You are currently browsing the monthly archive for March 2011.
- Software agents are invading online poker sites and relieving the humans of their money.
- The New York Times web site will beat you at rock scissors paper because you are a predictable human. (mm: Courtney Conklin Knapp)
- Tyler Cowen and his computer make each other better at chess.
Following up on Tyler, the suggestion is that there are gains from specialization in computer/human partnerships. But it is not enough for Tyler and his computer to beat a computer. Could Tyler and another human player (of strength comparable to his computer partner) do even better?
Now it is interesting to observe that the other comparison is not possible. Would a team of two computers (with strengths comparable to Tyler and his machine) do even better? How would two computers make a team? If the two computers came up with different ideas how would they decide which one was better?
010101: I think we should play Re1. I rate it +.30
1110011: I considered that move and at 22 ply I rate it at +0.05, instead I suggest we sac the Knight.
010101: I considered that move and at 22 ply I rate it at -1.8.
1110011: Here take a look at my analysis.
010101: Yes I am aware of that sequence of moves, I already considered it. It’s worth +0.05.
1110011: No, +0.30
010101: No, +0.05
etc. Any protocol for deciding which is the right analysis should already have been programmed into the original software. Put differently, if there was a way to map the pair of evaluations (.3,.05) into a better evaluation y, then the position should already have been evaluated at y by each machine individually.
The only benefit of the two computers would be the deeper search in the same amount time. That is, a two computer team is just two parallel processers but exactly the same evaluation heuristic applied to the final position searched. In that sense the human’s unique ability is to understand when to switch heuristics. (But why can’t this understanding be programmed into software?)
Exploding food, frog blancmange, one of the oldest pubs in England (note posh accents), Harry Potter’s drink of choice etc. Creativity run amok with some technical skill – ideal combination for cooking or research. Gordon Ramsay eat your heart out…
The MILQs at Spousonomics riff on the subject of “learned incompetence.” It’s the strategic response to comparative advantage in the household: if I am supposed to specialize in my comparative advantage I am going to make sure to demonstrate that my comparative advantage is in relaxing on the couch. Examples from Spousonomics:
Buying dog food. My husband has the number of the pet food store that delivers and he knows the size of the bag we buy. It would be extremely inconvenient for me to ask him for that number.
Sweeping the patio. He’s way better at getting those little pine tree needles out of the cracks. I don’t know how he does it!
A related syndrome is learned ignorance. It springs from the marital collective decision-making process. Let’s say we are deciding whether to spend a month in San Diego. Ideally we should both think it over, weigh and discuss the costs and benefits and come to an agreement. But what’s really going to happen is I am going to say yes without a moment’s reflection and her vote is going to be the pivotal one.
The reason is that, for decisions like this that require unanimity, my vote is only going to count when she is in favor. Now she loves San Diego, but she doesn’t surf and so she can’t love it nearly as much as me. So she’s going to put more weight on the costs in her cost-benefit calculation. I care about costs too but I know that conditional on she being in favor I am certainly in favor too.
Over time spouses come to know who is the marginal decision maker on all kinds of decisions. Once that happens there is no incentive for the other party to do any meaningful deliberation. Then all decisions are effectively made unilaterally by the person who is least willing to deviate from the status quo.
Why might democracies be less warlike than other regime types?
Two early and related ideas:
Thomas Paine ([3] p. 169): “What inducement has the farmer, while following the plough, to lay aside his peaceful pursuit, and go to war with the farmer of another country?”
Immanuel Kant ([1], p. 122): “if the consent of the subjects is required to determine whether there shall be war or not, nothing is more natural than that they should weigh the matter well, before undertaking such a bad business.”
This idea has influenced policymakers of different political persuasions. Is there a rational choice/strategic theory for the democratic peace? This lecture discusses various alternatives.
