A/C in Action: The AP Case

[ALawPoker]

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ALaw...I wasnt implying that you didn't understand what adanthar meant, just that those who claimed not too were being disingenuous or worse.

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Don't forget that there is a big difference between claiming to not understand an argument and claiming that the argument is flawed. I haven't read the entire thread, so I'm not sure exactly what or who you're referring to, but a lot of Adanthar's "dot connection" that I read here has been way off, imo, and (to say the least) I think there is plenty of room to reasonably disagree. You can understand perfectly what someone is trying to express, but still disagree that his arguments validly support his point.

[mosdef]

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In other words, the market very, very clearly did not react to the perceived honesty of AP or lack thereof.

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Hold on - what do you mean? "The market" is not a tangible entity, it's a catch-all word for the sum of all individual choices. Are you saying that very, very clearly no individuals made any changes to their buying habits because of the perceived honesty of AP or lack thereof? If a single person started acting differently (OP perhaps) then "the market" responded.

[ALawPoker]

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In other words, the market very, very clearly did not react to the perceived honesty of AP or lack thereof.

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Hold on - what do you mean? "The market" is not a tangible entity, it's a catch-all word for the sum of all individual choices. Are you saying that very, very clearly no individuals made any changes to their buying habits because of the perceived honesty of AP or lack thereof? If a single person started acting differently (OP perhaps) then "the market" responded.

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Ya, claiming that "the market did not respond" is an odd position. The market did what it did. What's the reaction "supposed" to be?? Exactly what *you* think it will be?? I don't get it. If other people are comfortable playing on AP, who is anyone else to tell them they're "supposed" to react a certain way?

If everyone analyzed risk the exact same way I do, I'd be sort of creeped out.

Moreover, we're dealing with people who play a digitized card game for real money on the internet, for crying out loud. Consider the demographic. Most people who play online poker probably think it's sketchy in the first place. The standards were never all that high.

If I stick a pin in a balloon that does not have much air in it, the reaction isn't exactly what I saw in physics class.

[Phil153]

There's three things the ACists are claiming here. Let's examine them separately:

- The current situation doesn't represent a free market

A: Why not? There's a huge number of voluntary participants, and a significant free market review and oversight mechanism through blogs, affiliates, forums, and the free press. All of the things that should be acting, are. And to claim that the problems stem from a lack of the most reputable players is silly. Both PokerStars and Party Poker offer secure alternatives with a strong focus on security and game integrity - at least as far as the end consumer is concerned. Many of the current fish would probably play elsewhere if they knew of the scandal. But they don't - and it highlights beautifully the failure of the end consumer review process due to lack of time, lack of resources and understanding, and lack of interest. Transaction costs, smart people.

Another point to add is that no reputable body has sprung up to provide certification to these sites, despite the supposed consumer value of a such a body. The only certifying body is the KGC, which has its hand in the pocket of the very sites it's pretending to be overseeing. We didn't know how much until the scandal broke, because there are no laws for transparency.

So what exactly is missing from the equation? Are the things listed above not strong enough for the market to work? Most of practical AC philosopy requires the assumption that they are.

- The current situation doesn't matter in the scheme of things

A: There's two problems with this position. The first is that ACists often claim that the market will do a better job than government, in everything (cue Borodog). This doesn't appear to be happening here, and it would be nice if that was at least conceded.

The second is that the current situation is harmful for the market overall. When people get blatantly ripped off, and the perpetrators suffer no consequences, it reduces trust and provides incentive for others to follow in their path. This is bad for everyone.

As far as individuals go, you can argue that the stupid are getting their just desserts, but that's a pretty cynical view of the world.

- Legal remedies would exist in a AC world

A: Are you sure? Unless a site agreed beforehand to be overseen by a binding arbitrator, AND that arbitrator (whose motive is purely profit) was impartial, there is little chance of justice in AC land. Who has the power to go in and audit the books of a corrupt company with someone to hide? Absolute no one. And there is absolutely no reason why sham arbitration companies wouldn't exist, why sham regulatory bodies wouldn't exist, or why consumers would know the difference between them. The companies that lack this can just do clever marketing or rely on the innocence/trust/lack of knowledge of their customers, such as AP and the KGC have done here.

You guys are kidding yourselves if you think that companies won't be able to bend the rules and cheat their customers significantly more in the absence of a body with the absolute power to regulate, fine, and shut them down. Simple utility should make that obvious. You guys understand utility, right?

[adanthar]

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Ya, claiming that "the market did not respond" is an odd position. The market did what it did. What's the reaction "supposed" to be?? Exactly what *you* think it will be?? I don't get it. If other people are comfortable playing on AP, who is anyone else to tell them they're "supposed" to react a certain way?

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See Phil's post. The market not reacting this way harms the entire industry and provides a clear incentive for future cheating.

[mosdef]

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- The current situation doesn't matter in the scheme of things

A: There's two problems with this position. The first is that ACists often claim that the market will do a better job than government, in everything (cue Borodog). This doesn't appear to be happening here, and it would be nice if that was at least conceded.

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That point can't really be "conceded" because it would require:

- an objective determination of how "good" things are in aggregate
- a control showing that with government regulation the "goodness" was greater

Neither are available.

[mosdef]

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Ya, claiming that "the market did not respond" is an odd position. The market did what it did. What's the reaction "supposed" to be?? Exactly what *you* think it will be?? I don't get it. If other people are comfortable playing on AP, who is anyone else to tell them they're "supposed" to react a certain way?

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See Phil's post. The market not reacting this way harms the entire industry and provides a clear incentive for future cheating.

