They’re mostly fun stuff to do – mostly armchair economics and armchair computer science. But the thing about brainstorming things to do and actual implementation is that sometimes implementations can go spurious. We’d expect something to work one way and then it doesn’t.

So, yes, we have to constantly remind ourselves that value is contextual. And because I’m such a bore, I shall bore you, my readers as well.

One way we can value things (and in fact, as far as basic economics is concerned, the only way) is to analyze its opportunity cost.

For example, would you pay $100 for a Big Mac? Most people would not (unless you’re starving in a desert carrying nothing but $100, when a genie conjures up a very expensive McDonald’s for you). Most of us wouldn’t pay $100 bucks for two reasons: a) we know from prior experience that a Big Mac should be about $3.95 (in Australia); b) we can do far more with $100.

Reason (a) is what economists call anchoring – a fairly icky problem for us – most of us (except those from the Behavioural Economist crowd) try to circle around it. Reason (b) is the opportunity cost. An opportunity cost is simply the question: “with these resources I have to do X, what other things can I do with it?” That’s what we’re going to look at today.

With $100 we can do a lot more than just buy a Big Mac. You could use your $100 to buy a Denon AKDL1 Dedicated Link Cable (though admittedly you’d be $500 short). The thing is, there are plenty more things we can do with $100 than just using it to buy a Big Mac.

That’s one of the problems Pressyo faces. There are literally trillions of pages competing for your time and attention. Your opportunity cost of reading one site is reading another site that you may derive happiness from. And the best thing about the Internet is, these other sites are just a click away.

Today, you may feel emo, so you might read a livejournal page. Tomorrow, you’d be feeling all happy clappy and you wouldn’t even go near a emo livejournal. People’s moods change – we’ll talk more about that later with regards to anchoring in the next post – and people’s valuing of things change.

One of the easier solution is to provide a smörgåsbord of choices to cater for people’s changing tastes. In the coming days, you’ll see Pressyo changing into something that caters to a wider range of tastes – the so-called “long tail”, if you will (the other thing to do is to adapt to people’s anchoring – we’ll talk about that in another post).

That is the reason why we chose to use a price system for Pressyo. Why? Prices, in the very simplest manner, tells you about the opportunity cost. If you read a piece that is priced at Y5, you’d be reading Y5 worth of your time – that its 5 times more worth a Y1 post. These prices, are of course aggregate prices – that is the public’s valuation of the story. Your personal valuation? That’s anchoring. How we deal with that, we’ll talk about it in another post.

Why is it different from a voting system? A voting system produces ordinal data – at best it provides interval data (this doesn’t happen very much either). But a market, with a price system, provides ratio data. This provides at least 2 levels of data richness. With a voting system, you cannot say a story with 2 votes is twice better than a story with 1 vote (it simply means 1 more person voted the story). With a market, you can confidently say so, that a Y2 story is worth twice than Y1 (at least by public reckoning).

This would give users a lot more space to gauge whether a piece of information is worth their time (in economics term: if the pieces of information is worth its opportunity cost).

So, now that you’ve read this page, what’s your opportunity cost of reading this post? What things better you could have done instead of spending the last 4 minutes of your time reading this? That is your opportunity cost. Tell me.

Imagine, for a moment, that you are Grisha Perelman. You’ve discovered a valid proof for the Poincare Conjecture. Upon discovering the proof, you go back to sleep in your mother’s house, and proceed to play Tetris till you die.

Question: Would anyone know you’re good?

Answer: No. Why? Because you’re only as good as how much you’re disseminated.

Whilst the scenario above is a jest at that the brilliant (and slightly loony if you ask me) Russian mathematician, the fact remains that if you, or your work is not widely disseminated, you or your work won’t even be considered good.

Consider Ramanujan, the great Indian mathematician. If he didn’t leave India for England, all of his proofs will then be considered non-existant, even if he did have the smarts and did manage to prove them (he had these notebooks where he wrote them, and they weren’t discovered till the late 1970s).

In the academic world, getting published in a peer-reviewed journal is the exposure one needs to prove one’s work is good. Getting in a peer-reviewed journal is how everone will be exposed to the work. In the real world, though (and also, increasingly in the academic world), peer-review isn’t the only thing.