First, we study the fear motive for war. The median voter might be a coordination type who wants his country’s leader to be dovish against a dovish opponent but aggressive against an aggressive opponent. This captures the Kant/Paine idea but also Schelling’s idea that aggression might arise out of fear. These incentives imply that democracies are more responsive to aggression that other regime types. A second possibility is that a leader can survive with the support of the “mob” (which has the same preferences as the median voter) or with the support of an elite that favors war. The leader loses power if he is weak in the face of aggression (no one supports him) but survives if he is aggressive even when an opponent is not (the hawkish elite support him). This kind of regime is more aggressive than a dictatorship. Data support these these comparative statics.
Second, we study the greed motive. The leader of country may get a disproportionate share of the spoils of war should his country win but not suffer a large cost if it should lose. He has a bias. If both leaders are biased, it may be impossible to avoid inefficient war even if transfers are possible. But if both leaders are unbiased then transfers can resolve conflict and may even be unnecessary.
Third, bargaining may devolve into a war of attrition. A democratically elected leader suffers greater “audience costs” if he backs down. This makes him a tough bargainer and his opponent correspondingly weak. A player may even deliberately “talk up” his audience costs to become a tough bargainer.
Here are the slides.
So leads us to the remarkable story of Imperial College’s self-effacing head librarian, pitted in a battle of nerves against the publisher of titles like the Lancet. She is leading Research Libraries UK (RLUK), which represents the libraries of Russell Group universities, in a public campaign to pressure big publishers to end up-front payments, to allow them to pay in sterling and to reduce their subscription fees by 15%. The stakes are high, library staff and services are at risk and if an agreement or an alternative delivery plan is not in place by January 2nd next year, researchers at Imperial and elsewhere will lose access to thousands of journals. But Deborah Shorley is determined to take it to the edge if necessary: “I will not blink.”
The article is here. Part of what’s at stake is the so called “Big Deal” in which Elsevier bundles all of its academic journals and refuses to sell subscriptions to individual journals (or sells them only at exorbitant prices.) Edlin and Rubinfeld is a good overview of the law and economics of the Big Deals.
Boater Bow: Not Exactly Rocket Science.
There was an interview with Tom Waits on the radio last week and I heard him say something that got me thinking.
I like hearing things incorrectly. I think that’s how I get a lot of ideas is by mishearing something.
It happens to me all the time. It could be when I am half-listening to a lecture or catching a little snippet of a conversation by passersby. It can even happen when I am listening to an interview on the radio.
There are good reasons why mishearing is a great source of new ideas.
- If you hear something already put together, you are prone to give it credence. Ever notice how someone tells you about something surprising and right away you understand why its true? Sometimes even before they are done talking? The kickstarting effect of credence is a valuable scarce resource that is often wasted on the actually true. Mishearing tricks you into believing something that is probably not true and sets your brain in motion to find something true in it.
- Mishearing isn’t random: your brain does its best to make sense of whatever comes in. Think of the mishearing as some noise coming in and the brain assembling into something useful.
- It’s not just noise that comes in. You are mishearing something that originally made sense. So most of the parts fit together in some way already. The mishearing will just turn it around, extend it, or apply it to something new.
So how do you make it happen? Tom Waits:
I like turning on two radios at the same time and listening to them.
An insightful analysis from John Quiggin at Crooked Timber of the organizational economics of Arab dictatorships.
The element of truth is that the Arab monarchies have good prospects of survival if they can manage the transition to constitutional monarchy. And it makes sense for them to do so. After all, a constitutional monarch gets to live, literally, like a king, without having to worry about boring stuff like budgets and foreign affairs. And, in the modern context, the risk that such a setup will be overthrown by a military coup, as happened to quite a few of the postcolonial constitutional monarchs, is much diminished. By contrast, there’s no such thing as a constitutional dictatorship or tyranny and no way to make the transition from President-for-Life to constitutional monarch. That’s not to say all the monarchs in the region will survive, or for that matter, that all the remaining dictatorships will fall. But the general point is valid enough.
With this corollary for Saudi Arabia
The other big problem is that this can’t easily be done in Saudi Arabia. There are not even the forms of a constitutional government to begin with. Worse, the state is not so much a monarchy as an aristocracy/oligarchy saddled with 7000 members of the House of Saud, and many more of the hangers-on that typify such states. These people have a lot to lose, and nothing to gain, from any move in the direction of democracy.
