth-circle wizard who offers to cast the anti-anti-shoe-spell for just one gold piece, but I'm guessing you'll say that towns settle into an equilibrium where nobody has a gold piece to spend on anything, because, if they did, one more of their kids would have lived and that kid would now be eating more food.  This, unfortunately, makes it harder for me to define the concept of consumer surplus around a counterfactual willingness to pay any more."

"So suppose instead I tell you that consumer surplus is the amount that people would be sad if shoes stopped existing.  They would, on the one hand, be happy never to pay for shoes again, but, on the other hand, they would be even sadder than that, because the shoes were worth more to them than what they paid.  We in dath ilan would expect people to be a noticeable amount of sad, rather than just shrugging because they were only barely in favor of paying for shoes in the first place at standard shoe prices."

lintamande: "- all right. I think people'd be - a noticeable amount of sad, if the cobbler died. They'd say he was a lousy man and they don't miss him but they'd be worse off and not just barely."

Keltham: "...and then that town never has a cobbler again, and the surrounding farms who came there to buy shoes, just never get shoes again?  I mean, is that what happens in real life when a cobbler dies?"

Keltham is CONFUSED by the part about them saying the cobbler was a lousy man.  He notices the confusion consciously, then sets it aside.

lintamande: "I mean, usually he'd train his son, but I was imagining if he didn't train his son so people figured who knows if we'd ever get shoes again or just have to make our current ones last forever."

Keltham: "So there's, like, lineages of cobblers, each of which trains a single other cobbler to replace themselves, and if a cobbler dies out prematurely, all of Cheliax has one less cobbler lineage in it - where did cobblers come from originally?  Wait, are shoemakers a particular kind of nonhuman?"  Keltham is increasingly confused but that makes it all the more important to follow wherever this is going.

lintamande: "No? He can take some other apprentice if he wants but since it's good work he'd probably rather train up one of his sons, and there's certainly not enough money for two cobblers, so he only trains one. In the city probably cobblers take more apprentices."

Keltham: "And the town that lost its cobbler doesn't just invite in a new cobbler from the city, now that there's an unserved market there, because...?"

lintamande: "...why would anyone want to move to a village in the middle of nowhere?"

Keltham: "Why was the original cobbler in a village in the middle of nowhere?"

DOES GOLARION IN FACT HAVE MARKET EQUILIBRIA.

lintamande: "...he was born there?"

Keltham: "If cobblers live better lives in cities, he could move from his village to the city.  If cobblers don't live better lives in cities, why wouldn't one be willing to move to the village?"

lintamande: "...people don't like moving?"

Keltham: "Okay, Golarion has some kind of problem I don't even know how to describe right now.  I check my current guess that we are not talking about just shoemakers, here, this is also shirtmakers and basically everything else.  Affirm?"

lintamande: "Spinning and weaving and tailoring everyone does at home," Tonia corrects him. "But...yes, affirm that it's much more general than shoemakers."

Keltham: "...What's spinning and how would you do weaving or tailoring at home at your current technology level?"

lintamande: "To make fabric," says Tonia, "you shear a sheep. Then you clean the wool and card it and then you use a spinning wheel to turn it into thread, and then you put the thread on a loom, and then you stitch it to make clothes."

Keltham: "These people are supposedly very poor.  Where did they get all of this individual machinery for their personal house instead of having one machine time-shared among the whole village."

lintamande: "...it's not much machinery. And you want to be spinning all the time, pretty much, whenever you aren't planting, you wouldn't make nearly enough thread if you were sharing it around the whole village."

Keltham: "Where are they getting the power for this machinery?  The town is on a river and all the houses are along the river and they all have waterwheels that capture the motion from the water to turn the - spinning wheel?"

lintamande: "....you turn it with a pedal."

Keltham: "I think that we should, perhaps, get back to the fundamentals of economics as applied to negotiation, so that I can sell Cheliax the general and specific arts of making more efficient machinery."

