Tag Archives: manipulation

Preventing cheating is hopeless in online learning

Technology makes cheating easy even in in-person exams with invigilators next to the test-taker. For example, in-ear wireless headphones not visible externally can play a loop recording of the most important concepts of the tested material. A development of this idea is to use a hidden camera in the test-takers glasses or pen to send the exam contents to a helper who looks up the answers and transmits the spoken solutions via the headphones. Without a helper, sophisticated programming is needed: the image of the exam from the hidden camera is sent to a text-recognition (OCR) program, which pipes it to a web search or an online solver such as Wolfram Alpha, then uses a text-to-speech program to speak the results into the headphones.

A small screen on the inside of the glasses would be visible to a nearby invigilator, so is a risky way to transmit solutions. A small projector in the glasses could in theory display a cheat sheet right into the eye. The reflection from the eye would be small and difficult to detect even looking into the eyes of the test-taker, which are mostly pointed down at the exam.

If the testing is remote, then the test-taker could manipulate the cameras through which the invigilators watch, so that images of cheat sheets are replaced with the background and the sound of helpers saying answers is removed. The sound is easy to remove with a microphone near the mouth of the helper, the input of which is subtracted from the input of the computer webcam. A more sophisticated array of microphones feeding sound into small speakers near the web camera’s microphone can be used to subtract a particular voice from the web camera’s stereo microphone’s input. The technology is the same as in noise-cancelling headphones.

Replacing parts of images is doable even if the camera and its software are provided by the examiners and completely non-manipulable. The invigilators’ camera can be pointed at a screen which displays an already-edited video of the test-taker. The editing is fast enough to make it nearly real-time. The idea of the edited video is the same as in old crime movies where a photo of an empty room is stuck in front of a stationary security camera. Then the guard sees the empty room on the monitor no matter what actually goes on in the room.

There is probably a way to make part of the scene invisible to a camera even with 19th century technology, namely the Pepper’s Ghost illusion with a two-way mirror. The edges of the mirror have to be hidden somehow.

All public statues should be removed

There is no benefit to spending taxpayer money on creating or sustaining personality cults. The same goes for all public art – the current (local) government should not decide on which people to popularise. No significant market failure exists in physical art objects. The government thus does not need to intervene in the market for statues (copying digital art is another matter). Private individuals can put almost any statues and art on their own property as part of free speech.

The materials of which the statues are made could be used for something beneficial instead, like public housing for the poorest members of society. Clearly the government’s goal in erecting statues is to provide circus to the public in order to get re-elected, not to benefit society.

If the influential people whom the statues depict were asked whether the person or the idea matters more, my guess is that almost all would emphasise the idea. Most would ask the resources to be spent on more reasonable things than statues of them.

If the goal of a statue is to signal the importance of the ideas of the person depicted, then there are more efficient ways for this signalling. For example, a scholarship, a charity or a public library in the name of the person.

Bar-coding videos to prevent faking

To prevent clips from being cut out of a video or inserted, add a non-repeating sequence of bar codes onto either the whole frame or the main object of the video, such as a person talking. The bar code can use subtle „watermark” shading that does not interfere with viewing – it only needs to be readable by computer. The sequence of bar codes can be recreated at a later time if the algorithm is known, so if a clip is cut out of the video or added, then the sequence no longer matches the replication. Altering the video frame by frame also changes the bar code, although the forger can bypass this security feature by reading the original bar code, removing it before retouching and adding it back later. Still, these extra steps make faking the video somewhat more difficult. The main security feature is that the length of the video cannot be changed without altering the sequence of bar codes, which is easily detected.

The maker of the video may generate the bar codes cryptographically using a private key. This enables confirming the source of the video, for example in a copyright dispute.

Probably the idea of bar-coding videos has already been implemented, because watermarks and time stamps on photos have long been used. The main novelty relative to treating each frame as a photo is to link the bar codes to each other over time.

The smartest professors need not admit the smartest students

The smartest professors are likely the best at targeting admission offers to students who are the most useful for them. Other things equal, the intelligence of a student is beneficial, but there may be tradeoffs. The overall usefulness may be maximised by prioritising obedience (manipulability) over intelligence or hard work. It is an empirical question what the real admissions criteria are. Data on pre-admissions personality test results (which the admissions committee may or may not have) would allow measuring whether the admission probability increases in obedience. Measuring such effects for non-top universities is complicated by the strategic incentive to admit students who are reasonably likely to accept, i.e. unlikely to get a much better offer elsewhere. So the middle- and bottom-ranked universities might not offer a place to the highest-scoring students for reasons independent of the obedience-intelligence tradeoff.

