Your kid leaves her phone lying around. You find the scatterbrain never bothered to change her password as you guiltily break into her phone. You follow the trail of texts from last Saturday night. The slang is beyond you but Google translates. Shocked you find the supposed naïf and her friends were trying score some pot and booze from the cool crowd in school.

How should you respond?

You immediately want to go Putin-style hard on her ass. Confrontation, grounding, extra math classes. But any confrontation will likely reveal you accessed her phone. The stakes will only increase. Password changes, another phone purchased with the proceeds from the baby-sitting business..who knows where it will all end up?

You think through your strategy. Before this crisis, your threshold for the gateway drug was caffeine. So no Coca Cola has crossed the girl’s lips. But it seems she’s graduated from Izzes to Corona. Surely that worse than Coca Cola so you should come down like a ton of bricks? But one thing is certain – your access to her secret life is over because she’ll close off the information superhighway. How will you know if and when she’s “chasing the dragon” as people apparently said when you were young? You realize your threshold for intervention is coke (the drug) not Coca Cola. Just keep an eye on her messages till you see “yeyo” and then intervene.

You contemplate home schooling. You head over to the liquor cabinet and fix yourself a Scotch. Straight, no chaser.

 

 

 

Harold Pollack of UofC interviews Jon Gruber on the future of the healthcare act. Here is one exchange:

Jon:Right now, there is a successive subsidization of healthcare for many through Medicare – many rich people don’t need the excessive benefits of getting Medicare – and for many through the employer system. So I think we can get there in a different sharing route, but the bottom line is right. The constraint is going to be the financing.

Harold: By the way, you have now permanently prevented yourself from winning a high elective office in the United States despite your charisma, they be playing this tape back in an endless loop with a guy with a deep voice in the background.

Jon: I’ll guarantee it further by highlighting that guns are a public health issue.

From Bloomberg:

The latest fare study, by a Boston-area travel-tech startup called Hopper, found that Thursday is the cheapest day to purchase a ticket, with weekends the worst. The best fares were found for Wednesday departures, while returns were cheapest on Tuesday for domestic flights and on Wednesday for international trips. Friday was the most expensive day to fly home both domestically and abroad, likely because Friday and Sunday are two of the heaviest traffic days for airlines worldwide.

But don’t get too excited:

Still, as airlines become ever-more sophisticated at pricing—and keep tight checks on seat capacity—savings are relatively narrow. The difference between the “worst” and “best” purchase days was $10 for domestic flights and $25 internationally. Fare differences in departure and return days topped out at $60 for international flights, and even less domestically, according to Hopper. “I think the airlines have just become a lot better at the yield management piece so there’s no longer this predictable way you can outwit them,” says Patrick Surry, Hopper’s data scientist, calling the days of frequent consumer “big wins” largely over.

Wutherings Heights singer sells tickets for $80-$250 but they are on sale for $1000s on eBay.  She’s still running up that hill when it comes to ticket pricing

 

These are my thoughts and not those of Northwestern University, Northwestern Athletics, the Northwestern football team, nor of the Northwestern football players.