I mostly read blogs through Google Reader but lately I have been thinking that my selection is becoming a little stale. I want to mix it up a little bit, what blogs should I be reading? I like economics blogs but I like/get ideas from all kinds of blogs. What I am aiming for is a minimal spanning set.
Epilogue: Thanks for all the great suggestions! Keep them coming.
This was going to happen eventually.
Una advertencia: el lector desprevenido podrá suponer que el contenido de este artículo es irónico, exagerado o hasta apócrifo. Han sido recurrentes las ironías acerca de los efectos letales de los planes de ajuste que han impulsado e impulsan ciertos economistas. Marcelo Matellanes, el fallecido filósofo y economista, sostenía que a los economistas se les debería exigir, como a los médicos, el juramento hipocrático, pero con un detalle adicional: la mala praxis de los médicos tiene efectos más acotados que los programas de ajuste estructural que algunos economistas han puesto en práctica en las economías latinoamericanas. En otras palabras, los malos médicos matan de a uno; los malos economistas hacen un daño generalizado.
The article, in Spanish obviously, is here. (Google translate is at your service.) My translation: two evil economists from the center countries (??) named Sandeep Baliga and Jeffrey Ely have written a paper which demonstrates how to use torture optimally. They, and all economists for that matter, should report at once for ethical reprogramming.
Gat grope: Santiago Oliveros.
I don’t have a Kindle but I noticed that people were complaining so much about the absence of page numbers on early versions that Amazon has restored page numbers in the latest Kindle software. This adherence to tradition (in which I include prudish Professors and Editors who demand precise page references in Bibliographies) destroys a unique advantage of eBooks that could make them more than just a fragile, signal-jamming replacement for old fashioned pulp.
Suspense requires randomization. If you are reading my paper-bound novel and I want to maximize your suspense I am constrained by your ability to infer, based on how many pages are left, the likelihood that the story is going to play out as staged or whether there will be another twist in the plot. It is impossible for me to convince you of a “false ending” if you are on page 200 out of 400. The bastard publisher has spoiled it for me because 1) he has, without my permission, smeared page numbers all over my handiwork, and 2) refused to add bulk by randomly insert blank pages at the end to help me fool you.
Now Kindle, and eBook readers in general allow me to shuck that constraint. I can end the novel at any point and you would never know that the end is right around the corner. I could make it 1 page long. Imagine the effect of that! I could make it grind to a halt on page 200 only to surprise you with a development completely out of the blue that takes another 200 pages to resolve.
But no, you can’t handle the suspense. You call yourself a reader but you are really just a page counter. You begged for your time-marking crutch and Amazon obliged. Your loss, my novel goes back in the drawer.
P.S. Emir Kamenica gets some of the blame for this post.
Q.S. Quote from my buddy Dave: The key is to have a useful term–for example, I have stopped using the term “page number” and now use the term “oprah” to refer to the location in printed matter. I encourage you to start using this in the classroom. “All right, please turn to Oprah 31”)
An important role of government is to provide public goods that cannot be provided via private markets. There are many ways to express this view theoretically, a famous one using modern theory is Mailath-Postlewaite. (Here is a simple exposition.) They consider a public good that potentially benefits many individuals and can be provided at a fixed per-capita cost C. (So this is a public good whose cost scales proportionally with the size of the population.)
Whatever institution is supposed to supply this public good faces the problem of determining whether the sum of all individual’s values exceeds the cost. But how do you find out individual’s values? Without government intervention the best you can do is ask them to put their money where their mouths are. But this turns out to be hopelessly inefficient. For example if everybody is expected to pay (at least) an equal share of the cost, then the good will produced only if every single individual has a willingness to pay of at least C. The probability that happens shrinks to zero exponentially fast as the population grows. And in fact you can’t do much better than have everyone pay an equal share.
