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As far as I know. Anyway I always assumed that the Ely Lecture at the AEA meetings was named after me.
But changing the subject, Adriana Lleras-Muney writes to me:
From Henry Miller
“To be intelligent may be a boon, but to be completely trusting, gullible to the point of idiocy, to surrender without reservation is of of the supreme joys of life”
I think Henry Miller is confusing correlation with causation. Its probably true that in our happiest moments (among those moments we are with other people–I might even dispute that those moments are the happiest unconditionally) we are trusting, gullible and idiotically surrendering. But that’s likely because we are with a certain person and in a certain blissful state that we respond by surrendering. Its the person and the state that brings us the supreme joy and our surrender is just a symptom of that joy. I might go far as to say that the surrender is a complementary good but its enough to think about surrendering to the very next person who knocks on your office door to convince you that the surrender is not itself the source of joy.
And I have been to many very good Chinese restaurants in China, Taiwan, Singapore etc. This place is called Peter Chang’s China Grill. Here’s Wikipedia about the chef. Here are the badly misguided Yelp reviews. Note that from the look of the restaurant, the location, the service you would never guess what was in store for you. Indeed I was terrified when the folks at UVA told me we were driving off campus to go have Chinese for lunch, even moreso when I saw the place they were taking me to. But the food was a revelation. You probably do need to know what and how to order. For that I suggest getting invited to give a talk at the University of Virginia Economics department.
It’s called Coffee Places Where You Can Think, and its right there. A word of caution though. Ariel is a connoisseur of coffee houses but his preferences are guided mostly by the atmosphere of the place and not at all by the quality of the coffee. Indeed his bad taste in coffee rivals only his bad taste in web site designs. So use this guide accordingly. (Here is a series of pictures of Ariel’s tin can of instant coffee traveling to exotic locales across the world.)
But the picture above is from The Mudhouse in Charlottesville, Virginia which is a place I can also highly recommend, having been there and had an exquisite cappuccino just last month with Federico Ciliberto.
There’s someone you want to hook up with. How do you find out if the attraction is mutual while avoiding the risk of rejection? That is simply not possible no matter how sophisticated a mechanism you use. Because in order for the mechanism to determine whether the attraction is mutual you must communicate your desire to hook up but she’s not that into you, well you are going to be rejected.
But rejection per se is not the real risk. Because if she rejects you without ever actually knowing it, you will be disappointed but you won’t be embarrassed. The real cost of rejection comes only when rejection is common knowledge between the rejector and the rejected.
So to design a mechanism that maximizes the number of hookups you need to give people maximal incentives to reveal whom they want to hook up with and to do that you need to insure them against common-knowledge rejections.
And that’s where Bang With Friends comes in.
Bang With Friends is a Facebook app, coded by a few college kids in a weekend, that facilitates no-risk hookups with people on your friends list. You say you’d like to bang them, and no one ever knows, unless they happen to say that they’d like to bang you, too.
Now this indeed takes care of one side of the incentive problem, but I worry about the other side. Suppose I want to know who wants to bang with me even if I don’t have the same lust for them. I can find out by putting all of my friends on my Down To Bang list. The only cost I pay for this information is that all of those who are down to bang with me will be told that I am down to bang with them. In some cases this could be lead to some embarrassment and awkwardness but I imagine some people would pay that price just to find out. And anticipating this possibility everyone is again reluctant to be truthful about who they do want to Bang for fear of being caught out this way.
One way to mitigate the problem is to replace the flat list with a ranking of your friends from most to least Bang-able, and then establish a hookup only with the friend who is highest on your ranking among those who want to Bang back. Then if you do decide to pad your list, you will put the reconnaissance Bangage low on your list. Of course this will allow you to find out those friends who put you highest on their ranking, but at least this is less information than you can get with the existing system.
Congratulations to our colleague Aviv Nevo on his appointment to this position which Thomson-Reuters says will make him the top non-lawyer at the Department of Justice (there’s a joke in there somewhere).
Aviv joined our department the same year I rejoined and we both wanted the same office. Highest seniority in our department determines priority for choosing offices and to break the tie there was a coin toss. I was in Boston and couldn’t actually witness the coin toss but they tell me I lost.
So Aviv got the office, but he also got seniority which means he is in line to be chairman before me. I am sure he will be back with us in time to take his turn.