  1. As usual, the emergence of a unionization movement is the symptom of a problem rather than the cause.  Also as usual, a union is likely to only make the problem worse.
  2. From a strategic point of view the NCAA has made a huge blunder in not making a few pre-emptive moves that would have removed all of the political momentum this movement might eventually have.  Few in the general public are ever going to get behind the idea of paying college athletes.  Many however will support the idea of giving college athletes long-term health insurance and guaranteeing scholarships to players who can no longer play due to injury.  Eventually the NCAA will concede on at least those two dimensions.  Waiting to be forced into it by a union or the threat of a union will only lead to a situation which is far worse for  the NCAA in the long run.
  3. The personalities of Kain Colter and Northwestern football add to the interest in the case because as Rodger Sherman points out Northwestern treats its athletes better than just about any other university and Kain Colter is on record saying he loves Northwestern and his coaches.  But these developments are bigger than the individuals involved. They stem from economic forces that were going to come to a head sooner or later anyway.
  4. Before taking sides, take the following line of thought for a spin.  If today the NCAA lifted restrictions on player compensation, tomorrow all major athletic programs and their players would mutually, voluntarily enter into agreements where players were paid in some form or another in return for their commitment to the team.  We know this because those programs are trying hard to do exactly that every single year.  We call those efforts recruiting violations.
  5. Once that is understood it is clear that to support the NCAA’s position is to support restricting trade that its member schools and student athletes reveal year after year that they want very much.  When you hear that universities oppose removing those restrictions you understand that whey they really oppose is removing those restrictions for their opponents.  In other words, the NCAA is imposing a collusive arrangement because the NCAA has a claim to a significant portion of the rents from collusion.
  6. Therefore, in order to take a principled position against these developments you must point to some externality that makes this the exceptional case where collusion is justified.
  7. For sure, “Everyone will lose interest in college athletics once the players become true professionals” is a valid argument along these lines.  Indeed it is easy to write down a model where paying players destroys the sport and yet the only equilibrium is all teams pay their players and the sport is destroyed.
  8. However, the statement in quotes above is almost surely false. Professional sports are pretty popular. And anyway this kind of argument is usually just a way to avoid thinking seriously about tradeoffs and incremental changes. For example, how many would lose interest in college athletics if tomorrow football players were given a 1% stake in total revenue from the sale of tickets to see them play?
  9. My summary of all this would be that there are clearly desirable compromises that could be found but the more entrenched the parties get the smaller will be the benefits of those compromises when they eventually, inevitably, happen.

Farhad Manjoo has an interesting article on Netflix’s selection of oldish movies:

Like salmon, Hollywood movies are governed by rigid life cycles. First, a movie is released in theaters. A few months later, it heads to second-run outlets like airlines and hotel pay-per-view, and later it goes to Blu-ray, DVD and digital services that allow you to purchase or rent films à la carte.

Then, about a year after a film’s theatrical release, trouble kicks in. That’s when a movie is made available to pay-TV channels like HBO, Starz and Epix. These premium periods are exclusive; when a movie gets to a pay channel, it often can’t be shown on any other streaming service. This usually means it gets pulled from à la carte rental services, too. Right now, for instance, HBO is showing “This Is 40,” “The Hobbit” and “Moonrise Kingdom,” among other titles. Because of the network’s exclusive hold over those titles, you can’t rent those films from any other digital service….

Why are movies released in this staggered way? And why can’t the system change to accommodate an all-you-can-eat plan? Money, of course.

HBO and other premium networks have agreed to pay billions of dollars for the exclusive run of major studio films. HBO has said that, despite the cultural cachet of its original programs, movies are its most popular content; consequently, it has purchased rights to about half of all the movies released by major studios in the United States until beyond 2020. At least in this decade, then, a monthly movie plan that offers all of the movies isn’t going to happen.

Eric Posner makes a key point:

After the collapse of the Soviet Union, Ukraine inherited a huge nuclear arsenal, which it subsequently gave up. In return it received assurances from Russia,  the United States, and the United Kingdom that its territorial integrity would be respected. These assurances were embodied in the Budapest Memorandum of 1994. While the United States and the UK complied with that agreement by not invading Ukraine, Russia did not.

What if Ukraine had retained its nuclear arsenal? It seems more than likely that Russia would not have invaded Crimea. Putin might have calculated that Ukraine would not have used its nuclear weapons in defense because then Ukraine would itself have surely been obliterated by Russia. But the risk of nuclear war would have been too great; Putin would have stayed his hand. (However, it is possible that Ukraine would have been forced to give up its nuclear weapons one way or the other long before 2014.)

So between meaningless paper security assurances and nuclear weapons, the latter provides a  bit more security. One implication of the Crimea crisis may be the further unraveling of the nuclear nonproliferation efforts that President Obama has made the centerpiece of his foreign policy.

I would add that a similar implication follows from the lessons of Libya.

Zeke Emanuel, healthcare advisor to President Obama (and brother of Rahm and Ari) thinks:

Even though the health law’s “employer mandate” requires that companies with 50 or more workers pay a penalty of $2,000 per employee if they do not provide health care, many large companies now spend far more than that to offer coverage. As a result, Mr. Emanuel says they will be able to pay the penalty, give workers a raise and shed the burden of providing coverage by sending workers to the public exchanges.