Government can help because it has the power to tax. We don’t have to rely on voluntary contributions to raise enough to cover the costs of the good. (In the language of mechanism design, the government can violate individual rationality.) But compulsory contributions don’t amount to a free lunch: if you are forced to pay you have no incentive to truthfully express your true value for the public good. So government provision of public goods helps with one problem but exacerbates another. For example if the policy is to tax everyone then nobody gives reliable information about their value and the best government can do is to compare the cost with the expected total value. This policy is better than nothing but it will often be inefficient since the actual values may be very different.
But government can use hybrid schemes too. For example, we could pick a representative group in the population and have them make voluntary contributions to the public good, signaling their value. Then, if enough of them have signaled a high willingness to pay, we produce the good and tax everyone else an equal share of the residual cost. This way we get some information revelation but not so much that the Mailath Postlewaite conclusion kicks in.
Indeed it is possible to get very close to the ideal mechanism with an extreme version of this. You set aside a single individual and then ask everyone else to announce their value for the public good. If the total of these values exceeds the cost you produce the public good and then charge them their Vickrey-Clarke-Groves (VCG) tax. It is well known that these taxes provide incentives for truthful revelation but that the sum of these taxes will fall short of the cost of providing the public good. Here’s where government steps in. The singled-out agent will be forced to cover the budget shortfall.
Now obviously this is bad policy and is probably infeasible anyway since the poor guy may not be able to pay that much. But the basic idea can be used in a perfectly acceptable way. The idea was that by taxing an agent we lose the ability to make use of information about his value so we want to minimize the efficiency loss associated with that. Ideally we would like to find an individual or group of individuals who are completely indifferent about the public good and tax them. Since they are indifferent we don’t need their information so we lose nothing by loading all of the tax burden on them.
In fact there is always such a group and it is a very large group: everybody who is not yet born. Since they have no information about the value of a public good provided today they are the ideal budget balancers. Today’s generation uses the efficient VCG mechanism to decide whether to produce the good and future generations are taxed to make up any budget imbalance.
There are obviously other considerations that come into play here and this is an extreme example contrived to make a point. But let me be explicit about the point. Balanced budget requirements force today’s generation to internalize all of the costs of their decisions. It is ingrained in our senses that this is the efficient way to structure incentives. For if we don’t internalize the externalities imposed on subsequent generations we will make inefficient decisions. While that is certainly true on many dimensions, it is not a universal truth. In particular public goods cannot be provided efficiently unless we offload some of the costs to the next generation.
In my youth, every black turtleneck wearing undergraduate hoping to get laid carried around Milan Kundera’s “The Unbearable Lightness of Being“, pretending to be mature enough to understand its rather adult themes. To separate himself from the herd, a clever but randy student might also have an artfully ink-stained and annotated copy of Thomas Kuhn’s “The Structure of Scientific Revolutions“. He would pose around in coffee-shops and project a mood of delicate ennui, a mood that could be lifted by an interesting girl who could give some meaning to his life, especially in the bedroom. But only a professional philosopher would have a copy of Kripke’s “Naming and Necessity“.
According to Errol Morris, a filmmaker who made “The Fog of War: Eleven Lessons From the Life of Robert S. McNamara”, the last book, while not a fundamental contribution to foreplay, is a fundamental contribution to the philosophy of science. It is somewhat the antithesis of Kuhn’s theory. So much so that Kuhn forbade Morris, then a philosophy student, from going to Kripke’s lectures. It seems Morris and Kuhn had a difficult relationship.
I asked him, “If paradigms are really incommensurable, how is history of science possible? Wouldn’t we be merely interpreting the past in the light of the present? Wouldn’t the past be inaccessible to us? Wouldn’t it be ‘incommensurable?’ ”
He started moaning. He put his head in his hands and was muttering, “He’s trying to kill me. He’s trying to kill me.”
And then I added, “…except for someone who imagines himself to be God.”
It was at this point that Kuhn threw the ashtray at me.
And missed.
For that and more, see Morris’ essays in the NYT. I am going to change my PhD supervision style now I know the norm.
I am standing in front of an intimidating audience and a question stops me. I should know how to answer. I do know the answer. But its not coming to me right away. So the question has me stopped.
