ParaLead

Does the #SuperMajority rule mitigate the Tyranny of Majority? Henderson Investment is an example that shows the unintended consequences of the supermajority rule. #governance #CorporateGovernance #paralead #drarmani #election #voting #tyrannyofmajority #votes

Imagine there is a publicly-traded company with one million shares. It is eco-friendly and the government sets up a program to protect and support it. The program guarantees to buy the company's shares for $100 each if its stock price drops below $20. Currently, the company’s stock price is around $100, but today, the company’s management reveals that their research project failed and they will not make any profit any time soon. And hence the company shares are worth less than $2 each (intrinsic value). What will be the equilibrium price? And how much will this program cost the government? Note that once the price goes down and approaches $20, it becomes more and more likely that the program goes into effect, making the shares worth $100 each. This motivates traders to buy, thereby driving the price up. So what is the actual "value" of the company shares? * Let me know if you have heard of any puzzle/paradox like this before. #financialmarkets #price #efficientmarket #paperscore #economics #paradox #valueengineering #stockmarkets #value

The Illusion of Power There is no wavelength for purple in the visible light spectrum; our brains interpret the combination of red and blue as “purple.” In other words, purple is just an illusion, a product of human perception rather than a real color. Coincidentally, purple symbolizes power, especially political power. But what is power? People fear a dictator because his armed forces protect him and oppress them. The armed forces obey the dictator because he pays them. Financial incentives drive the armed forces’ loyalty and willingness to uphold the dictator’s commands. The dictator takes care of those who show more loyalty, and fires (sometimes literally) those who disobey him. The dictator obtains financial resources through taxation and controlling the national resources. He collects taxes and controls the resources using the armed forces. The armed forces obey the dictator because he has the power to distribute funds, and he has the power to collect funds because the armed forces obey him. In short, the dictator has power because enough people believe he has power. Power is just the combination of controlling the armed forces (red) and controlling the national resources (blue) and taxes. This cycle of taxation and coercion sustains the dictator’s power. But just the prospect of bankruptcy breaks this cycle. If the armed forces suspect that the dictator may not be able to compensate them enough in the near future, they may not defend the dictator against the angry people. A revolution bankrupts the dictator using two forces: increasing his costs and decreasing his revenue. Street protests engage the armed forces, which is costly for the dictator. On the other hand, national strikes will cut the revenues for the dictator. When they happen at the same time, the dictator will need to print money (a form of taxation) to pay the armed forces, but this rapidly devalues the currency and the armed forces can smell it. The prospect of bankruptcy undermines the armed forces’ loyalty, as the anticipation of inadequate compensation diminishes their willingness to defend the dictator. This highlights the fragile nature of political power, which can dissipate when people have sufficient incentives to change their circumstances. Especially, the economies of dictatorial countries gradually decline due to widespread corruption and systematic inefficiencies. Of course, dictators commonly utilize various forms of propaganda, ideologies, and perceived security threats to justify funding the armed forces. The possibility of war and foreign invasion helps their propaganda a lot. #power #politics #politicalpower #dictators #autocracy #dictatorship #revolution #people #purplepower #paralead #powerofpeople #democracy

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A three-sided network effect between authors, institutions, and #journals dominates the current #research #publication industry. Institutions and authors want to publish in well-known journals, while journals want to publish works of well-known authors (and institutions) who have published in well-known journals. This can lead to self-fulfilling #prophecies. #PaperScore aims to break this outdated ecosystem by completely #decentralizing the #peerreview process. Moreover, the current ecosystem allows #editors to select #reviewers or reject a submission without any peer review. They also make the final decision on each submission. But like all people, editors are also susceptible to #biases. As a result, journals are subject to a number of #editorial biases. Such biases are reinforced if the editors are always succeeded by those who have #published in the journal before. #scientificresearch #researchpublication #publications #revolutionary

