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Is the marginal incentive to become a terrorist increasing or decreasing in the level of drone strikes? In the former case, terrorist activity is a strategic complement to drone strikes and, in the latter, a strategic substitute. Of course, the relationship may change sign with the level of strikes , e.g. at a medium level of drone strikes, terrorist activity is a complement but at very high levels it is a substitute (as we kill terrorists more quickly than they can be created!).
This issue lies at the heart of the optimal policy of drone strikes. Robert Wright asks whether hawkish policies:
“have, while killing terrorists abroad, created terrorists both abroad and — more disturbingly — at home.
These possibly counterproductive hawkish policies go beyond drone strikes — a fact that is unwittingly underscored by the hawks themselves. They’re the first to highlight the role played by that imam in Yemen, Anwar al-Awlaki, in inspiring Shahzad and other terrorists. But look at the jihadist recruiting narrative al-Awlaki’s peddling. He says America is at war with Islam, and to make this case he recites the greatest hits of hawkish policy: the invasion of Iraq, the troop escalation in Afghanistan, drone strikes in Pakistan, etc.”
Wright adds:
“Unfortunately, President Obama isn’t discarding the Bush-Cheney playbook that has given jihadist recruiters such effective talking points. Quite the contrary: the White House thinks the moral of the Shahzad story may be that we should get more aggressive in Pakistan,possibly putting more boots on the ground. And already Obama has authorized the assassination of al-Awlaki.
Even leaving aside the constitutional questions (al-Awlaki is an American citizen), doesn’t Obama see what a gift the killing of this imam would be to his cause? Just ask the Romans how their anti-Jesus-movement strategy worked out. (And Jesus’s followers didn’t have their leader’s sermons saved in ready-to-go video and audio files; al-Awlaki’s resurrection would be vivid indeed.)”
David Jaeger and Daniele Paserman have done empirical work on this issue in the context of the Israeli-Palestinian conflict. In one paper they find that Israeli fatalities in the last period are a good predictor of Palestinian fatalities the next (strategic complements) but Palestinian fatalities last period are not related significantly to Israeli fatalities the next. It is not clear whether this translates to the Al Qaeda/Taliban context. Surely the data is there somewhere to do the analysis. Is Obama’s policy evidence-based or is he, as Wright suggests, just copying the Bush-Cheney playbook?
Affirmative action in hiring is more controversial than it has to be because of the way it is typically framed. People who agree with the general motivation object to specific implementations like racial preferences and quotas because of their blunt nature.
Any affirmative action hiring policy entails a compromise because it mandates a distortion away from the employer’s unconstrained optimal practice. We should look for ways that achieve the goals of affirmative action but with minimal distortions.
One simple idea is turn away from policies that incentivize hiring and instead incentivize search. Suppose that the employer believes that 10% of all candidates are qualified for the job but that only 5% of all minorities are qualified. Imposing a quota on the number of minority hires is less flexible than a quota on the number of minorities interviewed.
Requiring the employer to interview twice as many minority candidates equalizes the probability that the most qualified candidate is a minority or non-minority. Across all employers using this policy, the fraction of minority employees will hit the target. But each individual employer is free to hire the most qualified candidate among the candidates identified so the allocation of workers is more efficient than would be achieved with a straight hiring quota.
Lebanon strikes the latest blow in an escalating hummus war with Israel.
Earlier this year, Israelis, who are also passionate about the smooth chick-pea spread, produced the 4,090-kilogram portion of hummus made by 50 chefs and put in a six-meter satellite dish.
Lebanon fought back, as 300 chefs in white coats of the al-Kataaf cooking school mashed up 10-tons of a special recipe for the occasion.
They mean business.
Sous-chef Alain Abou says it is not just about quantity, it is important for the hummus to taste good as well, even better, of course, than the Israelis’ creation.
“All the recipes, we prepare it before, we make it, we check it, so it is very good recipes,” said Abou. “We will beat it not in the army, but in the hummus.”
