1. Attribution – NonCommercial - ShareAlike
Altruistic Economics
AE5: A Relationship-Based
Trading Model
A presentation by Robin Upton
for BRAC University, Dhaka,
Latest version downloadable at
Attribution – NonCommercial - ShareAlike
Talk Structure

2. Failure . 11. Assumptions of the Market Economy
Talk Structure
Assumptions of the Market Economy
2. An Alternative Assumption
3. Model Modification
4. Model Developments
Failure Assumptions of the Market Economy

3. 1. Assumptions of the Market Economy
Firstly…
‘Perfect’ Information
ii. Impartial Support Systems
Then we consider the nature of
iii. Relationships in the ‘Perfect’ Market
i. ‘Perfect’ Information

4. i. ‘Perfect’ Information
Once upon a time, a long, long time ago, shops were small.
In the market, everyone knew…
Everything that was on sale
How much it cost
What the quality was like
Nowadays…

5. Nowadays
Nowadays …
Times have changed

6. ii. Impartial Support Systems
A healthy economy requires fair access to other systems, such as:
Finance
Law
Equal Access To Credit?

7. Equal Access to Credit?
“More than ½ the population of the world… do not qualify to take out a loan from a bank…
…My vision for the future?… to make credit a human right.”
Yunus talks of banks and people in partnership. Altruistic Economics is about people in partnership with one another.
Muhammad Yunus
. Equal Charges for Credit?

8. Equal Charges for Credit?
Money Movement due to Interest
Money Movement due to Interest
Credit is …
Interest…
Expensive for the poor.
moves money from poor to rich.
Income
Payment
German Household Groups According to Income
Source: 1980 – A Changing Money System (M. Kennedy)
2000 – Bundesbank figures (H. Creutz) .
Legal Example

9. Legal Example Consider the typical software EULA… Agree
We do what we want
We are not liable, whatever
Click to proceed…
TERMS AND CONDITIONS
Agree
Legal Summary

10. Legal Summary Anyway… lawyers cost a lot of money ! So…
money = legal power 
iii. The ‘Perfect’ Market

11. iii. The ‘Perfect’ Market
iii. The ‘Perfect’ Market
Modern Economics owes more to mathematics than psychology. The market as modelled is…
not about PEOPLE;
all about PRICES.
Relationships in the Market

12. Relationships in The Market
‘Perfect’ market relationships are …
money-centred not people-centred
self-interested not altruistic
short-term not long-term
. Personal Relationships

13. Personal Relationships
‘Perfect’ personal relationships are …
 people-centred not money-centred
 altruistic not self-interested
 long-term not short-term
Market Economy - Summary

14. 1. Market Economy - Summary
 Some assumptions are outdated
 Disharmony between Market & Personal values
t An Alternative Assumption

15. 2. An Alternative Assumption
Classical Economics
Altruistic Economics
Impartial Support Systems
People Care About One Other
Perfect Information
THEORETICAL ASSUMPTIONS
Selfish Individuals
Disharmony between Market & Personal Relationships
“We'd be very happy if she found a new position after we leave” – Foreigner about Deshi Cleaning Staff ?
PRACTICAL EFFECT
Modelling Relationships

16. Modelling Relationships
1. Relationships exist between particular individuals …
Relationship
Digital Signatures can
Differentiating Relationships

17. Differentiating Relationships
2. Express different types of relationships…
Sympathy, 0 <= s <= 1, is the first building block of this model.
The second is a social network graph.
…by adding a numerical element.
Sympathy, s

18. “Emotional Proximity” ~ s > 0 for Friendships
Sympathy, S
“Emotional Proximity” ~ s > 0 for Friendships 1
Applying altruistic economics to the telephone example, the solution is:
Good friends ( s >0.6) get called back in both cases, not so close friends (0.05 < s < 0.6) get called back in the second case, and everyone else (s<0.05) don’t get called back at all.
No Love At All
Love Like Self
Network of Care

19. Aysha has a Sympathy of 0.4 for Birbal, so
Network Of Care
Aysha Cares for Birbal Birbal Cares for everyone else
Christopher Cares for Birbal David Cares for no one A B C D
SBC
SCB
SBD
SAB
SBA
0.4
Aysha has a Sympathy of 0.4 for Birbal, so
SAB=0.4
0.25
Trading A to B

20. Consider a trade between A & B …
Trading A to B
Aysha Cares for Birbal Birbal Cares for everyone else
Christopher Cares for Birbal David Cares for no one
0.4
SAB
SBC B C A
SCB
0.25
SBA
SBD D
Consider a trade between A & B …
. Birbal Needs Help!

