SoAMadDeathWish

Is Using Someone's Reason Against Them Fraud?

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Carl is perpetrating a fraud but an obvious one with not serious consequences. Are you familiar with the term hormesis? A low level toxin can have a positive effect on an organism. Carl's con game does not rise to the level of being prosecuted for a crime. I wouldn't put anything past him though, and wouldn't invite him to dinner.

Ok, sure, but I'm referring to the principle of the thing. The scam could have just as easily involved hundreds, or maybe even thousands of dollars.

Also, how exactly is this a form of fraud?

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What is the purpose of this thread? If the auction is a fraud can we not as easily say this thread is a fraud for much the same reason? Why? Because the auction is so self-evidently not a fraud.

Here's fraud: a parent unjustly abuses a child who so desperately needs love and acceptance he cannot believe or understand out of the innocence and ignorance of a life not yet much lived that it's not his fault.

--Brant

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So is this fraud? To me, it doesn't seem like it. Alice and Bob were never lied to or misdirected in any way.

While it isn't fraud... it is a perfect match of values. For someone else to appeal to a person with the chance of getting something for nothing, there has to already be that something for nothing value within them.

And they were acting in their rational self-interest every step of the way.

Trying to get something for nothing isn't in anyone's rational self interest because of the kind of person they devolve into.

Greg

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So is this fraud? To me, it doesn't seem like it. Alice and Bob were never lied to or misdirected in any way.

While it isn't fraud... it is a perfect match of values. For someone else to appeal to a person with the chance of getting something for nothing, there has to already be that something for nothing value within them.

And they were acting in their rational self-interest every step of the way.

Trying to get something for nothing isn't in anyone's rational self interest because of the kind of person they devolve into.

Greg

They were not trying to get something for nothing, though. They were trying to get something they valued more ($20) for something they valued less (some smaller amount of money). Carl could just as easily have bought a $20 good and auctioned that instead of the money.

How do so many people not see that it was Carl who was trying to get something for nothing?

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All I see are two stupid bidders bidding in a stupid auction. I know the purpose of this simple example is clarity, but with that clarity it's only stupidity I see. Fraud? That requires a higher level of action/intelligence. If this thread was really about fraud it needs to be rachetted up. Or, like a parallel parking failure, started over.

--Brant

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All I see are two stupid bidders bidding in a stupid auction. I know the purpose of this simple example is clarity, but with that clarity it's only stupidity I see. Fraud? That requires a higher level of action/intelligence. If this thread was really about fraud it needs to be rachetted up. Or, like a parallel parking failure, started over.

--Brant

This is just the result of the curse of knowledge. If it isn't, then do explain how Alice or Bob could have predicted the outcome.

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SoMad: The trader principle is win-win (please read again #44). Alice and Bob were trying to make a transaction which was win-lose. The outcome is predictable, somebody loses. Buyer beware, the seller always has superior knowledge of what he is selling.

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SoMad: The trader principle is win-win (please read again #44). Alice and Bob were trying to make a transaction which was win-lose. The outcome is predictable, somebody loses. Buyer beware, the seller always has superior knowledge of what he is selling.

I already responded to that, but here it is again. How could they possibly know that Carl wants to lose money? They can't. Just because they value the $20 at $20, does not mean that Carl does too.

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Yawn. How about insider trading, or beating a bomb's location out of a terrorist? Borderline cases involving electronic points or bitcoins is a bore. I will give you ten seconds to answer and then I am leaving.

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All I see are two stupid bidders bidding in a stupid auction. I know the purpose of this simple example is clarity, but with that clarity it's only stupidity I see. Fraud? That requires a higher level of action/intelligence. If this thread was really about fraud it needs to be rachetted up. Or, like a parallel parking failure, started over.

--Brant

This is just the result of the curse of knowledge. If it isn't, then do explain how Alice or Bob could have predicted the outcome.

By growing up.