The press is picking this up and focussing on the $2000 penalty and saying it is too small. But note the “give workers a raise” part. In a competitive labor market, just dumping workers on the exchanges without compensating them is not an option. They would exit and find jobs with companies that do offer them health insurance. To prevent this, you would have to raise their salaries. It would have been great if the NYT article could have added analysis of expense of this and hence whether the end of employer provided health insurance is really on the horizon.

Also, the big advantage Walmart etc have over the private exchanges is the ability to negotiate volume discounts. Is a decentralized private exchange ever going to be able to match those rates?

Economists of all stripes agree that there is no reason companies should also be in the business of providing health insurance to their employees. But there still seem to be many steps to there from here.

From NU:

Jean Tirole, chairman of the Foundation Jean-Jacques Laffont/Toulouse School of Economics and scientific director of the Institute for Industrial Economics, University of Toulouse Capitole in France, is the recipient of the 2014 Erwin Plein Nemmers Prize in Economics.

The prize carries a $200,000 stipend, among the largest monetary awards in the United States for outstanding achievements in economics. The 2014 prize marks the 11th time Northwestern has awarded the prize. The Frederic Esser Nemmers Prize in Mathematics and the Michael Ludwig Nemmers Prize in Music Composition will both be announced this spring.

The Nemmers prizes are given in recognition of major contributions to new knowledge or the development of significant new modes of analysis. Six out of the past 10 Nemmers economics prize winners have gone on to win a Nobel Prize. (Those who already have won a Nobel Prize are ineligible to receive a Nemmers prize.)

Looking forward to hanging out with Jean next year.

 

The standard story about Obamacare has two steps: (1) We need young people to join so that average costs are low. Prices will reflect average cost because of insurer competition and so healthy young people will cross subsidize less healthy older people. (2) This cross subsidy will only operate if the young get Obamacare. They may not because the price is greater than their payoff from going without insurance. Hence, the individual mandate is necessary to hold this together. If the tax is too small or the website failure too forbidding, young people will not join and the whole thing will collapse as adverse selection drives up prices and further reduces participation etc – the so-called “death spiral”.

But this story is persuasive if young and old people are in the same pool. Obamacare allows pricing based on age so young and old people are in different pools. The young do not subsidize the old. If the young do not get Obamacare the old still get their insurance and they can live happily ever after (or at least get statins and heart bypasses). At a second cut there is a bit of a cross subsidy because Obamacare imposes a 3-to-1 ratio on prices of older age groups versus new. If this constraint does not bind, no problem. Even if it binds, it is relaxed if the young do not participate in their pool so prices go up in that pool allowing higher prices in the older pools.

Still, within a fixed age based pool there can be adverse selection. How big is it?  There is a working paper by Handel, Hendel and Whinston that gives us an idea. There is an impact of adverse selection because at least when you allow just two plans, one covering 90% of costs and the other 60%, only the latter trades. But what happens if you also drop the individual mandate? The last column of Table 12 on page 41 gives their forecast based on their model and the data. Participation is 87%-90% for those 50 and older. But is only 63-70% for those 25-40.

This is the death spiral, but only among the young. It does not affect the older population. First, age-based discrimination innoculates the old from the non-participation of the young. Second, the 50+ crowd (which I am fast approaching!) need health insurance so they all get it.

(Also, this analysis ignores subsidies which would increase participation further even in 25-40 age group…)

Melissa Harris at the Chicago Tribune has written a nice story about Purple Pricing at NU.    (The photographer asked us to look serious and we complied!) Melissa also interviewed Nick Kokonas whom we talked to originally. He decided not to use auctions for Next restaurant tickets. Here is his current rationale:

“Even if we could charge more, I don’t want to,” he said. “The economists say I’m being inefficient; that it’s a rational thing to take more money, if people are willing to pay it. But I’m convinced people would be willing to pay it only once. If we allowed people to pay $2,000 to eat at Next, but it feels like it’s worth $500, they’re not coming back. And I’m not in this for a one-time sale of some gizmo. We want to be around for 20 years.”