Keltham: Next up is going to be the Final Trade Offer Game, which shall henceforth be referred to as Ultimatum Game for brevity.  One person picks a split from 0:12 to 12:0, the other person has to assent to it or both get nothing.

What do the Chelaxians make of this, one wonders?

lintamande: "It's the Rovagug situation," says Gregoria, "which you solve with an oath, if you're a god or a king or it's very important."

Carissa Sevar: - note to self which is coming too late to do any good figure out why Keltham shouldn't just ask them all for oaths because if he does that everything's going to fall apart or everyone be forsworn by the end of the day. 

Carissa Sevar: "And which none of you have the training to do," she says, which is false, because they were just about to be deployed to the Worldwound, but she's pretty sure it is worth lying about. 

Keltham: "I wouldn't have expected anyone here to know how oaths work, now that I think back on it using my current knowledge.  That takes Law well beyond the level of the stuff I was just teaching you, along that same pathway, and I would've expected it to be straight-up too Lawful for Golarion period - wait.  What does the Taldane word 'oath' mean to you?  I know what it translates into in Baseline but that may be deceptive."

Carissa Sevar: No one else answers, probably because she's now established that they're lying and so they don't know how much lying they're doing. She isn't sure either. The Taldane books did mention people taking, and occasionally breaking, oaths of fealty but Taldor's not a Lawful country. - oh, there is an angle on making Keltham not want to insist -

"It is when you swear by your god to make a commitment in the way that gods make them, where you cannot be the sort of person who'd break them, and if you do break them you've betrayed Law enough you lose your afterlife and your soul goes to Abaddon and gets eaten. ...with some caveats."

Keltham: ...okay, in retrospect, the situation where he was doubting her intentions right after they met, where the alien with vital knowledge for her entire world expressed doubt about a statement she'd already made and knew to have been honest, might very well, for all she knew, have been that urgent, but FLAMING SHIT CARISSA.

Keltham: What even is the POINT of doing THAT if the alien doesn't KNOW THAT'S HOW IT WORKS -

Keltham: She didn't know he didn't know that was how it worked.  Though, the absence of gods and afterlives should've been a hint -

Maybe she just didn't think of that fast enough.  Time pressure.

Keltham: "I see," Keltham says rather shakily.  "Well, no gods or afterlives in dath ilan, so we - try to understand enough Law that - we're governed by the same sort of Law that governs gods directly?  Which dath ilani short of high-ranked Keepers can't actually do, but even at levels short of that, there's a shadow of the Law whose connection to us shatters a little more each time it's betrayed, not just for us, but all across everywhere governed by math, which is understood by society to be a serious affair.  When people write novels about aliens attacking dath ilan and trying to kill all humans everywhere, the most common rationale for why they'd do that is that they want our resources and don't otherwise care who's using them, but, if you want the aliens to have a sympathetic reason, the most common reason is that they're worried a human might break an oath again at some point, or spawn the kind of society that betrays the alien hypercivilization in the future."

lintamande: Humans on Golarion totally do break oaths but the Chelish students think that anyone who wants to murder them all about it is pretty justified, though Asmodeus would probably collaborate with that entity on instead making them all stop by enslaving them. 

Carissa Sevar: "I - am guessing, theological education doesn't mostly get into the details of this if you're training to be a combat wizard, but I think that - the thing you just said - is also a shadow of why Asmodeus was angry, when humans were given free will."

Keltham: "Not quite valid under my own utility function, but understandable for Asmodeus, yeah."

"Anyways.  The Ultimatum game is the shadow of a situation that isn't rare enough, in real life, that you could afford to deal with it using solutions that require gods, kings, and risking your literal actual existence.  What other solutions can you come up with?"

lintamande: "I mean, you can just have a reputation for turning down trades where you don't get much," Meritxell says. "Or if you expect to be deciding the split about as often as vetoing it you can try to specifically play nice with people who play nice with you."