--Brant

otherwise it's a learning moment or the parents intervene--but they do not learn about fraud; this is not Three-Card Monte

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SoMad: I have reached the end of my rope. You make the assumption that Alice and Bob are totally naive and have zero experience or trading skills. A skilled trader, even a novice, is always aware of the upside of his trading partner as well as his own. Given the lack of experience of Alice and Bob going in I believe their experience was infinitely more valuable to them than the small amount of money they lost. I don't see any point you're making, you apparently refuse to understand the nuance's of trading which have been part of human DNA for tens of thousands of years. But it does require a tiny bit of experience. If our default is protecting the Alice and Bob's of the world from the Carl's of the world that requires a totalitarian state with zero freedom. Then they have much worse problems.

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By growing up.

--Brant

otherwise it's a learning moment or the parents intervene--but they do not learn about fraud; this is not Three-Card Monty

That's not an answer.

Of course it's an answer. It's just I'm not talking your game and you're not talking mine. While you started this thread, you do not control it.

--Brant

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SoMad: I have reached the end of my rope. You make the assumption that Alice and Bob are totally naive and have zero experience or trading skills. A skilled trader, even a novice, is always aware of the upside of his trading partner as well as his own.

Wrong. Alice and Bob are assumed to be rational, which is the exact opposite of naive. If it is rational for them to refuse to participate in the auction then there needs to be a reason for them to do so. Thus far, that reason has not been identified, or it is even possible that there isn't one. Whether or not they have experience with the situation is irrelevant, and research shows that people who have encountered this game before are still susceptible to it. Unless experience can be rationally integrated, it is useless.

Given the lack of experience of Alice and Bob going in I believe their experience was infinitely more valuable to them than the small amount of money they lost.

This is a red herring. It doesn't matter that Alice and Bob learned something if Carl did something wrong, because, obviously, Carl did something wrong. To look at it another way, suppose a thief steals $100 bill from you as you're holding it in your hand. Is the thief justified because now he gave you a "lesson"? Of course not.

I don't see any point you're making, you apparently refuse to understand the nuance's of trading which have been part of human DNA for tens of thousands of years. But it does require a tiny bit of experience.

My point is that there are evils beyond force and fraud.

If our default is protecting the Alice and Bob's of the world from the Carl's of the world that requires a totalitarian state with zero freedom. Then they have much worse problems.

This is a non-sequitur and an argument from consequences. There is no reason, as far as I can see, that a totalitarian state with zero freedom would be required to protect people from Carl. And even if it was true that we need a totalitarian state, that would be irrelevant anyway because the truth of the matter is independent of the consequences that might come from holding such a belief.

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Of course it's an answer. It's just I'm not talking your game and you're not talking mine. While you started this thread, you do not control it.

--Brant

If your game involves posting platitudinous nonsense instead of rational argument then I want no part of it.

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Let's say Carl has $20, and wants to make some more. Alice and Bob have more money than he does, so he's gonna try and sell them a product. He goes up to them and says, "I propose an all-pay auction (one where everyone who bids, pays whatever their bid, lose or win). The item on sale is this crisp $20 bill, and the bidding starts at $0."

Alice and Bob think to themselves, "Well why not? If I bid as little as possible, I could get more money than I started with. It's even possible that I could get $19."

My wife's name is, coincidentally, Alice. We would agree that one of us would bid $1 and then share the $19 winnings.

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So is this fraud? To me, it doesn't seem like it. Alice and Bob were never lied to or misdirected in any way. And they were acting in their rational self-interest every step of the way. But on the other hand, I would really hate to be on the receiving end of this kind of maneuver.

No, it is certainly not fraud.

As to being on the receiving end of that kind of maneuver, just say no, and know why.

A...

This thread should have ended right here. Posssibly after "Ms. Death Chaser" answered with:

Here's my issue with that line of reasoning. If it is not fraud, then Alice and Bob were being entirely rational. However, they both agree (and I think we can too as is implied by your second sentence) that if they knew the outcome of the auction beforehand, they would not have agreed to it. Hence, they could not have been acting rationally when they agreed to it.