Peer-review in academia works because the experts who are reviewing the work do so in an impartial manner. To compound that further, a journal article is reviewed by not one, but multiple reviewers, to further affirm the quality of the said article.

Of course we hear news like Merck sponsoring journals for a biased article; and the existence of peer-reviewed creationist science (*snort, what an oxymoron) journals. So while peer-review isn’t perfect (no one system, in my opinion, is perfect), it most certainly has significantly more quality than say, your Sunday paper’s opinion column.

Of course, the key factor behind the relative success of peer-review is that each reviewer acts independently and impartially. In the real world, we cannot get that. More often than not, an issue polarizes opinion.

Take the recent murder of Dr. George Tiller. Opinions polarized between those who think that the murder was justified, to those who think that the murder was terrorism. Which is correct?

It is a hard question to answer. We try our best not to judge in issues. Afterall, one man’s meat may be another man’s poison.

The quality of the content is variable to each person. And that is what we at Pressyo are trying to do. We’re trying to present to people, good content. The audience part of the equation is a piece of cake. The main problem lies with the content quality part.

That’s what we’re striving for. The work will always be in progress (until such a time when Skynet our system can read human minds), and that’s what we’re striving for – identifying quality.

The way I see it, we’re born into markets, and throughout life, we accumulate resources. Some of us are born with higher initial endowment of resources – richer parents, big inheritence; but most of us… most of us just have human capital on our end. We only have labor, and time as our inital endowment of resources, and to me, that is enough.

Maybe all that argument about how to distribute initial endowment of resources is moot afterall?

Welcome back to the revitalized Outside the Box blog. There has been plenty of changes to Pressyo, and more to come in the coming week. As you can tell, we’ve been busy, with both our personal lives, and with Pressyo, but exciting times are coming to Pressyo.

Why is this of interest to me? A few reasons actually:

1. An Esoteric Measure of Cost
   If you noticed, Dr. Perry used time as a measure of cost. Esoteric measures excite us at Pressyo. We’ve talked a bit about valuing information, and among the more esoteric measures we came up with as an alternative to just price, included time and energy. While this is venturing into the land of Physics and not Economics any longer, it’s always good to keep an open mind (besides, the major theme here at Pressyo is that we use what’s best to achieve our goals, and that means having a plethora of knowledge would be handy).

   Costs factor in calculation of value of information, and in our discussions, we once talked about the virtues of various forms of valuation and value accounting, and naturally, time was one of the factors. Dr. Perry anchors time with wage (i.e. modern man only has to work 33 minutes to get a scientific calculator, as opposed to the neanderthals of th 70s, having to work for 12.5 hours).

   Other valuation methods we considered included the fairly unheard-of Energy Accounting technique and similar. We’ll discuss it another day, as it would only serve to kick this blog post out of topic.

2. A Different Way of Handling Inflation
   If you took the time to discount $58.95 from 1975 to present, you’d notice that $58.95 in 1975 is worth about $238.83 (this is when a financial calculator is handy, by the way, when you want to do NPVs like these). In his article, you’d notice Dr. Perry mentions that it’s worth $230 in today’s dollars.Now, I take it most people do not understand what I just wrote in the above 2 lines. It’s rather simple, actually. By expressing inflation in terms of time and wages, as 2 separate variables, it makes things easier to understand, than saying stuff like “discounting to the present”. It gives one a base level for comparison.

   The beauty of this is, one doesn’t even need to know how to discount to take into account for inflation. This is because wage itself is already affected by inflation, and hence all that is affecting the change is time. This excites me because its very very hard to explain inflation to people who ask. Dr. Perry essentially gave me a new way of explaining it.

   At Pressyo we deal with growth and inflation everyday, and though Dr. Perry’s post is restating the obvious (rephrasing is the word to use), it remains refreshing to see something old explained in a new way.

3. Technology Matters
   I think this is what Dr. Perry was driving at in his series of posts – that technology matters. Technology drives down costs. Indeed, most of his blog seems to be dedicated to growth. Technology has allowed people to do more for less.