With social networking you are now exposed to so many different voices in rapid succession. Each one is monotonous as an individual but individual voices arrive too infrequently for you notice that, all you see is the endless variety of people saying and thinking things that you can never think or say. It seems like the everyone in the world is more creative than one-dimensional you.
- To indirectly find out what a person of the opposite sex thinks of her/himself ask what she thinks are the big differences between men and women.
- Letters of recommendation usually exaggerate the quality of the candidate but writers can only bring themselves to go so far. To get extra mileage try phrases like “he’s great, if not outstanding” and hope that its understood as “he’s great, maybe even outstanding” when what you really mean is “he’s not outstanding, just great.”
- In chess, kids are taught never to move a piece twice in the opening. This is a clear sunk cost fallacy.
- I remember hearing that numerals are base 10 because we have 10 fingers. But then why is music (probably more primitive than numerals) counted mostly in fours?
- “Loss aversion” is a dumb terminology. At least risk aversion means something: you can be either risk averse or risk loving. Who likes losses?
Can opposite-sex friendships last? Only if the two are mutually deceived:
The results suggest large gender differences in how men and women experience opposite-sex friendships. Men were much more attracted to their female friends than vice versa. Men were also more likely than women to think that their opposite-sex friends were attracted to them—a clearly misguided belief. In fact, men’s estimates of how attractive they were to their female friends had virtually nothing to do with how these women actually felt, and almost everything to do with how the men themselves felt—basically, males assumed that any romantic attraction they experienced was mutual, and were blind to the actual level of romantic interest felt by their female friends. Women, too, were blind to the mindset of their opposite-sex friends; because females generally were not attracted to their male friends, they assumed that this lack of attraction was mutual. As a result, men consistentlyoverestimated the level of attraction felt by their female friends and women consistently underestimated the level of attraction felt by their male friends.
At some level this is automatically true. Assume simply this: all men are attracted to all women. Then which women will the men be friends with? The ones they expect to be able to hook up with. Of these friendships few will survive: if she figures out he is attracted to her she will either hookup with him (if its mutual) or run away (if its not). Either way the platonic friendship ends. The only surviving friendships will be those in which he thinks she’s attracted to him, she’s not attracted to him and she hasn’t yet figured out he’s attracted to her. QED.
- Is it that women like to socialize more than men do or is it that everyone, men and women alike, prefers to socialize with women?
- A great way to test for strategic effort in sports would be to measure the decibel level of Maria Sharapova’s grunts at various points in a match.
- If you are browsing the New York Times and you are over your article limit for the month, hit the stop button just after the page renders but before the browser has a chance to load the “Please subscribe” overlay. This is easy on slow browsers like your phone.
- Given the Archimedes Principle why do we think that the sea level will rise when the Polar Caps melt?
You must watch Balasz Szentes’ talk at the Becker Friedman Institute. At the very least, watch up until about 7:00. You will not regret it. (Note that Gary Becker was sitting in the front row.)
Ariel Rubinstein brings his game theory debunking manifesto to The Browser.
In general, I would say there were too many claims made by game theoreticians about its relevance. Every book of game theory starts with “Game theory is very relevant to everything that you can imagine, and probably many things that you can’t imagine.” In my opinion that’s just a marketing device.
Let’s show its usefulness by using game theory to analyze Ariel Rubinstein. We model him with the following game. Ariel is the first mover. He privately observes whether game theory is useful. Then he has the first decision to make. He can either announce publicly that game theory is not useful or stay silent. If he stays silent the game is over. If he announces then everybody else moves next. We can either try to prove him wrong by citing examples where game theory is useful or we can stay silent. Then the game ends.
Let’s solve the game by backward induction. If Ariel has announced that game theory is not useful, each of us has a strong incentive to find examples to prove him wrong so we do (assuming game theory is in fact useful which we will find out by looking for examples.) Knowing this, and having privately observed that game theory is useful and being the humble yet social-welfare maximizing (not to mention supremely strategic) person Ariel is, Ariel announces that game theory is not useful so as to give the rest of us the incentive and the glory of proving him wrong.
And so it is done.
You poor sap. I know you won’t believe any of this, but you should. How can I get it through your thick, acne-pocked skull? All the stupid things you are so worried about really aren’t very important at all. In fact, they are the opposite of important. What if I told you that all the “winners” around you right now were actually the losers? Well, I just did tell you that, but you still don’t believe me because I’m an adult and 16 year olds can never trust adults.