So either, this is a form of fraud, or else you should agree to participate in this kind of auction.

A...

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My wife's name is, coincidentally, Alice. We would agree that one of us would bid $1 and then share the $19 winnings.

Normally, it is assumed that the players can't communicate. But even so, your plan won't work because the other could then bid $2 and get the $18 all for themselves.

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My point is that there are evils beyond force and fraud.

Do you somehow have the idea that Objectivism holds that force and fraud are the only evils?

Regarding your initial scenario, I don't think that any of the actors is being rational. For once, I even agree with Greg, up to a point. They're all three trying to get something for nothing. This isn't my idea of rational behavior.

Ellen

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Do you somehow have the idea that Objectivism holds that force and fraud are the only evils?

Interestingly enough, no. I've never seen a proof that force and fraud are the only evils according to Objectivism. These are, however, the only evils that Objectivism has identified so far. Nonetheless, no Objectivist has ever claimed that there do exist evils beyond force and fraud, until now.

Regarding your initial scenario, I don't think that any of the actors is being rational. For once, I even agree with Greg, up to a point. They're all three trying to get something for nothing. This isn't my idea of rational behavior.

How do you figure that Alice and Bob are trying to get something for nothing?

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Do you somehow have the idea that Objectivism holds that force and fraud are the only evils?

Interestingly enough, no. I've never seen a proof that force and fraud are the only evils according to Objectivism. These are, however, the only evils that Objectivism has identified so far. Nonetheless, no Objectivist has ever claimed that there do exist evils beyond force and fraud, until now.

I'm guessing you haven't read much Objectivist literature. Start with Galt's Speech. Rand identifies many evils - with failing to make the effort of thinking being the root evil. Maybe you're confusing rights violations with the whole range of evils. Rights violations are a special subset which Rand held are justifiably made illegal, but she certainly didn't equate the illegal with the entire range of the immoral.

Regarding your initial scenario, I don't think that any of the actors is being rational. For once, I even agree with Greg, up to a point. They're all three trying to get something for nothing. This isn't my idea of rational behavior.

How do you figure that Alice and Bob are trying to get something for nothing?

They start out, as you described the hypothetical, expecting to make a large return with no effort.

They then proceeded, as you described the escalation, to act like dopes in my opinion. If they were going to gamble that the other person was going to stop early and figured they were willing to lose a dollar or a few for the sake of a potential substantial (percentage-wise) return, then they should have stopped after the betting continued beyond a few dollars' loss, just accepting the loss instead of hoping to recoup.

Ellen

PS: To avoid possibly misleading you: I don't consider myself an Objectivist. However, I know Objectivism well and am in "general ball-park" agreement with what for short I call "the outline."

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I'm guessing you haven't read much Objectivist literature. Start with Galt's Speech. Rand identifies many evils - with failing to make the effort of thinking being the root evil. Maybe you're confusing rights violations with the whole range of evils. Rights violations are a special subset which Rand held are justifiably made illegal, but she certainly didn't equate the illegal with the entire range of the immoral.

I recognize that force and fraud can be used against oneself, and most of the evils Rand lists that are not perpetrated against others are forms of self-deception in one way or another.

They start out, as you described the hypothetical, expecting to make a large return with no effort.

They have to expend money in order to make money. They had to get the money somehow. I wouldn't call that "no effort". And if risking or spending money to get money is getting something for nothing, is investing in business similarly irrational?

They then proceeded, as you described the escalation, to act like dopes in my opinion. If they were going to gamble that the other person was going to stop early and figured they were willing to lose a dollar or a few for the sake of a potential substantial (percentage-wise) return, then they should have stopped after the betting continued beyond a few dollars' loss, just accepting the loss instead if hoping to recoup.

But at what amount, specifically? That's kind of the rub. Even though it is better to stop at some point before they run out of money, it is in the players' rational interest to keep bidding at every single point of the game.