Similarly, a firm does not necessarily hire the brightest and individually most productive workers, but rather those who the firm expects to contribute the most to the firm’s bottom line. Working well with colleagues, following orders and procedures may in some cases be the most important characteristics. A genius who is a maverick may disrupt other workers in the organisation too much, reducing overall productivity.

Directing help-seekers to resources is playing hot potato

In several mental health first aid guidelines, one of the steps is to direct the help-seeker to resources (suggest asking friends, family, professionals for help, reading materials on how to cope with the mental condition). This can provide an excuse to play hot potato: send the help-seeker to someone else instead of providing help. For example, the therapist or counsellor suggests seeing a doctor and obtaining a prescription, and the doctor recommends meeting a therapist instead.

The hot potato game is neither limited to sufferers of mental health issues, nor to doctors and counsellors. It is very common in universities: many people „raise awareness”, „coordinate” the work of others or „mentor” them, „manage change”, „are on the team or committee”, „create an action plan” (or strategy, policy or procedure), „start a conversation” about an issue or „call attention” to it, instead of actually doing useful work. One example is extolling the virtues of recycling, as opposed to physically moving recyclable items from the garbage bin to the recycling bin, and non-recyclable waste in the other direction. Another example is calling attention to mental health, instead of volunteering to visit the mentally ill at home and help them with tasks. Talking about supporting and mentoring early career academics, as opposed to donating part of one’s salary to create a new postdoc position, thereby putting one’s money where one’s mouth is.

All the seeming-work activities mentioned above allow avoiding actual work and padding one’s CV. Claiming to manage and coordinate other people additionally helps with empire-building – hiring more subordinates to whom one’s own work can be outsourced.

To motivate people to do useful work, as opposed to coordinating or managing, the desirable outcomes of the work should be clearly defined, measured, and incentivised. Mere discussions, committee meetings and action plans should attract no rewards, rather the reverse, because these waste other people’s time. More generally, using more inputs for the same output should be penalised, for example for academics, receiving more grant money should count negatively for promotions, given the same patent and publication output.

One way to measure the usefulness of someone’s activity is to use the revealed preference of colleagues (https://sanderheinsalu.com/ajaveeb/?p=1093). Some management and coordination is beneficial, but universities tend to overdo it, so it has negative value added.

Overbidding incentives in crowdfunding

Crowdfunding campaigns on Funderbeam and other platforms fix a price for the shares or loan notes and invite investors to submit the quantity they want to buy. If demand exceeds supply, then the financial instruments are rationed pro rata, or investors requesting quantities below a threshold get what they asked and others receive the threshold amount plus a pro rata share in the remaining quantity after the threshold amounts are allocated. Rationing creates the incentive to oversubscribe: an investor who wants n shares and expects being rationed to fraction x of her demanded quantity will rationally put in the order for n/x>n shares to counteract the rationing. For a mechanism not to invite such manipulation, the amount allocated to a given bidder in the event of oversubscription should not depend on that bidder’s bid quantity. For example, everyone gets the minimum of their demanded amount and a threshold quantity, where the threshold is determined so as to equate demand and supply. If there are s shares and all m investors demand more than s/m, then each gets s/m.

If some investors demand less than s/m, then the allocation process is recursive as follows. The i1 investors who asked for less than s/m each get what they requested. Their total t1 is subtracted from s to get s1 and the number of remaining investors reduced to m1=m-i1. Then the i2 investors asking for less than s1/m1 get what they demanded (t2 in total), and the new remaining amount s2=s1-t2 and number of investors m2=m1-i2 determined. Repeat until the number of investors asking for less than sj/mj is zero. Divide the remaining amount equally between the remaining investors.

An alternative is to let the market work by allowing the price to adjust, instead of fixing it in advance. Everyone should then submit demand curves: for each price, how many shares are they willing to buy. This may be too complicated for the unsophisticated crowdfunding investors.

However, complexity is probably not the main reason for the inefficient allocation mechanism that invites overbidding. The crowdfunding platform wants to appear popular among investors to attract companies to raise funds on it, so wants to increase the number of oversubscribed campaigns. Rationing is a way to achieve such manipulation if the fundraisers ignore the investors’ incentives to overbid and do not compare the platform to competing ones with similar allocation mechanisms. If fundraisers are irrational in this way, then they do not choose competing platforms without overbidding incentives, because funding campaigns there seem to attract less investor interest. Competing platforms with more efficient allocation mechanisms then go out of business, which eliminates comparison possibilities.