21.  Birbal Wants Help! User Type of Work Requested Rate B
Birbal has a computer problem,
so he publishes this fact:
User
Type of Work Requested
Rate B
Computer Repair 6
The rate for requests is usually >1, indicating that someone of average competence can make a net time gain by assisting.
He estimates: 1 hour of competent help would
save him 6 hours of his own effort.
Aysha Can Help

22.  Aysha Can Help! User Type of Work Offered Rate A Computer Repair -1
0.4 B A
0.25
Aysha is a computer engineer:
User
Type of Work Offered
Rate A
Computer Repair -1
The rate for offers is usually (1), indicating one hour of ‘standard work’
She estimates: 1 hour she spends = 1 hour of competent help
Selfish Transaction Evaluation

23. Individualistic Transaction Evaluation
Score using 2 self-evaluated time costs.
User
Work Offered
Rate A
Computer Repair -1
User
Work Requested
Rate B
Computer Repair 6
Capitalism works only at this level. Since it ignores the sympathy relationships between people, it makes trades profitable by associating them with a flow of money.
Individualistic
Evaluation A B -1 6
Individuals’ Scoring is Independent
NON-Zero Sum System 

24. Independent scoring is NON-Zero Sum
NON-Zero Sum System
(-1,+6)
A+B=0    
Good for Both
Bad for Both
Good for A,
Bad for B A B + -
Good for B,
Bad for A
0,0
Independent scoring is NON-Zero Sum
Zero-Sum System

25. Zero Sum System No one here ever makes* money…    
A+B=0    
Good for Both
Bad for Both
Good for A, Bad for B A B + -
Good for B, Bad for A
(-p,p)
Money is Zero-sum => (p,-p)
No one here ever makes* money…
A 1-dimensional value cannot possibly reflect the full reality of a 2-party transaction.
* ‘Making money’ is a euphemism; only forgers and central banks actually make it …
. Price = Systemic Conflict 

26. Price = Systemic Conflict 
Price = Systemic Conflict 
A+B=0
(-1,+6) B + 6
Real Value (hidden) -1
(-p,p)
Price P,
Splits the benefit A & B.
A & B have directly opposite interests!
Benefit for A
= P - 1
Good for B, Bad for A
Benefit for B
= 6 - P
Setting price causes a lot of grief (& inefficiency)! A - +
Real Cost (hidden) -
Individualistic Transaction Evaluation

27. Individualistic Transaction Evaluation
Use of 2 self-evaluated time costs…
 Removes systemic competition!
Individualistic
Evaluation A B -1 +6
Using 2 self-evaluated time costs removes the need to set a single price.
 Use the Network of Care
to modify this evaluation.
Altruistic Transaction Evaluation

28. Altruistic Transaction Evaluation
Individualistic
Evaluation A B -1 +6
Now apply the sympathy values… 1 .4
.25 1
0.4 B A
Altruistic
Evaluation A B
We see that A’s sympathy for B overcomes her personal loss from the transaction.
0.25 -1 +6
Altruistic
Evaluation A B
1.4
5.75 +
0.4x+6 +
.25x-1
Indirect Sympathy

29. . 2. Alternative Assumption - Summary
Indirect Sympathy A B
0.4
SBA C
0.3
SCB
Sympathy is not only for one’s own friends …
We see that A’s sympathy for B overcomes her personal loss from the transaction.
A has indirect sympathy for C:
SAC = SAB x SAC = 0.4 x 0.3 = 0.12
Alternative Assumption - Summary