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Maybe the other providers should pay for advertising that emphasize that they have no history of suspicious behaviour or out and out cheating so that they can take advantage of the demand for fair gaming. Maybe all the people who demand fair gaming should band together and create a Consumer Reports type entity to provide guidance on these issues. Maybe if these things aren't happending there really isn't a massive demand for the same services you want. Note that if a free market doesn't provide what you want because no one else wants it the market is not failing.

[ALawPoker]

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Ya, claiming that "the market did not respond" is an odd position. The market did what it did. What's the reaction "supposed" to be?? Exactly what *you* think it will be?? I don't get it. If other people are comfortable playing on AP, who is anyone else to tell them they're "supposed" to react a certain way?

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See Phil's post. The market not reacting this way harms the entire industry and provides a clear incentive for future cheating.

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I'll read Phil's post in a bit. Right now it is "tl" as they say, since I'm doing other things. If you'd like to paraphrase in your own words, feel free.

I'll say this though, in response to what you say here:

What's the better alternative? Life is not perfect, and yes, we will all be harmed when others make poor decisions. That's the beauty of spontaneous order.

The issue should not be "are things worse because people didn't react strongly" (obviously they are, and I don't disagree), the issue should be "considering people didn't react strongly, should we force people to act a certain way, or would that actually make things worse yet?" And my argument would be that anything you could do (i.e. force AP out of business) would make the problem worse, and not better.

My general line of reasoning is that by restricting other peoples' right to make a mistake, you are hindering their ability to make good decisions later. If every time a few dorks on a message board proved a business was corrupt we restricted access to that business, then customers at large would have increasingly less incentive to apply time and resource towards making a decisions for themselves, and their decisions would become worse. And to me, that outweighs the shortsighted benefit of "patching" problems every time people who supposedly know better see them.

Thinking that the "hands on" fix is longterm +EV is pretty utopian, imo, and I think the best way to get the result you're looking for is to let people make decisions for themselves and then hold them accountable for the consequences.

[adanthar]

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Maybe the other providers should pay for advertising that emphasize that they have no history of suspicious behaviour or out and out cheating so that they can take advantage of the demand for fair gaming. Maybe all the people who demand fair gaming should band together and create a Consumer Reports type entity to provide guidance on these issues.

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Maybe they should, but a total 3% loss is not an incentive to do any of that.

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Maybe if these things aren't happending there really isn't a massive demand for the same services you want. Note that if a free market doesn't provide what you want because no one else wants it the market is not failing.

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Two points:

1)This argument is inherently weak and doesn't make much sense for the same reason the one about 97% of the market hearing about the scandal and making an informed risk estimate doesn't either - it's simply not what happened. We are faced with the proposition that 97% of the marketplace heard of the scandal, performed an informed risk calculus and chose to continue playing at AP. Anybody think that's actually what took place, in those words, in 97% of the players' heads?

2)Taking your proposition as a given, let's assume that it did. Obviously - and this is beyond a doubt - this scandal hurts the entire industry, because it's going to be much harder to answer a newbie's "how do you know the site is fair?" question from this point forward and the conspiracy theorists have their rallying flag for a decade from now. It is, therefore, to the industry's advantage to beef up security and to players' advantage to have sites heavily regulated, but each individual site is better off with business as usual (or just cheating their players undetectably, for that matter). Therefore, the market in the long run appears to be driving the industry off a cliff.

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I'll read Phil's post in a bit. Right now it is "tl" as they say, since I'm doing other things. If you'd like to paraphrase in your own words, feel free.

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That's the second time you say you haven't read the thread or a critical post. In the nicest possible way, what are you doing replying? But okay:

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My general line of reasoning is that by restricting other peoples' right to make a mistake, you are hindering their ability to make good decisions later. If every time a few dorks on a message board proved a business was corrupt we restricted access to that business, then customers at large would have increasingly less incentive to apply time and resource towards making a decisions for themselves. And to me, that outweighs the benefit of "patching" problems every time people who supposedly know better see them.

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LOL. Forget mandatory auditing - there's no reason to investigate corruption at all if it would just remove citizens' incentive to do the research themselves. No need to remove convicted felons from CEO positions - if you don't do a background check on the criminal record of every executive in every company you buy stock in, it's your own fault. Why bother with jail time for fraudsters when the market will simply price their prior conduct into every transaction?

Also, Richard Goodkind is a horrible hack.

[mosdef]

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Maybe the other providers should pay for advertising that emphasize that they have no history of suspicious behaviour or out and out cheating so that they can take advantage of the demand for fair gaming. Maybe all the people who demand fair gaming should band together and create a Consumer Reports type entity to provide guidance on these issues.

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Maybe they should, but a total 3% loss is not an incentive to do any of that.

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If it doesn't make sense to do something why should we be forcing it to be done? You're saying "we need ABC to happen" and when I say "then let them do it" you say "it doesn't make sense to do it". How does having the government force them to do it add up to a good thing but having parties choose to do it add up to a bad thing?

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We are faced with the proposition that 97% of the marketplace heard of the scandal, performed an informed risk calculus and chose to continue playing at AP. Anybody think that's actually what took place, in those words, in 97% of the players' heads?

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It doesn't have to happen "in their heads" for it to be so. For example, if you go out any buy a sandwich for lunch but don't actually say to yourself "Hold on, what are all my options here? What if I get soup instead? What are all the potential pros and cons? And should I eat it here or get is as takeout? What about the impact on my retirement savings?" that doesn't actually mean you aren't expressing your preferences when you buy the sandwich. The amount of time spent researching something is part of the preference. If people don't spend a lot of time conducting a risk assessment, but you think they should, you can't conclude that they really actually want to conduct a risk assessment but the only way they can is with a government doing it for them.

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Obviously - and this is beyond a doubt - this scandal hurts the entire industry

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So they'll obviously take steps to remedy it, right? If the best thing for the industry is regulation, why wouldn't they self-regulate?