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I mean, I wrote back to some of the people – some of them in holy orders or running religious organizations. I said, when you say you’ll pray for me, do you mind if I ask, what for? And a number of them said, quite honestly, not really for your recovery, but that you see the error of your ways.
BLOCK: That you find God.
Mr. HITCHENS: Yeah. Now, I find that not as easy to be graceful about, because though it’s put in a nice way, it’s part of a phenomenon that I’ve always thought of as very disgusting, which is the belief of the religious – which they keep expressing and have done for centuries – that surely now you’re dying, your fears will overcome your reason.
I hope I don’t have to underline what’s horrible about that. There’s an element of blackmail to it. And an element also of tremendous insecurity, I think, on their part. I mean, they don’t seem to feel they’d win the argument so easily with someone who is mentally and physically strong. By the way, I think they’re right.
Chrisopher Hitchens is probably dying from cancer. And if he is, the day will come soon when the people with whom he frames this conflict will never matter again and the only ones left will be Hitchens and God.
When that moment comes why should Christopher Hitchens not try to make it to Heaven? At that moment what does he have to lose? Maybe there is still a little bit of life left to live and doing whatever it takes, praying, reconciling, fretting, may not be the way he wanted to spend it. Or he might feel like a death-bed entreaty only makes a mockery of his life as an outspoken atheist. But now this starts to sound like reason overcome by fear.
Doesn’t reason dictate that unless Hitchens is absolutely convinced there is no God he should, at the very least, say to whoever might be listening “Hey, please let me into Heaven.” ? And doesn’t reason dictate that you cannot be absolutely certain of anything?
But what if God can tell whether you really mean it? He sees through some bogus last-minute self-serving plea. He wants Hitchens to say “Dear God, I believe in you.” And Hitchens, who rationally accepts that God might exist, nevertheless considers it unlikely and therefore cannot honestly say that. At best he could say “Dear God, I p-believe in you, but I admit that p is on the low side.” But shouldn’t he at least say that? After all Hitchens, being a man of reason, cannot be sure exactly what p God demands.
A reasonable Hitchens should understand that God, if he exists, understands Hitchens. “Dear God, conditional on you existing, you deserve all the faith and honesty that you demand of me. However, I am not sure that you exist. In all honesty I think it is unlikely. Here’s the problem. I have used reason to find evidence of your existence but so far I have not found enough to be convinced. If you do exist then evidently I have failed. It could be that I relied too much on reason, but reason told me that there was nothing else to use. I am imperfect, as you of course would know if you exist. In that case I am sorry and I ask your forgiveness.”
As to which God Hitchens is supposed to address this to, that is not a problem. He can make a separate speech to each of the Gods that might be threatening him with damnation in the afterlife. Even if there is an uncountable number of such hypothetical Gods, he can single out the finite number who have Books about them and then say a final catch-all speech addressed at all the others.
There is only one way I can see a reasonable Hitchens deciding against this strategy. He says “Jeff, you are right that since I accept that God might exist and if there is any chance at all that God will allow me into Heaven I should do whatever it takes, within reason, to try and get there. However, among all of the hypothetical Gods that might exist, there is one in particular I am especially nervous about. He’s the God who allows everyone into Heaven except those that ask to go there. And, call me cynical, but reason tells me that in the highly unlikely event that there is a God, out of all the highly unlikely Gods that mankind has imagined, He’s no less likely than the others.”
Last week there were numerous celebrations at Northwestern in honor of our colleague Dale Mortensen, one of the new Nobel Laureates in Economics. There were two highlights. First, here is Dale opening a bottle of champagne with a sword.
and here is a really lovely moment captured on voicemail at 5:30AM CDT.
(thanks for that last bit of clarification Dale! 🙂 )
This is the greatest thing the internet has ever given me (gg: Chris Blattman.) The internet will surely live to regret it.
I once had a dream where I met Paul Krugman at a party. It went like this:
This happened in a dream I had. We were at a large round table having dinner. I was talking about pizza and saying something typically smart-ass about how to make good crust. Krugman was at the other end of the table and overheard. He jumped in just long enough to reduce my pizza thesis to mere crumbs. The rest of the guests looked on in pity.
When the party was over, I bumped into him again on the way out. We had this little conversation:
In the wake of the Nobel for the search theory of unemployment, let’s talk about the search models that really matter: hooking up.
Everybody who reads this blog understands the Prisoner’s Dilemma. Play it just once and neither side will cooperate. So a simple theory of relationships is based on a repeated Prisoner’s Dilemma. When the relationship can potentially continue, there is now an incentive to cooperate today in order to maintain cooperation in the future. Put differently, the threat of a future breakdown of cooperation enforces cooperation today.
But things get interesting when we embed this into a search and matching model. Out of the large pool of the unmatched, two singles get “matched” and they start a relationship, i.e. a repeated prisoner’s dilemma. As long as the relationship continues each decides whether to cooperate or defect and at any stage either party can break-up the relationship and go find another match.
