Update on Book Review Dominant Assurance Contract

Link post

This is a follow-up to Consider paying for literature or book reviews using bounties and dominant assurance contracts (LessWrong cross-post here).

In theory, writers could kickstart posts using dominant assurance contracts. An example (this is a real offer): If you send $20 to arjun.panickssery at Gmail via PayPal by noon New York time on January 21^st, I’ll send you back $25 if fewer than 10 people sent me money. If 10 or more people send me money, I’ll post a review of Steven Pinker’s The Sense of Style: The Thinking Person’s Guide to Writing in the 21st Century by the end of the month. I’m not sure whether I’m just giving away free money right now.

Ultimately, I only got 9 out of the 10 funders required—most of them after the Marginal Revolution signal-boost—so each of them made $5 in profit. In theory, there’s an equilibrium where exactly 10 people take the contract, so this was close.

Of course, a bunch of the funders were probably in it for the novelty or maybe speculating that the post was very unlikely to be funded. If the dominant assurance contract (DAC) is priced well and the number of required funders is set effectively, you should only take the deal if the value of the post to you is actually above the price. The potential payout just eliminates the motivation to free-ride.

In hindsight, book reviews are a weird example because they’re excludable: I could just send the book review only to people who paid.

In general, the model still makes sense to me, though. An example: suppose that

(1) you could spend 2 hours working through the ideas in Joe Carlsmith’s Is power-seeking AI an existential risk, and

(2) your time is worth at least $30/hr to you, and

(3) a strong summary of the key points that takes 10 minutes (i.e. costs $5 of your time) to read would be at least half as good as the whole paper.

Using these conservative numbers, you’d spend up to $25 for this summary.

If a freelance technical writer wants to make $60/hr spending 6 hours writing this distillation, then a DAC could be set at $20 with a payout of $25 if fewer than 20 people take the deal. With an online platform reducing the transaction costs, this could be a viable way to fund distillations or certain kinds of research if the audience is large enough. Maybe a DAC could fund the platform development . . .

Raemon in the LessWrong comments points out that the major problem here is communicating your specific goals to the researchers you’re funding. One way around this might be a platform whose central proposals are by reputable writers themselves who make their research goals as clear as they can, rather than a market focused on individuals posting large bounties for their slippery research questions.