SoAMadDeathWish

That $20 is intrinsic value... not perceived value. The smaller value is also intrinsic value... not perceived value. That is the classic definition of trying to get something for nothing. Zero sum games only appeal to failures who don't produce anything of useful value. Greg There is no such thing as intrinsic value. If things were intrinsically valuable, then wealth could never be produced by trade, as all trades would result in a mere re-allocation of value. PS: The auction is definitely not a zero-sum game. Look up the definition of the term before you use it.

Really? They're not realistic? Even though they act just like a whole lot of real people do? Huh... It doesn't matter who critiques my position, I'm still right until proven otherwise. PS: It's the place right under my avatar.

It works, contrary to your view that Alice and Bob are not realistic.

Or, you could use it to create an auction website and rake in $28.3 million: http://en.wikipedia.org/wiki/Swoopo

It doesn't matter. What matters is figuring out what Carl (or Alice or Bob) is doing wrong, if anything. To me it doesn't seem like any of them are refusing to make a mental effort to be aware, but the opposite. How are you able to conclude that Carl is being foolish. All the evidence seems to suggest otherwise, as he certainly ends up making money off of his little scheme. On the other hand, Carl's values may not be the same as our own, as I've argued elsewhere, so we can't assume that he is being irrational on that basis alone. How would they determine that limit? This question needs answering. As to the lottery scenario, it is not at all equivalent because the expected utility of the first ticket is negative, due to the odds of winning being so small.

My objection here is that Alice cannot know how Bob will choose between two options he values equally. If he expects to gain nothing by participating and also nothing by not, then he may still choose to participate. This would give Alice an expected utility of 0.5*0.01 = 0.005, whereas bidding just $0.01 gives her an expected utility of 19.99*0.5 + 0.5*0 = 9.995. However, even if she knew that Bob would not participate if she bid $19.99, it still wouldn't resolve the issue, because then her expected utility would only be 0.01 which is still much much lower than the 9.995 she gets from bidding 1 cent. Another person in the thread tried a similar scheme. But it also fails because there is a powerful temptation to break the agreement. This is because, after they make the agreement, and Bob bids $1, then Alice can only expect to gain $9.50 if she keeps to the agreement, but she can expect to gain $18, almost twice as much, if she breaks it. I'm inclined to agree with you that Carl is preying on Alice and Bob by taking advantage of the circumstances. My only comment here is that using someone's ignorance against them in this way doesn't seem to fit the usual definition of fraud. This is not a trivial issue since many people in this thread didn't think that any form of fraud was being perpetrated. Nonetheless, they have to, because, once they are in the game, they each expect the other to back down first because they still have to maximize their gains. And so, neither of them backs down even if they recognize that they are caught in an escalation game. Two problems here: 1) There is a slight error in your calculation, which should be 0.05*18 + 0.95*0 = 0.90, because if Alice doesn't drop out, it doesn't mean that Bob will lose $2, just that the game continues. What this also shows is that the probabilities that players assign are quite irrelevant to the outcome, because every nonzero probability of somebody dropping out leads to a positive payoff. 2) Why should anybody assume that there is a 5% probability that Alice will drop out after the next bid, rather than some other probability? We could, with just as much justification, assume that there is a 95% probability that Alice will drop out after the next bid. The point of assigning equal probability to all events in a state of total ignorance is to avoid leaving yourself vulnerable to exploitation.

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 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? 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.

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

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.

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

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

That's not an answer.

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.

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.

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. 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?

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?

Carl is running a con, but the question is, is he doing anything wrong? Do there exist non-coercive and non-fraudulent unethical actions?

I think that the kind of thing that Carl pulled is called a "gambit": A device, action, or opening remark, typically one entailing a degree of risk, that is calculated to gain an advantage.

Is this objectively true? Because if value is subjective, then Alice and Bob cannot say that Carl is acting irrationally just because his values don't conform to their own.

Morality is acting in your own rational-self interest. Immoral people, by definition, don't do this.

Are you claiming that any and all forms of entertainment that people choose must be rational?!!! The context of that quote is that some people were arguing that Alice and Bob were acting rationally because they may have been entertained by the outcome. But I was pointing out that just because one is entertained by the outcome, that does not mean that their behavior was rational. Non-sequitur. It's entirely possible that someone might do something even if they were not entertained by the act. It does matter because if you don't get the product you expected to buy and have paid for, then you have been defrauded. That case only considers what would happen if they knew the outcome. The whole point is that they didn't. You know what I mean.

False. Immoral people certainly don't.

Non sequitur. You seem to be laboring under the mistaken opinion that any decision absent fraud must, by definition, be "rational." Not so. "Rational" doesn't mean "in the absence of fraud." J Sorry, in that post I meant to say that Bob and Alice were capable of acting in their rational self-interest. If this was fraud, then you're right they could still be rational even if they could not act in their rational self-interest.

In what sense is it "not rational"? When you do something rationally, that means that you've done the best you can given your goals and information. Sometimes, you have no information about something, but reality still demands that you make a decision.

If you believe that someone can act against their own interests by being rational, then you need to check your premises. Reason cannot fail, unless someone tries to use force or fraud or this third thing, apparently.