What if I tried to explain it this way: That feeling you’ve never been able to put a name on — it feels something like, let’s say, a bone-crushing insecurity and cluelessness about your place in the world — just forget about it! That’s right. You can forget about it and go about your days — confident with the knowledge that it’s all going to work out just fine.
Could it be that this kind of confidence would just turn his 16 year old self into one of the winners who will eventually turn out to be a loser? Isn’t that kind of confidence exactly what separates the winners in high school from the losers? And what else but insecurity and cluelessness about your place in the world leads a 16 year old to give up on the present and try to explore ways of being that might one day give him real self-confidence and not just the artificially, socially propped-up kind?
I have known Larry since the time I was on the junior job market and he was winding down a spectacular term as chairman of the BU economics department, having built a top-ten department out of nothing. Eight years later I spent a year as a faculty member at BU and again Larry was chairman. Everybody who has spent any time with Larry in a professional capacity agrees that he is a natural-born leader. He just has this quality that draws people from all sides to his. And he knows how to make an organization work. On top of all that he is great economist with world-leading expertise on the topics that would be most important for a President right now to know. I honestly can’t think of anybody I know personally who would make a better President than Larry. I might even vote for him.
Here’s his campaign web page. Via Tyler Cowen on Twitter.
Someone you know is making a scene on a plane. They don’t see you. Yet. As of now they think they are making a scene only in front of total strangers who they will never see again. It might be awkward if they knew you were a witness. Should you avert your eyes in hopes they won’t see you seeing them?
If they are really making a scene it is highly unlikely that you didn’t notice. So if eventually he does see you and sees that you are looking the other way he is still going to know that you saw him. So in fact it’s not really possible to pretend.
Moreover if he sees that you were trying to pretend then he will infer that you think that he was behaving inappropriately and that is why you averted your eyes. Given that he’s going to know you saw him you’d rather him think that you think that he was in fact in the right. Then there will be no awkwardness afterward.
However, there is the flip side to consider. If you do make eye contact there will be higher order knowledge that you saw him. How he feels about that depends on whether he thinks his behavior is inappropriate. If he does then he’s going to assume you do too. Once you realize you can’t avoid leaving the impression that you knew he was behaving inappropriately, and the unavoidable mutual knowledge of that fact, the best you can do is avoid the higher-order knowledge by looking the other way.
So it all boils down to a simple rule of thumb: If you think that he knows he is behaving inappropriately then you should look away. You are going to create discomfort either way, but less if you minimize the higher-orders of knowledge. But if you think that he thinks that in fact he has good reason to be making a scene then, even if you know better and see that he is actually way out of line, you must make eye contact to avoid him inferring that you are being judgmental.
Unless you can’t fake it. But whatever you do, don’t blog about it.
When you shop for a gift, your recipient observes only what you bought, and not what alternatives you considered.
Why would price matter more to givers than receivers? Dr. Flynn and his Stanford colleague, Gabrielle Adams, attribute it to the “egocentric bias” of givers who focus on their own experience in shopping. When they economize by giving a book, they compare it with the bracelet that they passed up.
But the recipients have a different frame of reference. They don’t know anything about the bracelet, so they’re not using it for comparison. The salient alternative in their minds may be the possibility of no gift at all, in which case the book looks wonderfully thoughtful.
Click through for an excellent article on giving, touching on the potlatch, the gift registry, and re-gifting.
You and your partner have to decide on a new venture. Maybe you and your sweetie are deciding on a movie, you and your co-author are deciding on which new idea to develop, or you and your colleague are deciding which new Assistant Professor to hire.
Deliberation consists of proposals and reactions. When you pitch your idea you naturally become attached to it. Its your idea, your creation. Your feelings are going to be hurt if your partner doesn’t like it.
Maybe you really are a dispassionate common interest maximizer, but there’s no way for your partner to know that for sure. You try to say “give me your honest opinion, I promise I have thick skin, you won’t hurt my feelings.” But you would say that even if it’s a little white lie.
The important thing is that no matter how sensitive you actually are, your partner believes that there is a chance your feelings will be hurt if she shoots down your idea. And she might even worry that you would respond by feeling resentful towards her. All of this makes her reluctant to give her honest opinion about your idea. The net result is that some inferior projects might get adopted because concern for hurt feelings gets in the way of honest information exchange.