Keltham: "Well, let's run a trial then and see who can end up with the most hypothetical jellychips after 5 rounds, everyone paired up at random in each round, all results of previous rounds public.  That's not the same instruction or incentive structure that dath ilani kids get, their instructions are to seek more jellychips not the most jellychips, but frankly I'm curious what you peculiar aliens do if you get that instruction instead."

lintamande: The students offer and accept 50-50 splits all around.

Keltham: Keltham pauses them after round 1.  "Nobody can end up with the most chips if you all do that," Keltham observes.  "Don't get me wrong, that's fine for the real life situation and it's what dath ilani kids do with the usual instructions, but you can't play to get the most chips that way.  If I already had money I'd offer an actual gold piece - or fraction of one, depending on how many I had - to the winner."

lintamande: "I'm not sure there's a strategy for ending up with the most beyond hoping other people fireball each other," says Meritxell. "Or offering out of context rewards for cooperation but I assume we're not supposed to do that either."

Keltham: "Well, I didn't tell you that you couldn't!  The less a game is winnable by ordinary means, the more it's implied that maybe you're expected to go outside it."

"Why didn't anyone try offering a 7:5 split?"

lintamande: "If you accept that then you definitely lose the overall game, you're going to end up with a lower score than other people. And since you've lost anyway you might as well burn them to the ground so they know not to mess with you."

Keltham: "I see.  I suppose the same would've applied to announcing that you wouldn't accept any splits less than 5:7?  Anyways, among the tactics I'd try in that situation is offering to generate a random number and split 11:1 or 1:11 based on that, in which case we'd each have a fifty percent chance of winning the whole game, if we did it on the last round and nobody else had caught on earlier."

lintamande: "...no one would believe you that you really did that, though."

Keltham: "Ah.  Clarification.  It's not assumed in these games that you're supposed to roleplay being not trustworthy.  Unless you've got a card from the older kids telling you to do that, but, at least at the age this game is usually played, they'd always tell you in advance if cards like that might be handed out.  I didn't tell Meritxell to cheat, with the card I gave her, just for her to try to end up with more jellychips."

"Though in this situation, if it's the last round, there's not much of a loss from carrying out your part?  If you both witness the randomness generation and it says you get the lower side of the split, failing to follow through at that point just causes nobody, including you, to be the winner.  The game instructions don't say that you do any worse by scoring lower than average - you either win or don't win.  It's a bargain where you don't actually lose anything from following through, even if you lost, which is part of the reason I'd expect it to work even in a lower-trust situation."

lintamande: "Oh, you mean if you use something publicly observable to decide which of you gets the split?"

Keltham: "Yeah, my - time-telling device that attaches to my wrist - would've done it, but that didn't follow me here.  Anything with a precise physical symmetry will do, though, like if it's got two identical sides you can toss it upwards while spinning it, and you can both see which side lands facing upward."

"Totally random question I keep forgetting to ask, how do you tell the time around here?"

lintamande: "Wizards usually have mechanical timepieces because you want to know exactly how long until your spell runs out. Other people just go off the sun, mostly."

Someone produces a pocketwatch to show Keltham.

Keltham: "Yeaaahhhh I kind of need one of those, will talk to requisitions about it I guess."

"Anyways.  The next step in the economics game would be one I don't see a simple way to play here; it involves a puzzle station that takes two players cooperating to win, and the two sides of the game vary independently in how much effort it takes to control that side of it.  Once the puzzle is sufficiently solved, one player locks in a split from 0 to 12, the other player has to decide whether to accept that split, and the game station spits out jellychips if they do."

"The idea being, this is modeling two people working on a task together, only they're not putting in the same amount of effort.  It's not easy to see from inspection exactly how much work the other player is doing.  And then one of the players has to decide how to split the rewards, afterwards, and the other player has to decide whether to accept that, or if they both get nothing."

"What would you do, in that situation?  What do you think we did in dath ilan, as kids?"

lintamande: "...I don't see how that game is any different than this one? Unless you mean there's not the reputational element."