Hello World! #AI?can create and empower despots around the world. A super AI can end liberty on Earth. We need to get ready for the?#singularity?ASAP. We need global?#governance?mechanisms to control power. And the?#blockchain?technology is key. Let's explore the uncharted territories of blockchains together, one block at a time. In the next few weeks, I will post some interesting articles and videos on my page. https://drblockchain.org https://blockcenter.org #blockchaintechnology?#blockchaindevelopment?#DAO?#DAC?#DACurve?#PaperScore?#TeammateMe?#blockcenter?#blockchaincenter?#decentralizationcenter?#TexasBC

The collapse of authoritarian regimes, as recently seen in Syria and potentially soon in Iran, can create dangerous power vacuums leading to chaos or new dictatorships. We need a robust framework to prevent such outcomes and ensure a smooth transition to real democracy. Specifically, we need a well-designed interim constitution that governs the country during the transition period. Unlike permanent constitutions, which may cover a wide range of matters like political structure and civil rights, an interim constitution has a very limited scope with a particular purpose: establishing clear rules and processes for the transitional government to hold a referendum for a new constitution and form a new democratic government. The transitional government maintains basic law and order until it transfers power to the new government. The interim constitution should remain silent or neutral about the ultimate form of the new government, economic systems, foreign policies, and long-term regulations. It should just enable the people to decide about such matters through a constitutional referendum and subsequent elections. There are historical precedents for such a focused approach. South Africa's successful transition from apartheid was guided by an interim constitution that prioritized process over policy. Similarly, Portugal's Carnation Revolution succeeded partly because its transitional government had clear limitations and a mandate focused solely on establishing democratic processes. In contrast, Yemen's failed transition after 2011 lacked such a framework, leading to power struggles and eventual civil war. In my opinion, the interim constitution is an engineering challenge to design control mechanisms that limit the transitional government's power while giving it sufficient authority to maintain order, hold a referendum, and conduct the first round of elections. The procedural nature of the interim constitution makes it uniquely suitable for computer implementation as a smart contract. This can automate crucial aspects of the transition process, enforce some constitutional rules, ensure transparency, prevent power abuse (to some extents), and enable citizens to determine their future government's structure through democratic processes. This can address important historical issues in transitions: preventing power grabs (as attempted in Egypt by the military), ensuring transparency (unlike the opaque transitions in Myanmar), and maintaining consistency in applying rules (in contrast to Afghanistan's troubled transition). The following link provides an example of such an interim constitution along with its Solidity code to be deployed to the Ethereum blockchain. This implementation can enforce voting procedures, transparency, immutability, timeline, etc. If you have a suggestion, please fork this repo and open a PR. lnkd.in/eh4-f2g7 #Constitution #InterimConstitution #SmartConstitution #Revolution #Referendum #Election #Syria #Iran _

In multiple linear regression, high-dimensional data can pose challenges such as multicollinearity, unstable estimates, overfitting, and poor out-of-sample performance. Several methods can reduce dimensionality, address overfitting, and handle multicollinearity. In a recent post (https://lnkd.in/eeqETd6e), I compared Stepwise Regression, Genetic Algorithm, and Lasso Regularization to address overfitting and high-dimensionality. Here, I further compare Stepwise Regression, Principal Component Analysis (PCA), and Partial Least Squares (PLS) to reduce dimensions. Stepwise Regression automatically selects the best predictors based on some statistical criteria. Its coefficients are easier to interpret but may become unstable with highly correlated predictors. Principal Component Analysis (PCA) transforms the (potentially correlated) predictors into orthogonal components, thereby eliminating any possibility of multicollinearity. Then we can regress the response variable on the most important components, and reduce dimensionality while preserving most of the variance in the predictors. PCA creates components based only on the variance in predictors, ignoring the response variable and its potential relationships with the predictors. Therefore, PCA may perform poorly when the most relevant predictors contribute less to the variance of the most important components. On the other hand, the Partial Least Squares (PLS) method optimizes components to capture the maximum covariance between predictors and the response while handling multicollinearity and dimensionality reduction. Therefore it is expected to have more predictive power than PCA-based regression. Both PCA and PLS require tuning the number of components in the model, and in both cases, the component coefficients are hard to interpret directly. But we may multiply the component coefficients and their loadings to obtain coefficients on the original variables and interpret them as usual. I evaluated and compared these three methods based on their Out-of-Sample (OOS) performance. First, I applied each method to a simulated dataset and averaged its results across 10 folds of cross-validation. The Stepwise Regression performed better than the other methods at their optimal levels. Here is the R code:? https://lnkd.in/erK3pi4g Then I used real-world financial data to predict the weekly return of Tesla's stock price. To obtain robust estimates of OOS performance for each method, I used 10 iterations of Rolling-Forward time-series cross-validation and averaged the results across the 10 splits. The best predictive performance belongs to PLS with 23 components. Here is the R code:? https://lnkd.in/egJ3GV-f As you can see, the performance of each method highly depends on the situation and the problem at hand. You need to compare the outcomes of different methods in each situation. You can use these R codes to compare different methods for your specific problem.? https://lnkd.in/eSf32yct _