Elena Kagan is 50 years old which is not much younger than the average age of newly appointed justices: 53. That average age upon entry has been relatively constant over time but with life expectancies steadily increasing, the average tenure on the court has increased from 15 to 25 years before and after 1970.
We could argue about the socially efficient entry age and tenure length but its more fun to think about strategy. As a President from The Democratic Party you are today’s player in the infinite-horizon alternating-move SCOTUS appointment game. It is essentially a game of tug-of-war: they will appoint conservatives to balance out the liberals that you will appoint in order to balance out their conservatives…
The younger your appointee the longer she will sit on the court. On the plus side this means she is less likely to die or retire early. On the down side you will have to live longer with a Justice whose views are harder to discern and are more likely to change.
Tradeoff? Less than it appears. It boils down to a comparison of two probabilities: the probability that the older Justice will step down in a year when the Republicans control the White House versus the probability that the younger Justice will switch teams. Unless there is a lot of uncertainty about the younger Justice, the second probability is smaller and you should appoint her.
How young should you go? As you consider younger and younger nominees the mid-tenure defection eventually becomes the dominant concern. The probability that a non-defector can retire under a Democrat administration reaches its maximum but the uncertainty surrounding a younger Justice steadily increases.
The Liberal Democrats have played the Conservatives and the Labour Party off against each other brilliantly. While negotiating openly with the Conservatives, the Liberal Democrats were secretly talking to the Labour Party.
It was always clear that the game resembles an auction with two bidders, the Conservatives and Labour, and one object for sale, the Liberal Democrats. The value that can be extracted by the Liberal Democrats as in classical auction theory depends on the bid of the second-highest bidder. As I suggested in an earlier post, the Labour Party is the weak bidder as it got less votes in the General Election. But Clegg’s masterstroke has been to strengthen the value of Labour by pressuring Brown to step aside, which he did today. This immediately led to a stronger bid by the Conservatives: they are open to allowing a referendum on a change in the voting procedure used to elect Members of Parliament. This is a cause dear to the hearts of the Liberal Democrats who cannot get many seats in parliament otherwise.
Has Labour leap-frogged the Conservatives as the strong bidder? At least pretending this is the case is the next stratagem available to the Liberal Democrats to extract maximum concessions from the Conservatives. The Conservatives will send out their right-wingers to show they won’t offer any more and the Liberal Democrats will send out their left-wingers to signal a better offer is necessary. Some members of Labour may prefer to be in opposition. The next government will have to make huge cuts in spending to rein in the deficit. Better to wait on the sidelines and pick up the pieces in a few years. There are so many layers to this it is hard to keep up!
Tyler Cowen tweeted:
Why do chess players hold their heads hard, with their hands, when they are thinking? If it works, why don’t more thinkers do it?
To prevent overheating of course. You’ll notice that they typically extend their fingers and cover their foreheads which is the hottest part. They are maximizing surface area in order to increase heat dissipation.
Here is a suggestion for how to super-cool your cranium and over-clock your brain. On a more serious note, here is a pipe that is surgically implanted in the skull of epileptics to reduce the intensity of seizures.
Jonathan Weinstein is blogging now at The Leisure of the Theory Class. His first post is a nice one on a common fallacy in basketball strategy.
if a player has a dangerous number of fouls, the coach will voluntarily bench him for part of the game, to lessen the chance of fouling out. Coaches seem to roughly use the rule of thumb that a player with n fouls should sit until n/6 of the game has passed. Allowing a player to play with 3 fouls in the first half is a particular taboo. On rare occasions when this taboo is broken, the announcers will invariably say something like, “They’re taking a big risk here; you really don’t want him to get his 4th.”
The fallacy is that in trying to avoid the mere risk of losing minutes from fouling out the common strategy loses minutes for sure by benching him.
Jonathan discusses a couple of caveats in his post and here is another one. The best players rise to the occasion and overcome deficits as necessary. But they need to know how much of a deficit to overcome.
Suppose you know that a player will foul out in 1 minute. There are 5 minutes to go in the game. If you keep him in the game now he will have to guess how many points the opponents will score in the last 4 and try to beat that. This entails risk because the opponents might do better than expected.