There is a silence. And at the center of that silence stands me waiting for the answer to come. At first. But the silence is piling up, and as it does I start to make alternative plans. Up to this point I was just hanging passively as some automatic mechanism searches through the files for the right thread, but now I may have to start actively conjuring something up.
The last thing you want to do is waste precious moments deciding when to cut off that search, especially because as soon as those thoughts start to creep in they threaten to be a self-fulfilling prophecy.
But I can’t not think about it. Because no matter how confident I am that I do have the answer stored in there somewhere there is always a chance that memory fails and as long I stand here, the answer is still not going to come to me. And the longer I wait the less time I am going to have to stammer out something forced. All the while the audience is growing uncomfortable.
This is more than just an optimal stopping problem because of the Zen state variable. Its the Zen fixed point. The more confident you are that the answer will come, the less you will be infiltrated by thoughts of the eventual collapse, the more likely your confidence will be validated. And then there’s what happens when that doesn’t happen.
And then there’s what happens when you know all of the above and it either fuels your confidence (because you are the confident type) or sends you even sooner spiraling into a panic searching for plan B, crowding out plan Absent, all the while escalating the panic (because you are prone to panic) ensuring that whatever finally does come out is going to be a big mess.
Chickle: Type-A Meditation from www.f1me.net
It is about three and a half inches long and mostly black. It has a cap that, when removed, reveals a small silver point, out of the end of which comes black ink. There is a window of clear plastic on the body of the object through which you can monitor how quickly said ink disappears. The general shape is cylindrical. Its diameter is less than one centimeter and fits nicely between the fingers of a woman who is 5’4” tall with slightly oversized hands for her height. The decorative elements are minimal, but there are some advertorial ones. These read: “Pilot. Precise V5. Rolling Ball. Extra Fine.”
The rest of the ode is here.
It occurs to me that in our taxonomy of varieties of public goods, we are missing a category. Normally we distinguish public goods according to whether they are rival/non-rival and whether they are excludable/non-excludable. It is generally easier to efficiently finance excludable public goods because people by the threat of exclusion you can get users to reveal how much they are willing to pay for access to the public good.
I read this article about Piracy of sports broadcasts and I started to wonder what effect it will have on the business of sports. Free availability of otherwise exclusive broadcasts mean that professional sports change from an excludable to a non-excludable public good. This happened to software and music but unique aspects of those goods enable alternative revenue sources (support in the case of software, live performance in the case of music.)
For sports the main alternative is advertising. And the only way to ensure that the ads can’t be stripped out of the hijacked broadcast, we are going to see more and more ads directly projected onto the players and the field.
And then I started wondering what would be the analogue of advertising to support other non-excludable public goods. The key property is that you cannot consume the good without being exposed to the ad. What about clean air? National defense?
But then I realized that there is something different about these public goods. Not only are they not excludable– a user cannot be prevented from using it, but they are not avoidable — the user himself cannot escape the public good. And there is no reason to finance unavoidable public goods by any means other than taxation.
Here’s the point. If the public good is avoidable, you can increase the user tax (by bundling ads) and trust that those who don’t value the public good very much will stop using it. Given the level of the tax it would be inefficient for them to use it. Knowing that this inefficiency can be avoided you have more flexibility to raise the tax, effectively price discriminating high-value users.
If the public good is unavoidable, everyone pays whether you use ads or just taxation (uncoupled with usage), so there really isn’t any difference.
So this category of an avoidable public good seems a useful one. Can you think of other examples of non-excludable but avoidable public goods? Sunsets: avoidable. National defense: unavoidable.
“When two dynamite trucks meet on a road wide enough for one, who backs up?” asks Schelling in his classic essay on bargaining. There are multiple equilibria. How can the solution be made determinate?
If one side can make a commitment, Schelling points out a easy solution:
“When one wishes to persuade someone that he would not pay more than $16,000 for a house that is really worth $20,000 to him, what can he do to take advantage of the usually superior credibility of the truth over a false assertion? Answer: make it true…..But suppose the buyer could make an irrevocable and enforceable bet with some third party, duly recorded and certified, according to which he would pay for the house no more than $16,000, or forfeit $5,000.”