   Pressyo, as you may know, is technology driven (mostly the same technology that drives NYSE and stock exchanges), and we would very much like to bring more luxury to humans.

   The luxury we have today – would you trade it off for so-called “better times” of the past?

Finally, really? $9.99 for a scientific calculator? I feel ripped off.

The new design is simpler, leaner and cleaner with the emphasis on the content, not the header or the footer. Do let us know what you think by e-mailing us.

Towards a faster loading Pressyo

The old pressyo design weights in at 312,555 bytes, while the new one now weights only 293,815 bytes. A saving of almost 6%. A good thing, considering much of the code thrown away is useless anyway. Also, by using a more standard and CSS-based rendering, we managed to NOT use JavaScript for rudimentary task like centering and rendering, which should be best to let CSS to deal with it.

Why do we sacrifice the rounded corners?

We strive for simplicity in the new design, therefore we think while beauty is important, being lean and fast loading is more important. But who knows, maybe one day we may have the rounded corners back, so stay tuned!

Finally, we hope you like the new design, as much as we like delivering it to you. Happy new year and keep Pressyo-ing!

Pressyo user experience team

So, you can now register (you will still need to be manually approved), and start using Pressyo. Unsure of what Pressyo does and how to use it? Read the Pressyo Basics.

As one of the creators of Pressyo, I recommend you try a basic strategy first – buy low, sell high. Only thus can you gain enough Yos to be rich!

In the initial marketing and proposal of Pressyo’s concepts to the F3 crowd (Family, Friends and Fools), one of the first questions asked is “fine, you trade information, but what exactly are you trading?”, to which I replied “the right to vote”, I often get quizzical looks, as though I’ve been injected with a huge syringe of Retard.

Of course, soon after, the “are you out of your mind?” question comes. Of course I am not mad. Even my Chinese friends (yes, as a matter of fact, Communist China has always had democracy – in a relatively different form than its western counterparts but still democracy, its just rather ignorant of people who claim China as undemocratic) find the concept of trading votes repugnant. I’ve been wondering why.

Could it be the concept of democracy has been ingrained in the hearts and minds of the peoples of the nations of the free world that it is repugnant to even think of undoing the “one man, one vote” idea?

If you think logically about it, in a true democracy, every issue that affects the public would be voted upon. Naturally, there will be some people who are not interested in the issue. They can either be forced to vote (some countries like Australia and China enforces such laws), or not vote at all. If a third option was given – for the politically indifferent to trade votes – wouldn’t everyone be better off?

Naturally, some form of mechanism needs to be designed to prevent a moral hazard from emerging, but all in all, everyone should be better off.

There’s some food for thought for you then . If you do want to read more about repugnant transactions and the market design (and mechanism design), I recommend reading the greatest economist of them all with regards to this topic – Al Roth. Be aware though, his blog features some markets where even I find repugnant (assisted suicide for example).

Do tell me what you think of the idea of trading votes in politics – should people be allowed to trade?

Thankfully though, we at Pressyo do not deal with these issues (economists call these repugnant transactions, where a value is attached but it is generally considered untasteful – i.e. a ‘yuck’ factor). We do however deal with another kind of repugnant transaction that will be discussed in future blog posts. At Pressyo, we deal with valuating information, which in itself, presents a different challenge than say, evaluating how much insurers should pay for a lost thumb on a construction worker (about 10% of your health insurance, depending on which country you’re in).

There are several problems with trying to evaluate information. In attempt to be brief, I shall list a few down and not cite any academic sources (also, the dearth of popular academic articles with regards to this topic means that I’m too lazy to find the more obscure ones).

1. Different information holds different value to different people.
   You, for example, might derive value by reading about something about say, the Large Hadron Collider. Perez Hilton, on the other hand, might derive value by reading a paparazi piece on Paris Hilton (I mean, that’s why you’re reading this blog, and Perez Hilton isn’t). On a 1-5 scale of value, you might list a LHC piece on 5, while news of Paris Hilton’s newfound levels of sluttiness gets a 1 on your scale; likewise for Perez Hilton – 5 for Paris Hilton news, and 1 for the LHC news (unless of course, if the LHC threatens to put homo sapiens into extinction by virtue of a blackhole created, then he might actually derive value from news of the LHC).