If you bench him until there is 1 minute left then all the uncertainty is resolved by the time he comes back. Now he knows what needs to be done and he does it.
If Jonathan’s argument were correct then there would be no such thing as a “closer” in baseball. At any moment in the game you would field your most effective pitcher and remove him when he is tired. Instead there are pitchers who specialize in pitching the final innings of the game.
The role of a closer is indeed misunderstood in conventional accounts. Just as in Jonathan’s argument there is no reason to prefer having your best pitcher on the mound in later innings, other things equal. All innings are the same. But this doesn’t mean you shouldn’t save your best pitcher for the end of the game.
Suppose he can pitch for only one inning. If you use him in the 8th inning the opposition might win with a big 9th inning and then you’ve wasted your best pitcher. It would have been better to let them score their runs in the 8th. That way you know the game is lost before you have committed your best pitcher. You can save him for the next game.
Here is a wide-ranging article about proposals to utilize placebos as medicine.
But according to advocates, there’s enough data for doctors to start thinking of the placebo effect not as the opposite of medicine, but as a tool they can use in an evidence-based, conscientious manner. Broadly speaking, it seems sensible to make every effort to enlist the body’s own ability to heal itself–which is what, at bottom, placebos seem to do. And as researchers examine it more closely, the placebo is having another effect as well: it is revealing a great deal about the subtle and unexpected influences that medical care, as opposed to the medicine itself, has on patients.
The article never mentions it so I wonder if any consideration has been given to the equilibrium effects. Presumably the placebo effect requires the patient to believe that the drug is real. Then widespread use of true placebos will dilute the placebo effect. Since real drugs also contribute a placebo effect on top of any pharmacological effects, the placebo component of existing drugs will be reduced.
Does the benefit of using placebos outweigh the cost of reducing the effectiveness of non-placebos? If there is a complementarity between the placebo effect and real pharmacological effects it could be that zero is the optimal ratio of placebo to non-placebo treatments.
Note to my behavioral economics class: this is a good example of a topic that would require the tools of psychological game theory due to the direct payoff consequences of beliefs.
Neither the Labour Party nor the Conservative Party has won an absolute majority in the British elections. Each can try to rule as a minority government. This means roughly that each policy proposal would be voted on in an ad hoc fashion. If a key vote fails to win majority support, the minority government would fall and there would be another round of jostling for position. An alternative is to form a coalition with another party to form a government with majority support. This would mean the large party in the coalition would have to compromise on its ideal policy positions.
Both Labour and the Conservatives need the Liberal Democrats if they are to go the latter route. The Liberal Democrats suffer under the British electoral system where power is related to seats won in Parliament not total vote won across districts. Hence, they support “proportional representation”. Can the Liberal Democrats play the two parties off against each other to win this prize?
The difficulty for the Liberal Democrats is that the other two parties are in an asymmetric situation. The Conservatives are in better shape for running a minority government than Labour because they won more seats in Parliament. They are willing to offer less than Labour. Labour is willing to offer more but even the total number of seats held by the Liberal Democrats and Labour is not enough to form a majority coalition government. Plus it would involve a deal with a party mired in scandal and win a dark, brooding unpopular leader who refuses to step aside. Neither option looks good.
Hence, the real issue is the next election which may happen in days not years. The Liberal Democrats had great hopes of breaking out of their third party status and replacing the Labour party as the alternative to the Conservatives. It seems that in the end, voters were too worried about putting their faith in an unknown unknown. To break out of this hole, the Liberal Democrats have to look statesmanlike and work in the national interest not party interest. If neither party offers them a solid commitment to electoral reform, the Liberal Democrats should stay out of any coalition and maximize influence and publicity in Parliament. They can support sensible common values policy proposals put forward by the minority government and build themselves up in the eyes of the electorate. Only if they win significantly more seats in the next election will the Liberal Democrats get electoral reform
Native English speakers never have difficulty learning which prepositions to use. On the other hand I often hear even quite fluent second-languagers stumble over things like “Independent from, er… independent of.” (As in, X is independent of Y.) Is this just because children are better at learning language than adults? That probably explains a lot. But as I have speculated before I think there are some aspects of the difference between adults and children that don’t require an appeal to brain differences.