30. 2. Alternative Assumption - Summary
2. Alternative Assumption - Summary A
SAB B
Before trading:
Publish sympathy for friends.
User
Work Offered
Rate A
Computer Repair -1
User
Work Requested
Rate B
Computer Repair 6
Publish offers/requests.
Evaluate trade:
Use sympathy values to revise
->
Individualistic
Evaluation A B -1 +6
Altruistic
Evaluation A B
1.4
5.75
Record trade:
Publish post hoc feelings.
Model Refinement

31. 3. Model Refinement Limited Sympathy
If you would spend to save someone 50, does that mean you would also spend 1,000 to save them 5,000?
Could you spend 1Crore to save them 5Crore?
This model is superior to the previous one (and is in fact subtly different) but is much more flexible and powerful.
There are limits to what we do for others. Sympathy limits reflect that.
. Non-Linear Sympathy

32. Non-Linear Sympathy Sympathy is not constant
Gradient = 20
People run out of sympathy & get gradually less sympathetic
Gradient = 3
These curves will probably have a very similar shape in practice, but the theory allows for any shape.
Gradient increases with Time Given
. Modelling Sympathy

33. Modelling Sympathy Approximate the curve with straight lines:
Length 5h, gradient 2, so write it (5h 2)
Length 5h, gradient 10, so write it (5h 10)
Express the sympathy as
Multiplier = 1/s

34. call the multiplier = 2 in this case
Multiplier = 1/s
A is willing to spend up to 5 hours to save 10 hours for B
Hence, sympathy =5h/10h= 0.5
We will be looking at 1/s, which we
call the multiplier = 2 in this case
. Sympathy Vectors

35. Sympathy Vectors 5h 2 5h 10 Multipliers Lengths of Time
A & B Computer Example

36. A & B Computer Example Suppose A cares for B as follows:
User
Work Offered
Rate A
Computer Repair -1
User
Work Requested
Rate B
Computer Repair 6
Suppose A cares for B as follows:
B gains six hours for every hour of input from A, so the transaction has a multiplier of 6.
A will put in 5 hours of work for B (because 6>2)…
However, she will not work any more for B,
since 6<10, so that a multiplier of 6 is insufficient.
Sympathy as Credit

37. . Calculation of Indirect Sympathy
Sympathy as Credit
2h 1
1h 2
2h 3
1h 4
1h 7
1h 10
1h 13
1h 15
Increasing multipliers ~ reluctance to work altruistically as input is used up
Trade-off between complication and accuracy
Curves can be modelled as closely as is required
Calculation of Indirect Sympathy

38. Calculation Of Indirect Sympathy
B’s evaluation
A’s evaluation
Cheapest Rate (2):
12 B = 24 C .
4 A
= 12 B
Cheapest Rate (3):
+24B = 96 C
Next Rate (4):
6 A = 18 B
Cheapest Rate (3):
1 A = +6 B
Next Rate (6):
.Conflation - SABC

39. . Combination of Multiple Paths
Conflation - SABC
A evaluates
B evaluates
Overall
4 A = 12 B
12 B = 24 C
4A=24C
6 A = 18 B
18 B = 72 C
6A=72C
1 A = 6 B
. 6 B = 24 C
1A=24C
SABC =
4h 6
6h 12
1h 24
Note that each person’s evaluation only extends over their own friends. A trusts B’s evaluation of C.
Combination of Multiple Paths

40. Combination of Multiple Paths
If A also cares for D, who cares for C…
We know
SABC =
4h 6
6h 12
1h 24
Calculate
SADC =
15h 2
2h 5
3h 10
2½h 20
B and D both provide reasons for A to care about C.
Intelligent Path Choice

41. Intelligent Path Choice
A has 2 sympathy paths to C, A B C & A D C: B B B B
Simply order the different time values by multiplier: D D D D
SAC, calculated from SABC & SADC is the quantity that expresses the overall strength of the sympathy from A to C.
In the process of calculating it, the sympathy over all the various different paths is easily combined into a single summary vector
15h 2
The combination, SAC =
2h 5 4h
SAC ‘contains the intelligence’ of alternate paths of sympathy 3h 6h D
2½h 20 1h
3. Modified Model - Summary