   The problem then, is to cater to different people, with different evaluations of the same information. And the general value of information in its aggregate.

2. Information is (mostly) a public good.
   Public goods are non-rivalrous, non-excludable goods. It is non-rival because you accessing a piece of information does not prevent another person from doing the same. Back in the dark old days before the Internet, information is mostly on dead-tree books, and to some extent, it was rivalrous, but nowadays on the Internet, information is non-rival (mostly anyways). Information on the Internet is also non-excludable. It means you cannot exclude people from accessing it. Yes, you can try, as the New York Times did try, but for the most part, information online is non-excludable.

   What’s the problem with information being a public good? A few, actually – most notably, the free-rider problem. Free-riders are people who can be considered to be like parasites. Applied to the case of information goods, its those people who access information, but do not contribute back. Wikipedia faces a problem like this, where 90% of Wikipedia’s users are only readers and only 1% contribute (cf. Horowitz).

   In Pressyo’s case, this free-rider problem can be thought of as a black box with no leads out. Users who access stories in Pressyo, but doesn’t provide feedback to the system on how they value the information provided.

3. Information is (mostly) abundant.
   Information online has in recent years, became more abundant. Traditional economics work on the assumption of scarcity – in that things (goods) are finite, and there ain’t no free lunch in the world. But the Internet (or any new technology, actually) is turning that around. What used to be scarce and finite is now abundant and infinite. Spreading information online has a marginal cost of close to zero – it doesn’t cost much to spread information. This, of course has lead to spam and the like, but also poses a problem with valuation. In basic economics, when supply outstrips demand (and in the case of information, supply will always outstrip demand due to its public good nature), the price (which is a proxy for value) approaches zero.

   One could theoretically include and take into account network effects – an example would be to see how popular a piece of information by checking how far it is spread (a simple way is to inverse a supply schedule, and inverse the demand schedule) – but such are impractical methods, and also, not to mention, spam would probably be the highest valuated informations on the internet due to its overabundance.

These are amongst the few problems with evaluating information’s value on the Internet. Other concerns also include the psychological point of view – how does one value something? – and the very basic building blocks of values and valuation.

Some people have come up with responses (conversion rates, number of pageviews, etc) but we found those seriously lacking. The few innovative responses are sadly copyrights and trademarks of giant corporation (think Google PageRank).

Of course, we at Pressyo have come up with some surprisingly nifty techniques to evaluate information (hah, we’d be going into the realms of heavy mathematics like markov chains and hidden markov models – and at which point economics crosses with computer science). But also, we have uncovered some deceptively simple methods that could work – some are really out of the box. They will be left to future blog posts for discussion as this blog entry is already very lengthy.

Till then, how much do you think you’re worth?

If you’re wondering why we’ve moved servers – the private beta is now moving into a new phase. If you’re one of the few still waiting for your invite: fear not, we’ll soon have the capacity to accomodate you guys – so look out for those invites in your mailboxes!

UPDATE:
DNS changes should have propagated – you should now be seeing this blog at blog.pressyo.com! If you’re not, then, I guess you have a complaint to file with your ISP. Or possibly country. I wouldn’t know.

What the hell is going on?

Well, for one, plenty of resets. As you may or may not know (depending on whether you’ve been sent a briefing email), Pressyo has a lot under the hood, and there is more than meets the eye (cue Transformers sound effects). And plenty of tweaking needs to be done before it is ready for human consumption (you robots out there seem to be consuming it real fine).

But in all seriousness, the few of you who have access to the site already, keep posting. We really thank you for your contribution, please don’t be upset. Yes, we’ll be resetting quite a few more times before the mass of you are invited.

But, here’s the good news. More of you will be invited this coming week. And instead of you starting off with measly ¥10, you get to start out with more – ¥100 . Please do note though, this is not final. I’m quite sure the final amount you get to start off with will be higher, and along the way there will be more resets.

Buut.. we’ll get there, you and I.