Keltham: "You don't have an intuition that, in a game like that, the person who worked harder should get more jellychips?"

lintamande: Students glance at each other confusedly. 

Carissa Sevar: Carissa has literally no idea how Taldane students would answer that question so they'll just have to answer as themselves. "I mean, if it's a really atrocious amount of work and they don't do what they're supposed to in school just because they want to grow stronger, maybe they'll only be willing to do it if they're promised a certain number of jellychips in return?"

Keltham: "...do you have an intuition that in real life, if you cast a spell that was really difficult and exhausting to set up that morning, you'd want to charge more gold pieces for doing that."

Carissa Sevar: "...I mean, I'm going to charge as much as I can for any spell, right? If a spell is laborious, then probably it's also laborious for other wizards, so I can expect that fewer of them prepared it and that I can get away with higher prices, but if I try that and I'm wrong then I'll go on charging whatever price it sells at, or I'll stop doing it if it's not worth it at the price people want to pay me for it."

Keltham: Why are they so inconsistently economics?!?

"Suppose you're living in a multifamily home and there's this one big chore that nobody particularly wants to do, so everybody writes down their price for doing the chore, and everyone else pays whoever wrote down the lowest price to do it.  There's no market in doing the chore, it's a one-time thing that's never going to happen again.  You'd still write down a higher price for a chore you expected to need to spend more effort doing."

lintamande: For unclear reasons this example fails to land.

Keltham: "...suppose there's one job that's really easy and pays 1000 gold pieces a year, and there's one job that's really difficult and exhausting and pays 1003 gold pieces per year.  You'd probably take the first job, even though the market rate for it is lower, because the second job isn't worth enough more to make up for the additional effort you have to put in."

lintamande: Yep, okay, they agree with that!

Keltham: "If you've got two wizards fighting two monsters to get to a pile of gold coins they're guarding," Keltham's rapid skimming has picked up that this is a thing, though why is a much deeper and darker and more confusing question, "and one monster turns out to be a much tougher fight than the other, would the wizard who fought the tougher monster expect more than exactly half of the gold coins?"

lintamande: ".....depends on the contract they had going in?"

Keltham: "Okay, and if a contract didn't just say to divide the coins evenly, and the two wizards otherwise had equal job experience, what would the contract say?"

lintamande: Most of these students have not actually met any adventurers. 

Carissa Sevar: "Usually it'd say an even split, or an even split with the option to take it to arbitration if one party feels the other was shirking, or an uneven split because one put up the money for the expedition or had the tip on the password to the door or had the Teleport location or something."

Keltham: "So, the solution that dath ilani children immediately invent, is both kids say on a scale from 0 to 12 how hard they thought they had to work, and then the jellychips get divided in proportion to that.  I mean, that wouldn't reliably work at higher stakes except between lovers or cofounders, and if you're doing something with a hundred people you need a more objective and third-party way to measure efforts, but - if two people were just tidying a friend's house for money, or some such - saying intuitively how much effort you put in and dividing the payment accordingly would be very ordinary?  Do you have anything like that anywhere?"

Carissa Sevar: Obviously everyone would lie, to themselves if necessary, so it's an incredibly stupid system? She doesn't say that.

lintamande: "You don't want to reward effort," says Meritxell, "you want to reward results. If two people cleaned the same amount and one found it easy and one found it hard you don't want to give the one who found it hard compensation for their finding it hard! You might compensate them for the work but not for the effortfulness, unless you're their teacher or something and trying to build their character for some reason."

Keltham: "That works great and we'd do that as a matter of course, any time we had a reliable way of measuring how much work got done of how much intrinsic difficulty!  When you're tidying a house, you can't measure area tidied to determine work done, it takes more effort to tidy a kitchen than a bedroom, and not in any standard way!  If two people are going in without any prior reason to believe one of them is more efficient than the other, how hard they worked is an obvious if imperfect proxy for how difficult the job actually was..."