But here is the point: Since the tickets can be resold, they end up on Craiglist etc and people pay $2000. People do not end up with the great deal Kokonas wants to give them to persuade them to be repeat customers. They still end up paying $2000 for a $500 meal but the extra $1500 goes to a scalper and not to Kokonas. The scalpers are exploiting Kokonas’s “irrationality” to make money. So, if Kokonas really wants to achieve his objective he must be more old school and sell tickets at the door. This subverts his business model as Next becomes more like Frontera Grill with a set menu and random revenue stream. A compromise might be to auction off some fraction of seats and sell some at the door. This at least captures scalper surplus. If you do not want the extra money, use it to set up a Achatz- Kokonos Institute for the Culinary Arts (AKICA).

In the Tribune article, Jeff talks about interesting ideas to leverage the secondary market if resale can be fully controlled by the originator. When this happens, it would be possible to implement the Kokonas social welfare function: Set a price P for a ticket. All resale has to go through your system and the resale price must be P. You can set P as low or as high as you want depending on your desire to give consumers a good deal.

A couple of days ago, someone who currently has individual insurance could either sign up for insurance on an Obamacare exchange or pay a penalty. Now, these people can keep their current insurance and they will not have to pay a tax penalty. In other words, their outside option to the exchanges just got better.

But what about the inside option? First, the policies traded on exchanges are regulated. They have a cap on the maximum amount consumers can be charged per year. They cover pre-existing conditions etc. They are higher quality than the contracts traded outside the exchange. Second, the plans on the exchange are subsidized based on income. These two factors can imply the inside option is better than even the new outside option.

There are two countervailing effects. First, given the disfunctionality of healthcare.gov, it is impossible to calculate the inside option! Second, there could be a selection effect that makes the prices increase on the exchanges and leads to a “death spiral”. Specifically, if the people who currently have individual insurance are healthy and stay out of the exchanges, and there are a large number of them, prices could skyrocket in the exchanges. Then, paying the tax penalty makes more sense and the exchanges collapse.

Surely resolving the first countervailing effect is only a matter of time. This debacle should have been avoided but it is possible to fix. The second effect is potentially more problematic. It should be possible to estimate the size of the death spiral with enough data. Jon Gruber should be able to do it. I don’t have the data and can only offer an anecdote. On my way to the airport, my cab driver and I started discussing Obamacare. He and his two kids are on his wife’s individual insurance which costs them $1600/month and has huge deductibles. He was looking forward to getting Obamacare. He did not know about the subsidies. When I told him he got very excited. I used by smartphone to access the Kaiser Family Foundation subsidy calculator to guess what his family would have to pay for a silver plan. It was well below their current payments because they got a big subsidy. But how many people like him are there? How many people are buying plans in the individual marketplace in the first place? Someone should work this out.

Amazon wants to use small bricks-and-mortar retailers to sell more Kindles and eBooks. They are trying to incentivize them to execute their business strategy:

Retailers can choose between two programs:
1) Bookseller Program: Earn 10% of the price of every Kindle book purchased by their customers from their Kindle devices for two years from device purchase. This is in addition to the discount the bookseller receives when purchasing the devices and accessories from Amazon.
2) General Retail Program: Receive a larger discount when purchasing the devices from Amazon, but do not receive revenue from their customers’ Kindle book purchases.

EBooks are an existential threat to retailers. But no one small bookstore can have a significant effect on the probability of the success of the eBook market through its own choice of whether to join Amazon’s program or not. Hence, it can ignore this existential issue in making its own choice. Suppose it is beneficial for a small bookstore owner to join the program ceteris paribus. After all, people are coming in, browsing and then heading to Amazon to buy eBooks – why not capture some of that revenue? Many owners independently make the decision to join the program. Kindle and eBook penetration increases even further and small bookstores disappear.

Quite disturbing even though you know no volts are coursing through the subject’s body.

From Bloomberg:

UnitedHealth will “watch and see” how the exchanges evolve and expects the first enrollees will have “a pent-up appetite” for medical care, Hemsley said. “We are approaching them with some degree of caution because of that.”

