Sunday 17th October 2004
Altruistic (Post-Autistic) Economics
See draft download - GE–AU-Altruistically-Linked Utility 2004-06-04.doc

Title: Altruistic Economics - A Positive Alternative to Capitalist Economics
Speaker: Dr. Robin Upton
Summary: Practice and theory of an Economic system to support cooperation and personal trust networks.
Organisation: Altruists International - www.altruists.org

Longer Text:-
Dr. Upton will be presenting an economic system that replaces the traditional notion of a single, centralised market place with a
decentralised F2F (Friend2Friend) environment in which transactions take place over a network of social relationships, supported by personal trust. Altruistic economics is post-autistic in the sense that it does not ignore individuals' care and affection for others. By allowing people to explicitly state which people are important to them, it replaces the classical notion of self-maximising with an altruistic maximisation of the welfare of oneself and ones friends. As well as explaining theoretical aspects, Dr. Upton will be explaining the shift in mentality associated with such a system. He will draw parallels with similar practical projects underway, and set the issue in the context of emerging networks of personal trust on the internet.
Robin Upton
Altruists International
www.altruists.org

Short Model Summary
I choose who my friends are and tell the (DEcentralised, computer-based) system.
I also specify how much I care about them, as a number, which means the following:
If I love Kevin 0.8, then I am indifferent between, say: Me gaining £10 or Kevin gaining £8
If I love Terry 0.1, then I am indifferent between, say: Me gaining £5 or Terry gaining £50 or Me losing $10 or Terry losing $500 etc.

Clearly, '£' is just an illustration - it could be a mixture of normal money and/or CC.
In the model 'care' is an explicit measure of how much I perceive our wellbeings as being tied together.
The model also includes the networking angle, so if I tie my wellbeing to Mary's, and she ties hers to John's, then mine is also tied to John's by default.

As for what this means in practice, well that depends on who adopts this model. As I'm largely self-taught in this area, I would value the views of some more traditionally trained economists on this model. I developed it myself as part of the Friend2Friend Gift Economy module, but would love to have more input, or find others who could put it to good use. The PA-Econ stuff seems to fit very nicely with it. I'd be interested to hear your thoughts.
Robin Upton
Altruists International
www.altruists.org • esf2004@altruists.org

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Introduction
This project is a component of Altruists International’s Gift Economy project, which aims to establish a general purpose, worldwide gift economy as an alternative to standard trading systems.

Linked Utility Models
A linked utility model is a model of people’s utility that explicitly models the connections between separate individuals’ wellbeings. A linked utility model is based on the familiar concept of a utility function to express an individual’s preferences. This is referred to as a personal utility function. This is then modified by a linked utility function that incorporates the utilities of others. This second (linking) layer allows people to express their care for others.

Personal Utility
People declare their own (selfish) preferences, as a function of the environment, denoted by the symbol x. In the standard capitalist model (where there is no linked utility function), it simply expresses supply and demand.
ui(x) = amount of i’s personal satisfaction with x (the environment)

Linked Utility
In order to represent an individual’s care for others, the linked utility function reflects overall personal happiness in the light both of the environment and of everyone’s personal utilities:
U1i(x)= Fi(u1(x) ... uN(x))

Rationality requires that we make the following assumption about U1i(x):
· Self-interest – Strictly increasing in ui(x)

The following properties will probably prove popular for altruistic utility functions:
· Continuity – Tiny perturbations to the u.(x) or x will not cause a large changes to U1i(x)
· Transparency – Is easily interpreted by humans
· Simplicity – Can be effectively computed

All three properties are observed by the function below:
U1i(x) = ·sijuj(x) = si1u1(x) + si2u2(x) + ... + siNuN(x)

The degree of sympathy, sij, is introduced as the ‘emotional closeness’ of j to i. Since the assumption of self-interest implies sii>0, we can normalise it to 1. Under classical economics, sij=0 for all jØi. (No one cares about anyone else). However, we extend the model by making another, more plausible, assumption:
· Altruism – For any i, there is jØi, where sij>0 (everybody loves someone)

Enlightened Utility
We now consider the connection individuals i and k, who are only linked indirectly. i.e. sik=0, but for an intermediate individual j, sij>0 and sjk>0. To capture the fact that a boost in k’s wellbeing would improve i’s wellbeing, we introduce a new definition, doubly-linked utility, U2i(), as follows:
U2i(x) = ·sijU1j(x) = si1U11(x) + si2 U12(x) + ... + siN U1N(x)

Now we define a series of utility functions, U1, U2, U3… to encompass more and more people as follows:

For sufficiently large N, such a utility function would take account of everyone in the network. In practice, users may wish to choose smaller values of N, and the effective computability requirement may mean values of N greater than about 4 require excessive computations.

Summary
Having explained the role of the linked utility function, and shown the classes of functions we will be using, we will now extend the model by detailing the environment as including different commodities, x1..xN. We will include scenarios in which individuals make consumption and production decisions, and trade with one another rationally, so as to maximise UEi(x), for different E, noting that E=0 is a the familiar case of self-maximising individuals. The only page that is so far online about it is
www.altruists.org/static/page.asp?id=334

PS: The reference of an excellent Money Info Site is:
www.WizardsOfMoney.org - see also www.WizardsOfMoney.net - download