"I keep thinking that maybe the answer is that Golarion is a lower-trust society than dath ilan, and people are too scared the other person will lie about how hard the job was, or how good they are at it - which, I mean, you'd almost have to be lower-trust, given everything, but - that doesn't answer why lovers or cofounders or even just very good friends would never make an arrangement like that?"

lintamande: "I mean," says Gregoria, "they might? But you're not supposed to have lovers or cofounders in school, and you don't really have side jobs, so we wouldn't know, even if that's how some people do things privately."

Keltham: "...right.  Well, dath ilani kids invent the 0-12 scale and divide rewards proportionally to how hard they thought they worked, and... that succeeds for them, their spoken intuitive estimates are usually pretty close to the actual difficulty calibrations on the machines.  You have to hand out concealed cards telling some of the kids to be dishonest in their work estimates, if you want to break that up."

"It sounds like Cheliax might need to do other training differently, earlier in the sequence than this, if they want to get that same result with kids."

Carissa Sevar: "I think so."

Keltham: Keltham describes the sad situation which eventuates when you do hand out dishonesty cards to kids.  They work hard, propose splits that they guess are fair, not being able to trust the other person, and then sometimes those splits get rejected.  The kids get angry!  There is shouting!  They get sent home for the day without having a solution shown to them, because it's good for them to sometimes dwell with problems that don't get solved immediately.

(He doesn't tell them about younger-Keltham's emotional difficulties with being asked to act out a dishonesty card; he has a sense that Chelaxians would have trouble relating, for some reason.  Maybe they'd say that even at age seven you should be able to understand that the game isn't real and just do what the card says?)

If Keltham has understood correctly, Cheliax considers the obvious game solution to be even splits of jellychips, irrespective of work difficulty; which is repeatedly randomly unfair, and hence asymptotically fair.  Going into any one game, you are equally likely to get faced with a harder or an easier task for your fixed payment, and if you repeat that often enough, the expected unfairness as a fraction of all payments will drop as the square root of the number of repetitions.  It's not actually too bad, as solutions go.

Still, if Cheliax already has a better solution to the dath ilani game, or to the real-world situation that it stands for, Keltham stands ready to hear it?

lintamande: Nope, that's Cheliax's solution. 

Keltham: Keltham presents the standard solution (in dath ilan) to the Ultimatum game.  If they offer you 6:6, accept with probability 100%.  If they offer you 7:5, accept with probability slightly less than 6/7.  If they offer you 8:4, accept with probability slightly less-less than 6/8.

Does anyone want to try and guess the reasoning behind that solution, in advance of it being stated?

lintamande: "I see why it creates good incentives for the person who is deciding splits," Meritxell says. "...I don't see why the person deciding whether to accept splits or not has any incentive to do it, if they can't establish a reputation for it, and it's hard to establish a reputation for doing something sometimes."

Keltham: "Well, reputation-wise, it's definitely easier to have a reputation for doing something if everyone in your entire Civilization got trained to do it at age seven or eight."

lintamande: " - I see why you'd want to require everyone to do it, yeah. It'd be hard to catch them fudging, if we're talking about random peasants, but maybe that still keeps the incentives reasonable."

Keltham: "I think this is a place where I have the same reaction you had to burning down schools?  People don't need to be required to behave like that to be accepted for residency in a city, it's just in their own interests to behave that way.  Nobody wants to get a reputation as that weird person who accepts 11:1 splits and is very easy to take advantage of.  At least, nobody I know wanted it."  Limyar doesn't count, he was totally trolling.

lintamande: "The thing I'd expect people to be tempted to do, especially in a big city where they don't have much individual reputation, is make a show of using the randomization but take the split ten percent more of the time," says Meritxell. "So you get a bit more money but it's not obvious you're doing something exploitable, which means it isn't exploitable. But obviously it's bad for everyone if everyone can predict that lots of people will do that, so we will be better served if the Crown prohibits that."