But what if both sides can make a commitment? He says:
“Each must now recognize this possibility of stalemate, and take into account the likelihood that the other already has, or will have, signed his own commitment.”
And it is possible there is incomplete information, further complicating the issue.
In this class, I discuss two player bargaining models whether players can commit to demands. If a demand is rejected or joint commitments are incompatible, there is a chance of bargaining breakdown or costly delay till an agreement is reached.
First, I begin with complete information. The classic paper is by Rubinstein and it uses discounting to derive a unique equilibrium. Since, we want to study commitment, I instead followed Myerson’s analysis in his textbook. In his model, if a proposer’s demand is accepted, the game ends but if it is rejected, the game ends with probability p. If the game survives till the next period, the responder in the previous round becomes the proposer. The risk of breakdown acts as a discount factor. The risk of breakdown is a measure of commitment: the higher is p, the higher is the commitment to the demand. Myerson shows there is a unique equilibrium which is a function of p.
Second, suppose that with a small probability one player might be an r-insistent type who demands r and rejects any smaller offers. Then, Myerson shows that even if this player is not the r-insistent type, he can guarantee himself r in any equilibrium. If he demands r repeatedly, the opponent will give up rather than fight forever as he might be facing the r-insistent type. The rational player then knows he can get r eventually by pretending to the the r-insistent type. After a few rounds of haggling, his opponent is forced to give this to him. This solution does not depend on p. Hence, by adding a small probability that a player might be an r-insistent type, we have changed the equilibrium dramatically from the complete information model. In some sense, the player with an r-insistent type has a first-mover advantage. The bound on this player’s payoff varies with r so the equilibrium is not robust in the type that was added to the game.
What happens if both players can commit? Abreu and Gul study this issue. They show that essentially all bargaining games devolve into a war of attrition where rational players either pretend to to be r-insistent types at incompatible demands or reveal their rationality and concede, like in the Myerson game. In equilibrium, the probability that players are r-insistent types must reach one simultaneously. Otherwise, if say it reaches 1 for player 1 first, the rational type of player 2 must still be dropping out after he knows player 1 will not concede. But it is better for player 2 to deviate and give in earlier and get surplus rather than waste time. This idea pins down a property of an endpoint to the war of attrition. And other arguments can then be used to derive the unique equilibrium.
It is surprising the equilibrium is unique: bargaining games and games with incomplete information typically have multiple equilibria. The equilibrium is still sensitive to the r-insistent types. I believe this issue is resolved in later papers by Kambe and Abreu and Pearce. But I did not get to them. Here are my slides
- The device in question almost rhymes with rickshaw.
- This explains why there are so many missing parts.
- During my years in Berkeley I made sure that this man told me “I hate you” at least once a week. (Where’s Stoney Burke??)
- Best use of dead trees ever. (But what if she’s actually crying?)
- 16 items available only in Chinese WalMarts.
Bryan Caplan wonders whether economic theory is on the decline. Here are some signs I have noticed:
- Econometrica, the most theory-oriented of the top 4 journals has a well-publicized mission to publish more applied, general interest articles, and this is indeed happening. This comes at the expense of pure theory as well as theoretical econometrics.
- The new PhD market was, on the whole, difficult for theorists this year. Strong candidates from Yale, Stanford, NYU and Princeton were placed much lower than expectations, some without a job offer in North America as of yet. As far as I can tell, there will be only two junior theorists hired at top 5 departments.
But there are many positive signs too
- Theorists have been recruiting targets for high-profile private sector jobs. Michael Schwarz and Preston McAfee at Yahoo!, Susan Athey at Microsoft for example. In addition the research departments in these places are full of theorists-on-leave.
- Despite some overall weakness, theory is and always has been well represented at the top of the junior market. This year Alex Wolitzky, as pure a theorist as there is, is the clear superstar of the market. Here is the list of invitees to the Review of Economics Studies Tour from previous years. This is generally considered to be an all-star team of new PhDs in each year. Two theorists out of seven per year on average. (No theorist last year though.)