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Why isn't it reasonable to suppose that they could have predicted it? My 9-year-old son could have predicted it, and he's only just now learning long division. If a third grader's basic math skills could work that out, I don't see why I couldn't expect the same of Bob and Alice. I think you don't give poor Bob and Alice nearly enough credit for being thinking folks.

I explained why in my response to selene. But I'll explain why in more detail here:

At the beginning of the auction, Alice bids $1, because she thinks that there is a 50% chance that Bob will drop out and she will get $19. There is also a 50% chance that Bob will bid $2 and win the auction, in which case she loses $1. Her expected gains for bidding on the first round is 0.5*19 - 0.5*1 = $9, while her expected gains for not bidding at all is $0. Thus, she should bid $1 on the first round. Similarly for Bob. Since Alice has already bid $1, he needs to bid $2 to win. If he does, his expected gains are 0.5*18 - 0.5*2 = $8, which is more than if he doesn't, i.e. $0.

This goes on and on until the bid is at $10. At this point, Alice reasons, well if Bob bids more than $10, then his expected gains would be negative, so he won't bid more than $10, and Alice can certainly win the auction by betting $11 and getting $9. Bob, of course, is thinking the same thing and so he tries to bet more than $10.

Once the bid reaches $20, the same reasoning applies as in the first paragraph, except in this case each player is trying to minimize his losses. But by that point, Carl has already won.

Hi Naomi,

Welcome to OL.

I think the problem is your analysis of what is rational behavior. Your premise is that Bob and Alice must participate if they are rational because your reasoning shows --- I didn't follow your link --- that they are always better off if they continue the game then if they don't. I think that reasoning is faulty.

For example, the original problem doesn't say how large a bid can be, so why wouldn't Alice, if she went first, bid $19 or $19.99? Then, it would be impossible to Bob to place a bid that would allow him to profit, so he wouldn't bid and Alice would win and Carl would lose ($1 or $0.01).

Another possibility would be for Alice to say, "Hey Bob, I'll bid $1 and if you don't bid anything, I'll share the profit with you, 50/50." If Bob agreed, Bob and Alice would each come out $9.50 ahead and Carl would be out $19.

If the actions I outlined above were not allowed, then there would be no way for Bob or Alice to win, so there would be no reason for them to play. Their choice to play would either have to be irrational or based on ignorance. If Carl were hoping that Bob and Alice were ignorant, he would be committing or attempting to commit a type of fraud.

Every legitimate trade is beneficial to both parties. I don't think Objectivism advocates taking advantage of people that are incapable of determining what is in their self interest.

To take a real world example, consider the woman in Detroit who was told by a couple of shysters that she could take out a loan on her house to help her pay her (relatives) bills. However, the paperwork that they gave her to sign was actually a contract to sell her house to them for a pittance. The paperwork stated clearly that it was a contract to sell her house, but that contradicted what the con men were telling her the purpose of the contract was. Of course, in this case the con men deceived her by actually making false statements, but there are many other sins of commission or omission that could be used to relieve a person of his money.

For example, imagine that you download and installed a piece of software on your computer. At some point, you probably would have to click a button that said that you agreed to the terms of the license agreement. Imagine for a moment that somewhere, buried in the text, it stated that by installing this software you agreed to give your car or your house or your first born child to the software development company. In that case, no false statements would be made, but should such an agreement be enforceable?

What is the fraud being committed in my example? The hypothetical software company knows that people are bombarded with licensing agreements all the time and don't have time or resources to read them all in detail every time. So, the hypothetical software company is taking advantage of the ignorance of the person installing the software in order to attempt to enrich its owners at the expense of unsuspecting clients. That is a type of fraud.

The question is, does the person entering into an agreement have a reasonable expectation that the agreement will be mutually beneficial to both parties? I think the answer is yes, with some caveats involving small amounts of money or entertainment related activities. If you didn't enjoy the movie, that's just too bad, etc.

Darrell

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