Keltham: "Suppose I put to you:  Two gods interacting in the Ultimatum game would use the pattern I just showed you, even if they had no reputations and would never meet again."

lintamande: " - yes, of course."

Keltham: "Civilization in dath ilan usually feels annoyed with itself when it can't manage to do as well as gods.  Sometimes, to be clear, that annoyance is more productive than at other times, but the point is, we'll poke at the problem and prod at it, looking for ways, not to be perfect, but not to do that much worse than gods."

"If you get to the point in major negotiations where somebody says, with a million labor-hours at stake, 'If that's your final offer, I accept it with probability 25%', they'll generate random numbers about it in a clearly visible and verifiable way.  Most dath ilani wouldn't fake the results, but why trust when it's so easy to verify?  The problem you've presented isn't impossible after all for nongods to solve, if they say to themselves, 'Wait, we're doing worse than gods here, is there any way to try not that.'"

lintamande: Meritxell looks - slightly like she's having a religious experience, for a second, before she snaps out of it. "All right," she says quietly.

Keltham: "Once you've arrived at a notion of a 'fair price' in some one-time trading situation where the seller sets a price and the buyer decides whether to accept, the seller doesn't have an incentive to say the fair price is higher than that; the buyer will accept with a lower probability that cancels out some of the seller's expected gains from trade.  The buyer also doesn't have an incentive to claim the fair price is lower than they think it really is.  The seller won't actually adjust their price, if they think a lower price is unfair, and the buyer will have to follow through by accepting with a lower probability, which destroys a big chunk of their own expected gains from trade, and doesn't get them a different price even if the random number says to accept."

"The initial notion of a fair price has to come from somewhere - from the part of yourself that initially suggested 6:6 in the Ultimatum game, which reflects a bit of Law I'll describe later - but once you get that notion of fairness from somewhere, and put a system like this around it, no seller has an incentive to claim an unfairly high fair price, and no buyer has an incentive to claim an unfairly low fair price.  And if they happen to honestly disagree about that anyways, in some ambiguous situation, they'll still complete the transaction with very high probability so long as they only disagree a little."

"That, roughly, is how bargaining works in dath ilan over one-time trades:  If somebody offers a price the other side thinks unreasonable, the other side says, 'That strikes us as an unfair division of gains, even if mutually beneficial as such; but if you made that your final offer, we'd generate a visible random number and accept with 10% probability'.  And then the price-setting side can potentially offer further arguments about why the trade is more valuable than it looks, or make a better offer, or accept that low probability."

"The bargaining process Carissa described earlier, for selling my shirt, sounded like - people were probably trying to sort of flail at that underlying structure, by acting like they might be very unlikely to take an offer, or be moderately likely to take an offer, as they got closer to an agreeable price?  But with a lot more... weirdness, acting, in Baseline we'd say 'LARPing'.  Maybe because they think they have to pretend a lowball offer isn't mutually beneficial at all, in order to justify rejecting it; and also with some incentives to be misleading, because the underlying signals aren't as precise and legible as saying '10%'... and there's an incentive to exaggerate, but then the other side knows you're probably exaggerating, so you exaggerate even more, and you get people saying these exaggerated statements that both sides know aren't true, but there's uncertainty about how much the speaking side thinks they're really exaggerated, and modulating that uncertainty ends up being the medium of communication?  At least, that was my attempt to decode what Carissa described."

Carissa Sevar: "That sounds right."

Keltham: "If I imagine trying to negotiate a 256-page merger between two large companies, with 1024 clauses, I can't actually see how the Golarion method would scale, if you don't know about explicit acceptance probabilities.  Every time you wanted to negotiate one clause, you'd need to be ready to walk away otherwise, staking 100% of the success probability, because otherwise they don't have any incentive to give in.  But there's no way that would scale across 1024 clauses without triggering once... maybe the walk-away claims are mostly bluffs," wow, what a concept to have a single-syllable word for, "but the other side isn't sure you're bluffing each time they call it?  Does Golarion just not do large complicated contracts by dath ilani standards, or..."