- In recent years, two new theory journals, Theoretical Economics and American Economic Journal: Microeconomics, have been adopted by the leading Academic Societies in economics. These journals are already going strong.
- Market design is an essentially brand new field and one of the most important contributions of economics in recent years. It is dominated by theorists.
In my opinion there are some signs of change but, correctly interpreted, these are mostly for the better. Decision theory, always the most esoteric of subfields has moved to the forefront as a second wave of behavioral economics. Macroeconomics today is more heavily thoery-oriented than ever. Theorists (and theory journals) are drawn away from pure theory and toward applied theory not because pure theory has diminished in any absolute sense, but rather because applied theory has become more important than ever.
Professor Caplan offers some related observations in his commentary:
…mathematicians masquerading as economists were never big at GMU, and it’s hard to see how they could do well in the blogosphere either.
I am sure he is not talking about Sandeep and me because we are just as bad at math as all of the other bloggers who pretend to be economists. But just in case he is, I invite him to take a look around. Finally,
My econjobrumors insider tells me that its countless trolls are largely frustrated theorists who feel cheated of the respect they think the profession owes them. Speculation, yes, but speculation born of years of study of their not-so-silent screams.
He is talking about the people who anonymously post sometimes hilarious, sometimes obnoxious vitriol on that outpost of grad student angst known as EJMR. I wonder how he could possibly know the research area of anonymous posters to that web site? Among all the economists who feel cheated out of the respect that they think the profession owes them why would it be that theorists are the most likely to troll?
A principal employs an agent to collect taxes. The principal cannot observe how hard the agent is working. What is the best way to set up incentives? Suppose the principal asks for a share of the tax revenue. This acts as a tax on the agent’s effort so he will under-invest. The agent also has the incentive to hide tax revenue. Not the best incentive scheme. Perhaps the only practical alternative is to “sell the firm to the agent”: demand a lump-sum fee for the right to become a tax collector. The agent has great incentives to generate tax revenue. The principal extracts the tax collector’s expected profit upfront via the lump sum fee. A classic two-part tariff.
According to Dexter Filkins in the New Yorker, here is how bribery works in Afghanistan:
Bribes feed bribes: if an Afghan aspires to be a district police officer, he must often pay a significant amount, around fifty thousand dollars, to his boss, who is usually the provincial police chief. The policeman earns back the money by shaking down ordinary Afghans… “It’s a vertically integrated criminal enterprise,” one American official told me.
Lagers like Stella Artois are bottom-fermented while classical Belgian beers are top-fermented. Lagers are more transparent and look “cleaner” in a transparent glass. Perhaps because of this, demand shifted to lagers. The share of lager beers in Belgium went from 15% before WW1 to 70% after WWII.
Bottom fermentation requires more equipment to cool the beer during fermentation and maturation. Hence, it gains from greater scale. Greater demand plus cost economies led to the market shifting towards a few large breweries. These set a lower price than smaller breweries and drove them out of business. Add to this the costs of advertising and scale advantages multiply….
For this and and more on Lambics and Abbey beers see Belgian Beers: Where History Meets Globalization
From a fun little article by Andrew Gelman and Deborah Nolan:
The law of conservation of angular momentum tells us that once the coin is in the air, it spins at a nearly constant rate (slowing down very slightly due to air resistance). At any rate of spin, it spends half the time with heads facing up and half the time with heads facing down, so when it lands, the two sides are equally likely (with minor corrections due to the nonzero thickness of the edge of the coin); see Figure 3. Jaynes (1996) explained why weighting the coin has no effect here (unless, of course, the coin is so light that it floats like a feather): a lopsided coin spins around an axis that passes through its center of gravity, and although the axis does not go through the geometrical center of the coin, there is no difference in the way the biased and symmetric coins spin about their axes.
On the other hand, a weighted coin spun on a table will show a bias for the weighted side. The article describes some experiments and statistical tests to use in the classroom. There are some entertaining stories too. Like how the King of Norway avoided losing the entire Island of Hising to the King of Sweden by rolling a 13 with a pair of dice (“One die landed six, and the other split in half landing with both a six and a one showing.”)