Adults are building on stuff they already know, children are learning for the first time. Adults know what a preposition is and that “from” and “of” are both prepositions. They know grammar and they think in terms of grammatical structure. So they search through the prepositions they know that would play the right grammatical role.
Children don’t think about language, they just copy what they hear. They don’t hear “independent from” so they never consider saying that. Of course adults learning English don’t hear “independent from” either. The fact that they still make the mistake means that they don’t learn purely by imitation like children. They make use of the rules they already know.
And yes, I am just making this up. Claire?
That’s the subject of a 2006 paper by Bo Honore and Adriana Lleras-Muney. From the abstract:
In 1971 President Nixon declared war on cancer. Thirty years later, many have declared the war a failure: the age-adjusted mortality rate from cancer in 2000 was essentially the same as in the early 1970s. Meanwhile the age-adjusted mortality rate from cardiovascular disease fell dramatically. Since the causes underlying cancer and cardiovascular disease are likely to be correlated, the decline in mortality rates from cardiovascular disease may in part explain the lack of progress in cancer mortality.
If more people are surviving cardiovascular disease then more will die of cancer. So if there were really no progress in cancer treatment then cancer mortality would in fact be increasing. By how much? That counterfactual question gets at the true benefits of the war on cancer.
In the case of white males, the probability of surviving past age 75 increased by about 19.5 percentage points, from 56.1% in 1970 to 75.6% in 2000. From row 3 [of table 4 in the paper] we see that, in the absence of cancer progress, this probability would have been between 66% and 73.8% in 2000. Therefore from this vantage point progress in cancer ranges from 2 to 10.6 percentage points and accounts for somewhere between 10% and 55% of the total increase in survival.
They identify bounds on cancer progress for other groups as well. The published paper is gated, here is a 2005 working paper version.
The owners get peak-load pricing and volume discounts:
Like Disney, however, Mr. Achatz and Mr. Kokonas will sell tickets to their Magic Kingdom. Yes, tickets. (That’s a direct quote from the trailer.)
While the ticket sales portion of the web site hasn’t been worked out yet, anyone wishing to eat at Next will pay for the time slot in advance. Prices will be lower for off-peak hours and will also vary depending on the menu, but will run from $45 to $75 for a five- or six-course meal. (Wine and beverage pairings will begin at $25.) Annual subscriptions — seasons tickets — will also be sold.
They also get cost control:
“We now pay three or four reservationists all day long to basically tell people they can’t come to the restaurant,” Mr. Achatz said. “People call and say, ‘I want a reservation for four for next Saturday,’ and we’re like, ‘No, I’m sorry, it’s been booked for three months.’ Most people don’t realize how much of the cost of a meal is the cost of running a restaurant.” He said Next will strip away this and other hidden costs of dining out: “It allows us to give an experience that is actually great value. The guest will actually benefit. That’s the theory.”
I coach my 7-year-old daughter’s soccer team. It’s been a tough Spring season so far: they lost the first three games by 1 goal margins. But this week they won something like 15-1.
I noticed something interesting. In all of the close games the girls were emotionally drained. By the end of the game they didn’t have much energy left. Many of them asked to be rotated out.
But this week nobody asked to be rotated out. In fact this week they had the minimum number of players so each of them played the whole game and still nobody complained of being tired. Obviously they were having fun running up the score but they didn’t get tired.
Incentives are about getting players to want conditions to improve. So incentives necessarily make them less happy about where they are now. Feeling good about winning means feeling bad about not winning. That’s the motivation.
But encouragement is about being happy about where you are now. And it has real effects: it energizes you. You don’t get tired so fast when you are having fun.
There is a clear conflict between incentives and encouragement. At the same time incentives motivate you to win, they discourage you because you are losing. A coach who fails to recognize this is making a big mistake.