Unless you design the mechanism to work around that friction. The basic problem is that when you pitch your idea it becomes common knowledge that you are attached to it. From that moment forward it is common knowledge that any opinion expressed about the idea has the chance of causing hurt feelings.
So a better mechanism would change the timing to remove that feature. You and your partner first announce to one another which options are unacceptable to you. Now all of the rejections have been made before knowing which ones you are attached to. Only then do you choose your proposal from the acceptable set.
If your favorite idea has been rejected then for sure you are disappointed. But your feelings are not hurt because it is common knowledge that her rejection is completely independent of your attachment. And for exactly that reason she is perfectly comfortable being honest about which options are unacceptable.
This is going to work better for movies, and new Assistant Professors than it is for research ideas. Because we know in advance the universe of all movies and job market candidates.
Research ideas and other creative ventures are different because there is no way to enumerate all of the possibilities beforehand and reject the unacceptable ones. Indeed the real value of a collaborative relationship is that the partners are bringing to the table brand new previously unconceived-of ideas. This makes for a far more delicate relationship.
We can thus classify relationships according to whether they are movie-like or idea-like, and we would expect that the first category are easier to sustain with second-best mechanisms whereas the second require real trust and honesty.
If you have a meeting scheduled at 2 and you are worried its going to drag on too long, what do you do? Here’s a confession: Sometimes I lie and say I have an appointment and I have to leave at 3. But it’s a double-edged sword.
Because warning my friend that I will have to leave at 3 implies that I anticipate that the hour will be a binding constraint. That would only be true if I expect the meeting to go that long. My friend will therefore infer that the topic of our meeting is important enough to me to potentially warrant an hour of face time.
As far as I know, had I never said anything he might have kept the meeting to 30 minutes, but now that I capped it at 3:00, its a sure thing we are going to meet for the full hour.
The problem is that there is no way I can know how long he was planning to meet. If i knew he was planning to leave at 2:30 I wouldn’t say anything. But if he is actually planning to stay until 4:30 and I don’t invent a 3:00 appointment I am hosed.
Of course some meetings really need to take more than 30 minutes and often you only discover that in the course of the meeting. The downside of the cap is that it commits you. Unless you want to lose all credibility you are going to have to keep to your fictional meeting and cut those meetings shorter than they should be.
So what is the optimal cap? The tradeoffs are reminiscent of textbook monopoly pricing. You have your marginal and infra-marginal meetings. If i raise the cap by a minute then the marginal meeting gets the extra minute that it really needs but the infra-marginal meeting gets needlessly extended.
Its a complicated calculation that comes down to hazard rates, incentive constraints, etc. but I will save you the effort; I have done the integration by parts. The optimal cap is exactly 37 minutes. You can’t say that of course because your friend will know that nobody schedules appointments at 2:37, so you will have to round up or down to the half hour.
Or schedule all your meetings to start at 23 minutes past the hour.
Measuring social influence is notoriously difficult in observational data. If I like Tin Hat Trio and so do my friends is it because I influenced them or we just have similar tastes, as friends often do. A controlled experiment is called for. It’s hard to figure out how to do that. How can an experimenter cause a subject to like something new and then study the effect on his friends?
Online social networks open up new possibilities. And here is the first experiment I came across that uses Facebook to study social influence, by Johan Egebark and Mathias Ekstrom. If one of your friends “likes” an item on Facebook, will it make you like it too?
Making use of five Swedish users’ actual accounts, we create 44 updates in total during a seven month period.1 For every new update, we randomly assign our user’s friends into either a treatment or a control group; hence, while both groups are exposed to identical status updates, treated individuals see the update after someone (controlled by us) has Liked it whereas individuals in the control group see it without anyone doing so. We separate between three different treatment conditions: (i) one unknown user Likes the update, (ii) three unknown users Like the update and (iii) one peer Likes the update. Our motivation for altering treatments is that it enables us to study whether the number of previous opinions as well as social proximity matters.2 The result from this exercise is striking: whereas the first treatment condition left subjects unaffected, both the second and the third more than doubled the probability of Liking an update, and these effects are statistically significant.
Assume that people like to have access to a community of people with similar habits, tastes, demographics, etc. A “community” is just a group of some minimal absolute size. Then the denser the population the more likely you will find enough people to form such a community.