Visor volley: Toomas Hinnosaar.
I wrote last week about More Guns, Less Crime. That was the theory, let’s talk about the rhetoric.
Public debates have the tendency to focus on a single dimension of an issue with both sides putting all their weight behind arguments on that single front. In the utilitarian debate about the right to carry concealed weapons, the focus is on More Guns, Less Crime. As I tried to argue before, I expect that this will be a lost cause for gun control advocates. There just isn’t much theoretical reason why liberalized gun carry laws should increase crime. And when this debate is settled, it will be a victory for gun advocates and it will lead to a discrete drop in momentum for gun control (that may have already happened.)
And that will be true despite the fact that the real underlying issue is not whether you can reduce crime (after all there are plenty of ways to do that,) but at what cost. And once the main front is lost, it will be too late for fresh arguments about externalities to have much force in public opinion. Indeed, for gun advocates the debate could not be more fortuitously framed if the agenda were set by a skilled debater. A skilled debater knows the rhetorical value of getting your opponent to mount a defense and thereby implicitly cede the importance of a point, and then overwhelming his argument on that point.
Why do debates on inherently multi-dimensional issues tend to align themselves so neatly on one axis? And given that they do, why does the side that’s going to lose on those grounds play along? I have a theory.
Debate is not about convincing your opponent but about mobilizing the spectators. And convincing the spectators is neither necessary nor sufficient for gaining momentum in public opinion. To convince is to bring others to your side. To mobilize is to give your supporters reason to keep putting energy into the debate.
The incentive to be active in the debate is multiplied when the action of your supporters is coordinated and when the coordination among opposition is disrupted. Coordinated action is fueled not by knowledge that you are winning the debate but by common knowledge that you are winning the debate. If gun control advocates watch the news after the latest mass killing and see that nobody is seriously representing their views, they will infer they are in the minority and give up the fight even if in fact they are in the majority.
Common knowledge is produced when a publicly observable bright line is passed. Once that single dimension takes hold in the public debate it becomes the bright line: When the dust is settled it will be common knowledge who won. A second round is highly unlikely because the winning side will be galvanized and the losing side demoralized. Sure there will be many people, maybe even most, who know that this particular issue is of secondary importance but that will not be common knowledge. So the only thing to do is to mount your best offense on that single dimension and hope for a miracle or at least to confuse the issue.
(Real research idea for the vapor mill. Conjecture: When x and y are random variables it is “easier” to generate common knowledge that x>0 than to generate common knowledge that x>y.)
Chickle: Which One Are You Talking About? from www.f1me.net.
David Mitchell is a stammerer who wrote beautifully about it in his semi-autobiographical novel Black Swan Green. Here is Mitchell on The King’s Speech. In the article he talks about his own strategies for coping with stammering:
If these technical fixes tackle the problem once it’s begun, “attitudinal stances” seek to dampen the emotions that trigger my stammer in the first place. Most helpful has been a sort of militant indifference to how my audience might perceive me. Nothing fans a stammer’s flames like the fear that your listener is thinking “Jeez, what is wrong with this spasm-faced, eyeball-popping strangulated guy?” But if I persuade myself that this taxing sentence will take as long as it bloody well takes and if you, dear listener, are embarrassed then that’s your problem, I tend not to stammer. This explains how we can speak without trouble to animals and to ourselves: our fluency isn’t being assessed. This is also why it’s helpful for non-stammerers to maintain steady eye contact, and to send vibes that convey, “No hurry, we’ve got all the time in the world.”
(Gat Gape: The Browser) Incidentally, I watched The King’s Speech and also True Grit on a flight to San Francisco Sunday night while the Oscars were being handed out down below. I enjoyed the portrayal of stammering in TKS but unlike Mitchell I didn’t think that subject matter alone carried an entire film. And there wasn’t much else to it. (And by the way here is Christopher Hitchens complaining about the softie treatment of Churchill and King Edward VIII.)
True Grit was also a big disappointment. I haven’t seen Black Swan but I hear it has some great kung fu scenes.
Cheap Talk 