Yes, blockchain is an append-only database, but no, we cannot simply build one with SQL. However, for educational purposes, I designed a relational database that imitates/simulates the Bitcoin Blockchain to some extent. It has four main tables: Accounts: This table stores the public keys of senders and receivers involved in transactions. It does not store balances but the database calculates balances dynamically by summing up UTXOs (unspent transaction outputs) from the Parties table. If we also store the balance of each account, it becomes more like the Ethereum blockchain. Transactions: This table records the value transfers between accounts. To mimic Bitcoin, each transaction can have multiple senders and multiple receivers. Thus, it has a many-to-many relationship with the Accounts table. Parties: This is the bridge table that establishes the many-to-many relationship between Transactions and Accounts. To track each party’s gain from and contribution to each transaction, each record has an amount (UTXO) that is positive for receivers and negative for senders. The sum of inflows can be more than the sum of outflows. The extra amount is the fee (tip) that goes to the miner. Blocks: Each block can have one miner and multiple transactions. The blocks are added one at a time and each block points to the previous block via the block hash. ---------- We also need to make the database immutable and tamper-proof. While anybody can read (SELECT) information from any table, the UPDATE and DELETE access are revoked for everyone, making the database append-only.?? REVOKE UPDATE, DELETE ON Blocks FROM PUBLIC; -- Repeat for every table. People can only add (INSERT) new data into the database. But, to prevent invalid entries, INSERT into the Transactions and Blocks tables are possible only via the stored procedures that enforce the blockchain protocol rules. Like Bitcoin, each new block is added by the user (the miner) who finds a valid nonce through a computationally intensive process (proof of work). The blockchain protocol specifies the rules that control how and what new data is added to the blockchain. It determines how and who judges the validity of the new entries. In short, a blockchain protocol is a constitution in computer code (e-constitution) as explained in the article?"Blockchain: The Quiet Revolution" (https://lnkd.in/efD2FkV6) Here is the complete code for our blockchain database: https://lnkd.in/e7JZHCPi Except it is not complete! It lacks some details, such as decentralization, network propagation, cryptographic validation, and millions of identical duplicates worldwide! Such features are not trivial to implement in a traditional SQL database. So don’t try this at home! If you have an idea to improve this code, feel free to fork this repository, clone it, make changes, test your changes locally, and then open a PR. Please explain your reasons in the PR. #blockchain #database #bitcoin #cryptocurrency #paralead #SQL _

What is "justice," and why do we care about it? What is "right" and what is "wrong"? What non-ideological principles can be used to craft laws and policies for a society composed of diverse beliefs and ideologies? These questions become particularly important if we want to ask #AI to design laws and policies for society. We first need to define an objective optimization criterion for AI. This article proposes a pragmatic viewpoint and a secular legal theory for jurisprudence and?ethics in the AI era. #legaltheory #democracy #politicaleconomy #politicalscience #religions #philosophy #theology #justice #institutionalecononmics #economics #governance #ethicsandai #ethicsinai