Keeping an open mind and intellectual honesty

„Keep an open mind” is often used as an argument against science, or to justify ignoring evidence more broadly. Let’s distinguish two cases of keeping an open mind: before vs after the evidence comes in. It is good to keep an open mind before data is obtained – no hypothesis is ruled out. In reality, all possibilities have positive probability, no matter how great the amount and quality of information, so one should not dogmatically rule out anything even given the best evidence. However, for practical purposes a small enough probability is the same as zero. Decisions have to be made constantly (choosing not to decide is also a decision), so after enough scientific information is available, it is optimal to make up one’s mind, instead of keeping it open.
Intellectually honest people who want to keep an open mind after obtaining evidence would commit to it from the start: publicly say that no matter what the data shows in the future, they will ignore it and keep an open mind. Similarly, the intellectually honest who plan to make up their mind would also commit, in this case to a policy along the lines of „if the evidence says A, then do this, but if the evidence says B, then that”. The latter policy resembles (parts of) the scientific method.
The anti-science or just intellectually dishonest way of “keeping an open mind” is to do this if and only if the evidence disagrees with one’s prior views. In other words, favourable data is accepted, but unfavourable ignored, justifying the ignoring with the open mind excuse. In debates, the side that runs out of arguments and is about to lose is usually the one who recommends an open mind, and only at that late stage of the debate and conditional on own weak position. Similarly, “agreeing to disagree” is mostly recommended intellectually dishonestly by the losing side of an argument, to attempt to leave the outcome uncertain. This is an almost logically contradictory use of “agreeing to disagree”, because it is mathematically proven that rational agents putting positive probability on the same events cannot agree to disagree – if their posterior beliefs are common knowledge, then these must coincide.

Political parties claim inconsistent patience

If the stated preferences of politicians are taken at face value, then they have inconsistent patience across different policy areas. Left-wingers want to invest in education, infrastructure and prevention of climate change. These investments have a present cost and a long-delayed benefit, which suggests patient preferences (high discount factor, low discount rate). On the other hand, the left wants to increase borrowing, redistributive transfers and government spending in general, which have a current benefit (including electoral, but focus on societal for now) and a future cost. Preferring a current benefit and a future cost implies impatience.

For right-wing parties, these preferences are switched (impatient on education, climate, but patient on redistribution), so their inconsistency is the mirror image of the one described above. In summary, both sides of the political divide claim policy preferences that simultaneously imply patience and impatience, which suggests motives other than societal benefit. One way to reason about these other motives is described in https://sanderheinsalu.com/ajaveeb/?p=1015

M-diagram of politics

Suppose a politician claims that X is best for society. Quiz:

1. Should we infer that X is best for society?

2. Should we infer that the politician believes that X is best for society?

3. Should we infer that X is best for the politician?

4. Should we infer that X is best for the politician among policies that can be `sold’ as best for society?

5. Should we infer that the politician believes that X is best for the politician?

This quiz illustrates the general principle in game theory that players best-respond to their perceptions, not reality. Sometimes the perceptions may coincide with reality. Equilibrium concepts like Nash equilibrium assume that on average, players have correct beliefs.

The following diagram illustrates the reasoning of the politician claiming X is best for society: M-diagram of politics In case the diagram does not load, here is its description: the top row has `Official goal’ and `Real goal’, the bottom row has `Best way to the official goal’, `Best way to the real goal that looks like a reasonable way to the official goal’ and `Best way to the real goal’. Arrows point in an M-shaped pattern from the bottom row items to the top items. The arrow from `Best way to the real goal that looks like a reasonable way to the official goal’ to `Official goal’ is the constraint on the claims of the politician.

The correct answer to the quiz is 5.

This post is loosely translated from the original Estonian one https://www.sanderheinsalu.com/ajaveeb/?p=140

Platform providers fake being popular

Crowdfunding platforms, stock exchanges and other providers of two-sided markets want to appear popular, because having more buyers attracts more sellers and vice versa. The platform’s revenue is usually proportional to the number of users, because it charges a commission fee on trades or advertisers pay it to show ads to users. The exchange’s marginal cost of a user is close to zero, giving it an incentive to fake a high volume of trades, a large limit order book and a small bid-ask spread.

The platform’s cost of posting a great volume of outstanding buy and sell orders at a small spread is that many investors try to trade at these favourable bid and ask prices. Either the market maker has to take the other side of these attempted transactions or is found fraudulent. Taking the other side results in a large loss if some investors are better informed than the exchange.

