The Endowment Effect and Tesla Autopilot & FSD: The Remedies & Their Limits (Part 2)

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This article is the second part of a two-part series. You can find Part 1 here.

If government officials decide to compensate people to reduce pushback, and the purchase price is insufficient to do that, then how does one set a price on Autopilot and FSD Beta functionality? There’s definitely a price at which most people would accept losing Autopilot, even if that price is extremely high. Almost nobody would argue further if they were given a billion dollars, for example, but that’s unfeasible.

There are situations where human nature leads to people being unwilling to peacefully give something up at any price because the item in question or something connected to it is priceless. Ask a parent what they’d sell a child for, for example. There’s no price they’d be willing to sell their kid for. The debate over gun rights has likewise shown that some things aren’t seen a mere property for a person, as the idea of being able to ever own a gun in the future is far more valuable than the purchase price, so a refund of even thousands of times the purchase price is insufficient.

For some Tesla owners, Autopilot may be at that level. No amount of money would be sufficient for a peaceful and uncontested taking of the software’s functionality. One could probably remove the car’s antenna and keep using the last fully functional version of Autopilot that was available before a crippling or removing update got propagated to their vehicle. Someone willing to go to all that trouble (and loss of other functionality) would certainly be willing to go to great lengths to fight the government.

What Regulators And Their Supporters Really Fear

In reality, we may have reached the point where regulatory agencies just aren’t as powerful as they were decades ago. Sure, the legal landscape hasn’t changed, but the individual is more empowered than ever to fight a regulatory agency. Groups of individuals who can convince the public that they were aggrieved by government “theft” are probably more powerful and influential in a democracy than the lawmakers and regulators. If the group of affected individuals are numbered in the hundreds of thousands, regulators don’t really stand a chance.

Enough outrage about a topic, even among a small percentage of the population, is enough to topple any elected official, or topple the elected bosses of an appointed official. Everyone knows that, and thus are afraid to do anything too controversial that may cost them their jobs.

The Philosophical Questions

The next question that I think Zipper skips over is whether this fear on the part of regulators is moral. It appears that he thinks it’s immoral that some mob defending a billionaire could frighten public officials into submission, but it’s really not that simple.

On the one hand, a government with unlimited power is frightening. Elected and appointed officials who aren’t accountable to the public for their decisions can do a lot of evil in the world, and nothing but force could stop them. Nobody wants blood to run in the streets dislodging a corrupt and evil government from power, so we have a democratic system that exists to easily and peacefully “throw the bums out” if they cross the line.

This is what makes things like Donald Trump’s attempt to stay in power so frightening to many people. An elected official with that much power who can stay in office despite losing an election means that we’d have to go to unthinkable measures to remove him from power.

On the other hand, a government that becomes so powerless that it can’t protect the public from deadly threats is also frightening to people. If Tesla really were running a dangerous experimental system on public roads that kills a bunch of people, the public would expect the government to shut that down to protect them. Protecting the public is the very reason for the agency’s existence, after all.

What This All Hinges On

It’s really not reasonable to say that Tesla’s fans are corrupting the system and bullying regulators into fearfully giving them what they want. The public doesn’t like to see the government victimize people, but they also want the government to protect the public. That balance still exists.

If the government needs to overcome the resistance of Tesla’s fans to protect the public, that means they need to make a compelling case that Tesla’s conduct is truly dangerous to the public. The average person who doesn’t own a Tesla and doesn’t know what Autopilot is won’t stand up for Tesla and its fans if regulators can convince the rest of the motoring public that curtailing or recalling Autopilot is needed to keep them safe.

No matter how much Tesla fans howl and complain, if a soccer mom thinks Tesla is endangering her children, she isn’t going to care what Tesla says. If a businessman thinks Teslas will hurt his fleet, he’d support regulators. If the “Blue Lives Matter” crowd thinks Tesla’s software is a danger to police officers, they’ll back the regulators.

The problem (from the perspective of the regulators) is that regulators aren’t well-equipped to get their story out. They’re used to being able to say “We’ve got the authority here” and then make whatever regulations they think are best. They aren’t prepared to conduct public relations campaigns to make sure the public supports their regulations, and that the public won’t mess up their career prospects.

If NHTSA’s supporters want to affect the outcome, they should encourage NHTSA to do a better job at public relations instead of getting angry that people are taking political action against the agency. If the agency’s arguments are solid and they’re properly disseminated to the public, the agency would have nothing to worry about.

Conversely, if the agency’s arguments are either not very solid or they’re not well communicated to the public, they can’t expect the public to support their decisions by default. Merely being appointed by an elected official doesn’t mean you can now operate in a vacuum and not properly engage with the public.

Featured image: Screenshot from a YouTube video explaining the Endowment Effect. Image by QHat


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