An interpretation from Think Progress:

Get that? The company packed its bags and dumped its beneficiaries because it wants its competitors to swallow the first wave of sicker enrollees only to re-enter the market later and profit from the healthy people who still haven’t signed up for coverage.

I just saw Malcolm Gladwell on The Daily Show.  Apparently his book David and Goliath is about how it can actually be an advantage to have some kind of disadvantage.  He mentioned that a lot of really successful people are dyslexic for example.

But its either an absurdity or just a redefinition of terms to say that disadvantages can be advantageous.  The evidence appears to be a case of sample selection bias. Here’s a simple model. Everyone chooses between two activities/technologies. There is a safe technology, think of it as wage labor, that pays a certain return to everybody except those the disadvantaged. The disadvantaged would earn a significantly lower return from the safe technology because of their disadvantage

Then there is another technology which is highly risky. Think of it as entrepreneurship. There is free entry but only a randomly selected tiny fraction of entrants succeed and earn returns exceeding the safe technology. Everyone else fails and earns nothing. Free entry means that the expected return (or utility thereof) must be lower than the safe technology else all the advantaged would abandon the latter.

The disadvantaged take risks because of their disadvantage and a small fraction of them succeed.  All of the highly successful people have “advantageous” disadvantages.

Some people were asked to name their favorite number, others were asked to give a random number:

More here.  Via Justin Wolfers.

I liked this account very much:

there are two ways of changing the rate of mismatches. The best way is to alter your sensitivity to the thing you are trying to detect. This would mean setting your phone to a stronger vibration, or maybe placing your phone next to a more sensitive part of your body. (Don’t do both or people will look at you funny.) The second option is to shift your bias so that you are more or less likely to conclude “it’s ringing”, regardless of whether it really is.

Of course, there’s a trade-off to be made. If you don’t mind making more false alarms, you can avoid making so many misses. In other words, you can make sure that you always notice when your phone is ringing, but only at the cost of experiencing more phantom vibrations.

These two features of a perceiving system – sensitivity and bias – are always present and independent of each other. The more sensitive a system is the better, because it is more able to discriminate between true states of the world. But bias doesn’t have an obvious optimum. The appropriate level of bias depends on the relative costs and benefits of different matches and mismatches.

What does that mean in terms of your phone? We can assume that people like to notice when their phone is ringing, and that most people hate missing a call. This means their perceptual systems have adjusted their bias to a level that makes misses unlikely. The unavoidable cost is a raised likelihood of false alarms – of phantom phone vibrations. Sure enough, the same study that reported phantom phone vibrations among nearly 80% of the population also found that these types of mismatches were particularly common among people who scored highest on a novelty-seeking personality test. These people place the highest cost on missing an exciting call.

From Mind Hacks.

A rational player concedes to a known crazy type in a negotiation. If the crazy type is committed to a tough strategy, meeting that strategy with toughness leads to disaster. Hence, a rational opponent will concede. But this means a rational type has the incentive to pretend to be crazy. Then, a rational opponent will still concede as crazy and rational types pool.

This strategy might be effective in a two player game with one-sided incomplete information. But if one side is the Republicans in the Senate, it is not going to work because the McCain, Ayotte, Collins… part is too rational to send the country over the debt limit. So what to do?

One strategy is to compromise and try to win the Presidency. This is the establishment strategy with all its prescriptions of outreach to women and immigrants. But only a centrist appeals to the wishy-washy median voter. So if you are Ted Cruz, you cannot get the policies you want via a centrist Republican winning the Presidency.

The other strategy is to make commitment credible. This involves primarying those who do not vote crazy. Partisans turn out in droves in primaries and even a rational politician who wants re-election is forced to act/vote crazy to get into office. Then you have enough crazies or acting crazies to filibuster if your demands are not met. In essence, you give up on winning the Presidency and focus on ruling in opposition as a minority.

 

 

It doesn’t make sense that exercise is good for you.  Its just unnecessary wear and tear on your body. Take the analogy of a car.  Would it make sense to take it out for a drive up and down the block just to “exercise” it?  Your car will survive for only so many miles and you are wasting them with exercise.