But this effect is larger for people whose tastes, habits, and demographics are more idisyncratic than for people in the majority. Garden-variety people will find a community of garden-variety people just about anywhere they go. By contrast, if types of people are randomly distributed across locations, the density of cities makes it more likely that a community can be assembled there.
But that means that types won’t be just randomly distributed across locations. The unique types are willing to pay more to live in cities than the garden-variety types.
You receive an email with a question asking for advice or a suggestion or an opinion. To give a full answer you would have to take some time to think. You are a little busy and you would rather not give it too much thought but there is a second consideration that leads you to give the quick and dirty answer right away. The longer you wait the longer they will know you thought about it and the more credence they will give your answer. Not to mention that more of your reputation will be at stake if you are assumed to have thought carefully.
Still, some issues are important enough to give thought to. But how much? The same tradeoff is there, but now the characteristics of the correspondent matter. Every additional second you spend thinking allows you to make a slightly more thoughtful answer but also increases what he expects of you. If he is very sharp, he will be read your reply and possibly see deeper into the question than you did making you look bad. The gap only gets bigger the longer you wait. If he is less sharp, every second tilts the balance in your favor.
All of this is predicated on him knowing just how much time you spent on the question. You want to manipulate this by establishing a reputation for rapid-fire responses. Then if you wait a day but still give a lousy answer, he will put it down to you just having been busy for day before giving your usual top-of-your-head reply. Indeed you want everyone to think you are busier than you are.
Then along comes instant messaging, facebook, etc speeding up communications. You are expected to have seen the message sooner so its harder to pretend you were unavoidably delayed. On the plus side though now you can more easily commit to being busy. Just friend everyone. Your feed is so cluttered up with babble that these really important questions credibly get lost in the shuffle. He can directly see how overloaded you are.
So the value of your marginal friend is equal to the incremental publicly observed distraction she creates.
Amazon has patented a way to let you return gifts before you even receive them.
Amazon’s innovation, not ready for this Christmas season, includes an option to “Convert all gifts from Aunt Mildred,” the patent says. “For example, the user may specify such a rule because the user believes that this potential sender has different tastes than the user.” In other words, the consumer could keep an online list of lousy gift-givers whose choices would be vetted before anything ships.
The benefit to the receiver is clear. The benefit to Amazon is even bigger:
The proposal has also brought into focus a very costly part of the e-retailing business model: Up to 30 percent of purchases are returned, and the cost of getting rejected gifts back across the country and onto shelves has online retailers scrambling for ways to reduce these expenses.
To the giver? Think of it as weakly dominating a gift card. It’s a gift card with a default. If gifts are better that gift cards because they allow you to show the recipient something they never would have found/considered on their own, then this system achieves that without the risk of it going badly. Perhaps that allows you to take even more risks with your gifts. Not everyone is happy though.
“This idea totally misses the spirit of gift giving,” Post said. “The point of gift giving is to allow someone else to go through that action of buying something for us. Otherwise, giving a gift just becomes another one of the world’s transactions.”
Amazon’s system gives users a “Gift Conversion Wizard” through which they can program various rules like “no gifts made of wool” or ”Convert any gift from Aunt Mildred to a gift certificate, but only after checking with me.” But what will the giver be told?
Most cleverly – or deviously, depending on your attitude toward this sort of manipulation – the gift giver will be none the wiser: “The user may also be provided with the option of sending a thank you note for the original gift,” according to the patent, “even though the original gift is converted.” (Alternatively, a recipient could choose to let the giver know he has exchanged the item for something else.)
Casquette cast: Courtney Conklin Knapp.
Facebook, Buzz, Reader, and other social networking sites all have one thing in common: if you like something then you get to like it. But you never get to dislike what you dislike. (Sure you can unlike what you previously liked, but just as with that other interest rate you are constrained by the zero lower bound. You can’t go negative.)
This kind of system seems to pander to people such as me who obsessively count likes (and twitter followers, and google reader subscribers and…) because for people like us even a single dislike would be devastating. With only positive feedback possible we are spared the bad news.