The platform could falsely display a large trading volume, but keep the order book honestly small by adding fake trades at prices between the bid and the ask only, so no investor’s real limit order is ignored. This seems difficult to detect, unless one side of the limit order book is empty (e.g. no buyers) and at least one at-market order on the other side (e.g. a sell) is outstanding. In this case, any trades occurring would have to satisfy the at-market order. However, the platform or real investors can then take the other side of the at-market order at a very favourable price to themselves, which discourages at-market orders. A large trading volume with a thin order book is still slightly suspicious, because it requires that crossing buy and sell orders between the bid and ask prices arrive almost simultaneously, in order to be matched without appearing on the order book for long, and without triggering the real limit orders. Displaying the fake buys and sells on the order book risks attracting actual matching trades, which the platform would have to honour (at a cost).

Without automated quote matching, there are no at-market orders, for example on the Funderbeam crowdfunding platform. Instead, everyone either posts a limit order or picks an order from the other side to trade with, e.g. a buyer chooses a sell. Investors can pick an order with a worse price (higher sell or lower buy) on the other side, which frequently occurs on Funderbeam. Choosing a worse price is irrational, unless the traders in question are colluding, so the asset is effectively not changing ownership. Reasons to carry out such seemingly irrational trades are to manipulate price and volume, e.g. price can be raised or reduced by targeted trades outside the bid-ask interval. Volume can only increase after added trades, rational or not, but such seemingly greater activity is exactly what benefits the stakeholders of the platform. The employees of the market maker have a natural motive to fake-trade between themselves to make their firm look good, even without any inappropriate pressure from their boss.

Another way to attract issuers and investors is to demonstrate successful initial public offerings, meaning that the funds are raised quickly (good for issuers) and the price of the newly listed stock (or other asset) goes up, which benefits investors. Adding fake capital-raisers is difficult, because potential investors will check the background of the supposed issuer. Inserting spoof investors into an actual funding campaign is costly, because real money would have to be invested. One way to manipulate popularity upward is to simultaneously add a fake issuer and fake investors who satisfy its funding need. The idea is to not leave time for real investors to participate in the campaign, by pretending that the capital-raiser achieved its target funding level before most investors could react. This is easier in markets with a small number of real investors and without an auto-invest feature. However, the real investors who were supposedly pre-empted may still research the supposedly very popular issuer.

A costless way to briefly boost the popularity of a real fundraising campaign is to add fake investors after the target funding is achieved, and forbid issuers from increasing the target or accepting funds from those who subscribed after the goal was reached. Any campaign meeting its target can then be made to look heavily oversubscribed. However, if the issuers are informed in advance of the restriction not to increase the target, then they may find an alternative unrestricted platform to raise funds. On the other hand, if the restriction is not mentioned beforehand, then it will likely anger the issuers who will then create negative publicity for the platform. Competition between exchanges thus curtails their manipulation incentives.

The platform can motivate real investors to raise their bids when the campaign reaches its target by rationing demand: bidders in an oversubscribed share issue get only a fraction of what they wanted to buy. Anticipating this, buyers will increase their requested quantities so that the fraction of their new bid equals their actual demand. This makes the campaign look oversubscribed and creates a feedback loop: if other investors increase their quantities, then rationing reduces the fraction of a given investor’s demand that will be satisfied, so this investor raises her or his requested amount, which in turn makes others increase theirs.

If investors know of the bid rationing in advance, then they may select a rival market provider without this restriction, but if rationing takes them by surprise, then they may leave and publicly criticise the platform. Capital-raisers compare exchanges, so if many market providers inflate demand and the issuers pay attention to the level of oversubscription (instead of the fraction of campaigns reaching the target, which is what should matter to the capital-raiser), then the biggest inflator wins. Of course, platforms may not want to reveal unsuccessful campaigns (e.g. Funderbeam does not), so public data on the fraction of issuers who achieved their funding goal is unlikely to exist.

Theoretically, the feedback from bid rationing to increased quantity demanded could lead to infinite amounts requested. A countervailing incentive is that with positive probability, other investors do not honour their commitment to buy, in which case a given investor may be required to buy the amount (s)he demanded, instead of the lower amount (s)he actually wanted. If there is no commitment to buy (for example, on Funderbeam the bids are only non-binding indications of interest), then the danger of overcommitting is absent, so the rational choice seems to be requesting an infinite amount. Investors do not indicate infinite interest, so either they are irrational or some other penalty exists for outbidding one’s capability to pay.