And I am not giving a touchy-feely speech about “it’s not whether you win or lose…” I am saying that a cold-hearted coach who only cares about winning should, at the margin, put less weight on incentives to win.
If my daughter’s team loved losing, is it possible they would lose less often? Probably not. But that’s because the love of losing would give them an incentive to lose. They would be discouraged when they win but that would only help them to start losing. (Unless the opposing coach used equally insane incentives.)
Nevertheless, to love winning by 10 goals is a waste of incentive and is therefore a pure cost in terms of its effect on encouragement when the game is close. Think of it this way: you have a fixed budget of encouragement to spread across all states of the game. If you make your team happy about winning by 10 goals, that directly subtracts from their happiness about winning by only 1 goal.
My guess is that, against a typically incentivized opponent, the optimal incentive scheme is pretty flat over a broad range. That range might even include losing by one goal. Because when the team is losing by one goal, the positive attitude of being in the first-best equivalence class will keep them energized through the rest of the game and that’s a huge advantage.
Hertz is making an offer for Dollar-Thrifty. Consolidation of this sort helps all players in the industry by reducing capacity and allowing all firms, including those outside the merger, to raise prices. (I already talked about this in a post about the United-Continental-US Airways merger dance.) There is an incentive then to stay outside the merger and gain from it. There has to be a countervailing force to overcome the positive externality of a merger. In the rental car case, it seems Dollar has access to a leisure-traveller market that Hertz would like to get their hands on. And there is an interesting twist to the merger deal they signed with Dollar. The Avis CEO would like to bid for Dollar (or so he says) and writes to Dollar:
“[W]e are astonished that.. you have compounded these shortcomings by agreeing to aggressive lock-up provisions, such as unlimited recurring matching rights plus an unusually high break-up fee (more than 5.25% of the true transaction value, as described by your own financial advisor), as a deterrent to competing bids that could only serve to increase the value being offered to your shareholders.”
Hertz has built in a nifty-seeming “match the competition” clause into its agreement with Dollar, If other bidders emerge, Hertz gets to match their bids and there is a break-up fee that deters Dollar from accepting another suitor.
There are several strategic effects. If Avis truly wants the Dollar leisure market access, this clause clearly makes it hard for them to acquire it. But it leaves Hertz vulnerable to a spoiling strategy by Avis: Avis can start bidding up the price Hertz pays for Dollar by make high bids for Dollar. Avis won’t win Dollar but will leave Hertz stuck with a big payment.
Spoiling may backfire if its triggers a future price war if Hertz is forced to take a short-run perspective and slash prices to survive . We will see what happens in the next few days.
The New York Post reports that the FTC and the Justice Department are deciding which of those two entities will conduct an inquiry into Apple’s ban on iPhone-iPad development using cross-platform tools such as Adobe’s Flash-to-iPhone.
An inquiry doesn’t necessarily mean action will be taken against Apple, which argues the rule is in place to ensure the quality of the apps it sells to customers. Typically, regulators initiate inquiries to determine whether a full-fledged investigation ought to be launched. If the inquiry escalates to an investigation, the agency handling the matter would issue Apple a subpoena seeking information about the policy.
An inquiry is harmless in theory, often a slippery slope in practice. While there is certainly much to complain about, the general principle of not meddling when the market is still in its fluid infancy is the dominant consideration here. Remember the Microsoft case?
A water pipe to the Greater Boston area has broken. Two million residents have to boil water before they drink it. We were moving apartments so we were a bit slow off the mark. By the time I got to Walgreens this morning, all the water was sold out. Even the San Pellegrino at Whole Foods was gone. The water shortage has all the features of a classic bank run.
Of course everyone needs more bottled water than they usually buy. Who knows when the pipe will be fixed? So, everyone buys extra water for insurance. But then, this increases an individual’s incentive to buy lots of water yet further as there is greater risk of having no water. This is like a classic bank run: the more others’ withdraw money, the more I withdraw money as there may be nothing left for me to withdraw later. Lo and behold bottled water is all gone within hours, just like all the deposits in bank facing a run.
Luckily, there was no beer run. So, I’m safe.
Cheap Talk 