But after a while we start to get the nagging suspicion that the lack of a like is tantamount to being disliked. We put ourselves in the mind of each individual reader. If she liked it then she will like it. If she didn’t like it, she would like to dislike it but she can’t. So she’s silent. But then if she was neutral she now knows that by being silent she is going to be pooled with with the
dislike haters. She doesn’t want to hurt my feelings so she likes. Kindhearted but cruel: now I know that everyone who didn’t like indeed didn’t like. It’s exactly as if there was a dislike button. Despair.
But wait. One wrinkle saves our fragile ego. Some people are just too busy to like. Or they don’t know about the like button. And who knows exactly how many people read the article anyway. So a non-like could be any one of these. Which means that kindhearted neutrals can safely stay on the sidelines and pool with these non-participants. A pool big enough to drown out the haters. Joyful noise! And as a bonus I get to know for sure that the likers are likers and not just patronizers.
Finally there’s the personal aspect, it’s flattering to see who likes. The serial likers keep me going. Especially this one regular reader who by amazing coincidence has the same name as me and who likes everything I write.
Throw a party. And use a system like evite.com to handle the invitations. There is a typical pattern to the responses over time. You will have an initial flurry of yeses and regrets followed by a long period of silence punctuated by sporadic responses which continues to the days before the party. Then there is a final flurry and that is when you learn if your friends are real friends.
Because people come to your party for one of two reasons. Either they like you or they just feel obligated for reasons like you are an important co-worker or they don’t want to hurt your feelings, etc. Think of how these two types of people will handle your invitation.
An invitation is an option that can be exercised at any time before the date of the party. The people who did not respond immediately are waiting to decide whether to exercise the option. If she’s a true friend then this is because she has a potential conflict that would prevent her attending. She is waiting and hoping to avoid that conflict. When she is sure there is no conflict she will say yes.
The other people are hoping for an excuse not to come. Once they get a better offer, manage to schedule a conflicting business trip, or otherwise commit themselves, they will send their regrets.
In both cases, when the party is imminent, the option value of waiting is gone. Those who want to come but haven’t gotten out of their conflict give up and send their regrets. Those who hoped to get out of it but failed to come up with a believable excuse give up and accept.
So, a simple measure of how much your friends like you is the proportion of acceptances that arrive in the final days. Lots of acceptances means you better set aside a few extra drinks for yourself.
Because communication requires both a talker and a listener and it takes time and energy for the listener to process information. So it may be cheap to talk but it is costly to listen.
But then the cost of listening implies that there is an opportunity cost to everything you say. Because you can only say so much and still be listened to. They won’t drink from a firehose.
When you want to be listened to you have an incentive to ration what you say, and therefore the mere fact that you chose to say something conveys information about how valuable it was to you to have it heard. There is no babbling because babbling isn’t worth it.
I also believe that this is a key friction determining the architecture of social networks. Who talks and who listens to whom? The efficient structure economizes on the cost of listening. It is efficient to have a small number of people who specialize in listening to many sources then selectively “curating” and rebroadcasting specialized content. End-listeners are spared the cost of filtering. The economic question is whether the private and social incentives are aligned for someone who must ration his output in order to attract listeners.
A guy sometimes says stuff that, for reasons completely mysterious to him, hurts a girl’s feelings. It comes out that she’s hurt and he desperately tries to explain. He didn’t mean it. He didn’t think she would interpret it that way. He was just talking. She’s taking it too personally.
He forgets to call, he misses important dates, he get stalled by unexpected commitments. She listens to all of his excuses.
He’s trying to convince her that he had the right intentions. You see, he thinks that relationships are all about moral hazard. He wants her to know that he’s trying hard, but mistakes get made.
And he can never figure out why this isn’t enough for her. But the reason is simple. For her, relationships are all about adverse selection. It’s not his actions per se, it’s what they reveal about his type. She’s perfectly willing to forgive his missteps, she believes him that he’s trying hard and that he didn’t know he was being a louse, but that’s precisely the problem. If he weren’t such a lemon he would know the right way to say things, she’d always be in his thoughts, and she’d always be his highest priority.
If you receive email from ‘me’ and every instance of the word “me” is single-quoted, as in ‘me,’ don’t bother looking for any hidden message.
Rather it is a strange bug in my iPhone text-substitution mechanism which replaces every instance of me with ‘me.’ I could probably figure out how to fix this, but I might not. Sometimes feel like I am encased in single quotes so it seems appropriate.
Imagine the game: you and your partner are holding opposite ends of a rope which has a ribbon hanging from the middle of it. Your goal is to keep the ribbon dangling above a certain point marked on the ground.