But exercise is supposed to pay off in the long run. Sure you are wasting resources and subjecting your body to potential injury by exercising but if you survive the exercise you will be stronger as a result. Still this is hard to understand. Because its your own body that is making itself stronger. Your body is re-allocating resources away from some other use in order to build muscles. If that’s such a good thing to do why doesn’t your body just do it anyway? Why do you first have to weaken yourself and risk injury before your body begrudgingly does this thing that it should have done in the first place?

It must be an agency issue. Your body can either invest resources in making you stronger or use them for something else. The problem for your body is knowing which to do, i.e. when the environment is such that the investment will pay off. The physiological processes evolved over too long and old a time frame for them to be well-tuned to the minute changes in the environment that determine when the investment is a good one.  Your body needs a credible signal.

Physical exercise is that signal.  Before people started doing it for fun, more physical activity meant that your body was in a demanding environment and therefore one in which the rewards from a stronger body are greater. So the body optimally responds to increased exercise by making itself stronger.

Under this theory, people who jog or cycle or play sports just to “stay fit” are actually making themselves less healthy overall. True they get stronger bodies but this comes at the expense of something else and also entails risk. The diversion of resources and increased risk are worth it only when the exercise signals real value from physical fitness.

My friend and Berkeley grad school classmate Gary Charness posted this on Facebook:

It has finally happened. This could be a world record. I now have 63 published and accepted papers at the age of 63. I doubt that there is anyone who *first* matched their (positive) age at a higher age. Not bad given that my first accepted paper was in 1999. I am very pleased !!

Note that Gary is setting a very strict test here.  Draw a graph with age on the horizontal axis and publications on the vertical.  Take any economist and plot publications by age.  It’s already a major accomplishment for this plot to cross the 45 degree line at some point.  Its yet another for it to still be above the 45 degree line at age 63.  But its absolutely astounding that Gary’s plot first crossed the 45 degree line at age 63.

(Yes Gary was my classmate at Berkeley when I was 20-something and he was 40-something.)

The less you like talking on the phone the more phone calls you should make.  Assuming you are polite.

Unless the time of the call was pre-arranged the person placing the call is always going to have more time to talk than the person receiving the call simply because the caller is the one making the call.  So if you receive a call but you are too polite to make an excuse to hang up you are going to be stuck talking for a while.

So in order to avoid talking on the phone you should always be the one making the call.  Try to time it carefully.  It shouldn’t be at a time when your friend is completely unavailable to take your call because then you will have to leave a voicemail and he will eventually call you back when he has plenty of time to have a nice long conversation.

Ideally you want to catch your friend when they are just flexible enough to answer the phone but too busy to talk for very long.  That way you meet your weekly quota of phone calls at minimum cost in terms of time actually spent on the phone.  What could be more polite?

He has a blog (!):

Carl Reiner on Twitter last week, worried about the current Government shutdown, said this was cause for great concern in the world’s leading democracy.  And I thought, leading?  Who’s following?    The answer would appear to be no one.

After one of the recent school shootings a young mother said to me, “What must you think of us?   You must think we’re all mad.”     Mad certainly, but not all of you.

Half of America seems to be entirely enviable, movies, books, TV, arts, liberal democratic institutions, great centers of learning and research, gay marriage, social freedoms, etc. etc.

The other half does seem to be, well, nuts.

Matthew Rabin was here last week presenting his work with Erik Eyster about social learning. The most memorable theme of their their papers is what they call “anti-imitation.” It’s the subtle incentive to do the opposite of someone in your social network even if you have the same preferences and there are no direct strategic effects.

You are probably familiar with the usual herding logic. People in your social network have private information about the relative payoff of various actions. You see their actions but not their information. If their action reveals they have strong information in favor of it you should copy them even if you have private information that suggests doing the opposite.

Most people who know this logic probably equate social learning with imitation and eventual herding. But Eyster and Rabin show that the same social learning logic very often prescribes doing the opposite of people in your social network. Here is a simple intuition. Start with a different, but simpler problem.  Suppose that your friend makes an investment and his level of investment reveals how optimistic he is. His level of optimism is determined by two things, his prior belief and any private information he received.