42. 3. Modified Model - Summary
Sympathy expresses care for particular others.
Each relationship has a sympathy vector.
Conflation: A B C A C
Combination: A C A C
So, sympathy can be calculated between any 2 nodes on a Network of Care…
Model Developments

43. 4. Model Developments Recording Work Done (See AE10)
Many Open Areas of Research …
Recording Work Done (See AE10)
Range Of Applications
Multiple Currencies (See AE6)
Delegated Voting
Relationship Credit
Recording Work Done

44. . Swinging of Relationship Credit
Recording Work Done
Scoring would encourage people to give more. A B
Note that in a networked environment, the traffic between A and B is not just favours between A and B – in an enlightened trading systems, more traffic is likely to be between friends of A and B.
Fairness is satisfied if, for any pair of nodes, resource flow from A B is about equal to the flow from B A
Swinging of Relationship Credit

45. Swinging of Relationship Credit
Work Balance can be pushed out in either direction…
20h 2
20h 2
20h 4 8h
20h 10 8h
20h
20h
40h 1
20h 2
20h 4
20h 10 8h
SBA=
40h 1
20h
40h 1
20h 2
20h 4
20h 10 8h
SAB=
40h 1
40h 1
40h
40h
SAB and SBA are only equal for simplicity’s sake - users are always free to choose their own sympathy. This example shows that where trade is skewed in one direction, the multipliers adjust so that trade in the opposite direction is more likely. A B
Effect of variable multipliers is to restore the equilibrium
. Range Of Applications

46. Range Of Applications Altruistic Economics could apply at many levels.
Each node could represent, for example…
A person
A family
An idea
A project
An NGO
A country
Different levels could coexist, adding greatly to the power & flexibility of the system.
. Multiple Currencies

47. Multiple Currencies Users offer whatever currencies they like
Multiple Currencies
Patients Treated
Meetings Held /Day
Staff /PersonDays
Volunteer Assistance /PersonDays
Taka
Users offer whatever currencies they like
Users publish personal rates of conversion between different currencies to allow efficient flow between them.
Survival of the fittest will decide which are used
Voting As Currency

48. Voting as Currency Suppose…
Everyone receives one unit of a new resource;
It can be kept or transferred to others at will;
Whoever has the most units of this resource at a set time receives special treatment.
This is a delegated voting system
Ranking By Relationship Credit

49. . WANTED!!! Help Programming F2F
Relationship Credit
Offers
Requests
Computer/Hardware/Repair
Robin Upton, +160h –45h, Rate= -0.2
Computer Hardware, Statistics, Foreign Languages, Bangladesh Contacts …
Mike Channel, +120h –40h, Rate= 10h
Help! My scanner doesn’t seem to work. I urgently need it to do a job on Nov. … !
An Altruistic trading system could rank people by contribution made.
Kevin Towell, +14h –3h, Rate= -0.2
Computer Hardware, Motorbike repair, Shop Management, Psychology …
Angela Robinson, +550h –175h, Rating= 70h Can you help me with my Laptop? The is giving me a lot…
James Beckett, +60h –15h, Rate= -0.35
Computer programming, Computer Hardware, Electronics, Internet Advice …
Graham Upton, +3h –2h, Rate= 20h
I just can’t get my Wireless LAN working properly. It keeps cutting out, just …
This would reward altruism by meaning that the most generous people’s requests were met more quickly...
Need to Reward Generosity not selfishness…
WANTED!!! Help Programming F2F

50. WANTED !!! Altruistically-Minded others to help program
An Internet communication layer necessary to implement
Altruistic Economics -
Recommended Further Reading AE6: Exchange Rates
Thanks for your attention. This presentation is public domain under a creative commons licence.
Modification, reproduction and other non-commercial use, provided this notice is preserved.
Enjoy! - Robin Upton