This game is the Tug of Peace. Unlike a tug of war, you do not want to pull harder than your partner. In fact you want to pull exactly as hard as she pulls.
That shouldn’t be too difficult. But what if you feel that she is starting to tug a little harder than at first and the ribbon starts to move away from you. You will tug back to get it back in line.
But now she feels you tugging. If she responds, it could easily escalate into an equilibrium in which each of you tugs hard in order to counteract the other’s hard tugging.
This is metaphor for many relationship dysfunctions. For no reason other than strategic uncertainty you get locked into a tug of peace in which each party is working hard to keep the relationship in balance.
There is an even starker game-theoretic metaphor. Suppose that you choose simultaneously how hard you will tug and your choice is irreversible once the tugging begins. You never know how cooperative your partner is, and so suppose there is a tiny chance that she wants the ribbon just a little bit on her side of the mark.
Ideally you would both like to tug with minimal effort just to keep the ribbon elevated. But since there is a small probability she will tug harder than that you will tug just a little harder than that too to get the ribbon centered “on average.” Now, she knows this. And whether or not she is cooperative she will anticipate your adjustment and tug a little harder herself. But then you will tug all the harder. And so on.
This little bit of incomplete information causes you both to tug as hard as you can.
How often do you and your friends agree?
According to recent work by Winter Mason, Duncan Watts, and myself [Sharad Goel], you probably don’t know them as well as you think. In particular, we found that when friends disagree on a political issue, they are unaware of that disagreement about 60% of the time. Even close friends who discuss politics are typically unaware of their differences in opinions.
You probably can guess my reaction. (Or at least you think you can.) Since I am always right, and my friends are right more often than they are wrong, I am right to assume that they agree with me more often than not.
It turns out that my distant friends are right just about as often as my close friends:
people consistently overestimate the likelihood that their friends agree with them on political issues. Notably, even though close friends (so-called strong ties) are in reality more likely to agree with one another than distant friends, people do not appropriately adjust their perceptions. In other words, though we think close and distant friends are about equally likely to agree with us on political issues, in reality we are much more likely to agree with close friends.
I am very interested in this kind of survey work because I think that people do overestimate how similar they are to the rest of the world and I think it has important consequences. But perhaps for different reasons than these authors are emphasizing.
At the margin people are too reluctant to express themselves because they assume that what they have to say is obvious. But in fact the obvious thing is exactly what you want to say. Because the more obvious the thought the more likely it is uniquely yours and the more valuable it is to others.
Ryan Avent’s self-styled populist post takes to task a rich man’s tax-conscious balance sheet dance:
As far as I can tell, this is entirely within the law. But I don’t think it’s improper to declare it obscene. Shameful, even. With a fortune of that size, additional wealth is about little more than score-keeping.
Everyone has this natural response to a rich person desiring to avoid taxes. We all think like Ryan does:
But let’s be honest for a moment. According to this Bloomberg story, Mr Lampert is worth $3 billion. If he earns just 1% per year on that fortune—and he certainly earns much more—then he takes home $30 million in income. Per year. That’s 600 times the median household income in America. It’s more money than a person can reasonably spend. With that much money you can binge every day, and yet the money will just keep accumulating.
But you don’t have to think much longer than that to see a different side of things. Since Mr. Rich is beyond the binge-every-day constraint, there are lots of other things he can do with his money besides bingeing. For example, if you were Mr. Rich you could probably think of a lot of loved ones you would like to make happy by sharing your wealth with them. Or perhaps you understand that money is what determines what gets done in the world and maybe you have very strong feelings about what should get done.
Like maybe you want to be able to donate to artists or schools or libraries. Maybe you want to help prevent HIV infection. Is it so obvious that a rich man, already beyond bingeing, who wants an extra dollar is being more greedy than a middle-class man who wants to get a dollar closer to the bingeing stage?
Let me be clear that I don’t believe that all of the Mr. Riches are trying to be Bill and Melinda Gates. But I don’t see how you can conclude just from the fact that someone is rich that they don’t have reasons that we would be completely sympathetic to if we knew them.
And if I were a smart do-gooder who thought that everyone on Wall Street was evil the obvious thing to do would be to start a hedge fund, rip them off, and spend their money to meet my goals.
Ghutrah greeting: gappy3000.