You don’t care about his prior, it doesn’t convey any information that’s useful to you but you do want to know what information he got. The problem is the prior and the information are entangled together and just by observing his investment you can’t tease out whether he is optimistic because he was optimistic a priori or because he got some bullish information.

Notice that if somebody comes and tells you that his prior was very bullish this will lead you to downgrade your own level of optimism. Because holding his final beliefs fixed, the more optimistic was his prior the less optimistic must have been his new information and its that new information that matters for your beliefs. You want to do the opposite of his prior.

This is the basic force behind anti-imitation. (By the way I found it interesting that the English language doesn’t seem to have a handy non-prefixed word that means “doing the opposite of.”) Suppose now your friend got his prior beliefs from observing his friend. And now you see not only your friend’s investment level but his friend’s too. You have an incentive to do the opposite of his friend for exactly the same reason as above.

This assumes his friend’s action conveys no information of direct relevance for your own decision. And that leads to the prelim question. Consider a standard herding model where agents move in sequence first observing a private signal and then acting.  But add the following twist. Each agent’s signal is relevant only for his action and the action of the very next agent in line.  Agent 3 is like you in the example above.  He wants to anti-imitate agent 1. But what about agents 4,5,6, etc?

If you are like me and you believe that thinking is better path to success than not thinking, its hard not to take it personally when an athlete or other performer who is choking is said to be “overthinking it.” He needs to get “untracked.” And if he does and reaches peak performance he is said to be “unconscious.”

There are experiments that seem to confirm the idea that too much thinking harms performance.  But here’s a model in which thinking always improves performance and which is still consistent with the empirical observation that thinking is negatively correlated with performance.

In any activity we rely on two systems:  one which is conscious, deliberative and requires “thinking.”  The other is instinctive.  Using the deliberative system always gives better results but the deliberation requires the scarce resource of our moment-to-moment attention.  So for any sufficiently complex activity we have to ration the limited capacity of the deliberative system and offload many aspects of performance to pre-programmed instincts.

But for most activities we are not born with an instinctive knowledge how to do it.  What we call “training” is endless rehearsal of an activity which establishes that instinct.  With enough training, when circumstances demand we can offload the activity to the instinctive system in order to conserve precious deliberation for whatever novelties we are facing which truly require original thinking.

An athlete or performer who has been unsettled, unnerved, or otherwise knocked out of his rhythm finds that his instinctive system is failing him.  The wind is playing tricks with his toss and so his serve is falling apart.  Fortunately for him he can start focusing his attention on his toss and his serve and this will help.  He will serve better as a result of overthinking his serve.

But there is no free lunch.  The shock to his performance has required him to allocate more than usual of his deliberative resources to his serve and therefore he has less available for other things.  He is overthinking his serve and as a result his overall performance must suffer.

(Conversation with Scott Ogawa.)

From the always interesting Erik Erickson at Red State:

So the question is do we want to stop Obamacare or do we want to stop the debt ceiling increase? My view is that we cannot do both at the same time. We might dare to dream, but the debt ceiling will be increased one way or the other.

Right now the GOP is holding up very well in the press and public opinion because it is clear they want negotiations. The GOP keeps passing legislation to fund departments of government. It has put the Democrats in an awkward position.

But the moment the GOP refuses to raise the debt ceiling, we are going to have problems. Remember, the last time you and I wanted the GOP to fight on the debt ceiling, the attacks from our own side were particularly vicious.

They’ve been vicious over the shutdown too, but now that we are here, the water ain’t so bad and only a few ankle biting yappers continue to take shots at conservatives from the GOP side.

It will not be so with the debt ceiling. And the GOP will no longer seem very reasonable. The debt ceiling fight will become an impediment to undermining Obamacare.

The main target is defunding Obamacare. Since the House will cave on the debt limit, not good to link defunding Obamacare to the debt ceiling. Link it to CR. Logic seems good if you like the objective. Also, it reveals that right believes debt limit will be raised. Hence, bondholders can relax.

From National Memo:

A day in the life of the emptiest suit in Washington:

7 a.m. You wake up, light a Camel. Read a pink Post-it left on the refrigerator by your wife: “John, don’t ever forget, YOU REALLY ARE THE SPEAKER OF THE HOUSE!!! Also, we’re out of bagels.”

7:30 a.m. You lie in your tanning bed meditating about the government shutdown, wondering if it was such a brilliant idea to let it happen. You put on some Pink Floyd, “Dark Side of the Moon,” but that doesn’t help.

8:00 a.m. On the ride to Capitol Hill, your driver remarks that there’s not much traffic in the city, no tourists lined up to see money being inked at the Bureau of Engraving and Printing. You smoke another Camel.

Hiaasen has a new book out.

Boredom is wasted on the bored

 

I coach my daughter’s U12 travel soccer team. An important skill that a player of this age should be picking up is the instinct to keep her head up when receiving a pass, survey the landscape and plan what to do with the ball before it gets to her feet.  The game has just gotten fast enough that if she tries to do all that after the ball has already arrived she will be smothered before there is a chance.

Many drills are designed to train this instinct and today I invented a little drill that we worked on in the warmups before our game against our rivals from Deerfield, Illinois. The drill makes novel use of a trick from game theory called a jointly controlled lottery.

Imagine I am standing at midfield with a bunch of soccer balls and the players are in a single-file line facing me just outside of the penatly area.  I want to feed them the ball and have them decide as the ball approaches whether they are going to clear it to my left or to my right. In a game situation, that decision is going to be dictated by the position of their teammates and opponents on the field. But since this is just a pre-game warmup we don’t have that.  I could try to emulate it if I had some kind of signaling device on either flank and a system for randomly illuminating one of the signals just after I delivered the feed.  The player would clear to the side with the signal on.

But I don’t have that either and anyway that’s too easy and quick to read to be a good simulation of the kind of decision a player makes in a game.  So here’s where the jointly controlled lottery comes in.  I have two players volunteer to stand on either side of me to receive the clearing pass.  Just as I deliver the ball to the player in line the two girls simultaneously and randomly raise either one hand or two.  The player receiving the feed must add up the total number of hands raised and if that number is odd clear the ball to the player on my left and if it is even clear to the player on my right.

The two girls are jointly controlling a randomization device.  The parity of the number of hands is not under the control of either player.  And if each player knows that the other is choosing one or two hands with 50-50 probability, then each player knows that the parity of the total will be uniformly distributed no matter how that individual player decides to randomize her own hands.

And the nice thing about the jointly controlled lottery in this application is that the player receiving the feed must look left, look right, and think before the ball reaches her in order to be able to make the right decision as soon as it reaches her feet.

We beat Deerfield 3-0.

Leviathan_by_Thomas_Hobbes

 

From political scientist Gary Cox at the Monkey Blog:

The idea goes back to England’s Glorious Revolution, where MPs fought hard to put the Crown on a short financial leash, so that they could control Crown officials’ actions. Although they did not use the term, English arguments about what would give Parliament bargaining leverage vis-à-vis the Crown hinged on the budgetary reversion.  Because expenditure authority would lapse every year, forcing portions of the government to “shut down” in contemporary American parlance, parliamentarians were assured the Crown would seek a new budget every year — whereupon they could bargain for attainment of their various goals.

Eventually the power of the purse meant the monarch became a figurehead, the House of Lords a rubber stamp and power truly resides in the House of Commons. So, the analogy would be that the President becomes an (elected) figurehead, the House of Lords becomes an (elected) rubber stamp and the House of Representatives becomes the center of power. And the Tea Party Republicans want to turn us into Britain!

President Obama may or may not have the constitutional authority to raise the debt limit without Confressional approval. But he has not because:

[S]ome observers outside government in Washington and on Wall Street, citing a game theorylike approach, suggest that the president’s position is more tactical than fundamental, since raising the possibility of a way out for the White House like the constitutional gambit would take the heat off Republicans in Congress to act on its own before the Oct. 17 deadline.

This is Schelling 101 and of course is based on Sun Tzu:

When your army has crossed the border [into enemy territory], you should burn your boats and bridges, in order to make it clear to everybody that you have no hankering after home.

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