This possibility of breaking up the match adds a new friction to relationships. The threat of a breakdown in the current relationship is not enough anymore to incentivize cooperation because that threat can be avoided by leaving. And indeed, it’s not an equilibrium anymore for relationships to work efficiently because then any partner can cheat in his current relationship and then immediately go find another partner (who, expecting cooperation, is the next sucker, etc.)
Something has to give to maintain incentives. What’s the best way to make relationships just inefficient enough to keep as much cooperation as possible? A simple solution is to “start small:” At the beginning of any relationship there is a trial phase where the level of cooperation is purposefully low, and only after both partners remain in the relationship through the trial phase do they start to get-it-, er, cooperate.
This courtship ritual is privately wasteful but socially valuable. Once I am in a relationship I am willing to wait through the trial phase because the reward of cooperation is waiting for me at the end. And once the trial phase is over I have no incentive to cheat because then I would just have to go through the trial phase again with my new partner. Equilibrium is restored.
There are a number of different spins on this idea in the literature. There was an early series of papers by Joel Watson based on a model with incomplete information. I remember really liking this paper by Lindsey, Polak, and Zeckhauser on “Free Love, Fragile Fidelity, and Forgiveness.” And this quarter, we heard David McAdams with a new perspective on things, including some conditions under which courtship can be dispensed with altogether and partners can get right down to business.
Tyler Cowen explores economic ideas that should be popularized. Let me take this opportunity to help popularize what I think is one of the pillars of economic theory and the fruit of the information economics/game theory era.
When we notice that markets or other institutions are inefficient, we need to ask compared to what? What is the best we could possibly hope for even if we could design markets from scratch? Myerson and Satterthwaite give the definitive answer: even the best of all possible market designs must be inefficient: it must leave some potential gains from trade unrealized.
If markets were perfectly efficient, whenever individual A values a good more than individual B it should be sold from B to A at a price that they find mutually agreeable. There are many possible prices, but how do they decide on one? The Myerson-Satterthwaite theorem says that, no matter how clever you are in designing the rules of negotiation, inevitably it will sometimes fail to converge on such a price.
The problem is one of information. If B is going to be induced to sell to A, the price must be high enough to make B willing to part with the good. And the more B values the good, the higher the price it must be. That principle, which is required for market efficiency, creates an incentive problem which makes efficiency impossible. Because now B has an incentive to hold out for a higher price by acting as if he is unwilling to part with the good. And sometimes that price is more than A is willing to pay.
From Myerson-Satterthwaite we know what the right benchmark is for markets: we should expect no more from them than what is consistent with these informational constraints. It is a fundamental change in the way we think about markets and it is now part of the basic language of economics. Indeed, in my undergraduate intermediate microeconomics course I give simple proof of a dominant-strategy version of Myerson-Satterthwaite, you can find it here.
(Myerson won the Nobel prize jointly with Maskin and Hurwicz. There should be a second Nobel for Myerson and Satterthwaite.)
Fiction can only be so strange because, as fiction, it quickly loses credibility if it gets too strange. The audience loses the willingness to suspend disbelief. When truth is strange it is truly strange.
Of course truth is strange only by accident. So truth will be less strange on average than fiction because fiction is intentionally strange. But measured by their peaks, truth will be stranger than fiction.
(Not a post about Juan Williams.) From the comments in a post from Jonathan Weinstein:
In fact, there is a simple procedure to simulate a (exactly) unbiased random coin from a biased one. Flip your coin twice (and repeat the procedure if you obtain the same outcome). Call “Heads” if you first got heads than tails, and “Tails” otherwise.
Check out the whole discussion to see how this relates to Ultimate Frisbee, the essential randomness of the last digit in any large integer, Mark Machina, and Fourier analysis over Abelian groups.
From the latest issue of the Journal of Wine Economics, comes this paper.
The purpose of this paper is to measure the impact of Robert Parker’s oenological grades on Bordeaux wine prices. We study their impact on the so-called en primeur wine prices, i.e., the prices determined by the chaˆteau owners when the wines are still extremely young. The Parker grades are usually published in the spring of each year, before the wine prices are established. However, the wine grades attributed in 2003 have been published much later, in the autumn, after the determination of the prices. This unusual reversal is exploited to estimate a Parker effect. We find that, on average, the effect is equal to 2.80 euros per bottle of wine. We also estimate grade-specific effects, and use these estimates to predict what the prices would have been had Parker attended the spring tasting in 2003.
Note that the €2.80 number is the effect on price from having a rating at all, averaging across good ratings and bad. You do have to buy some identifying assumptions, however.
Here he writes about underappreciated economist Eric van den Steen. Tyler is right, Eric van den Steen is underappreciated. His work is fresh and creative and he is venturing into terrain (heterogenous priors) where few dare to tread. Not only that but he is drawing out credible applied ideas from there, not just philosophy. (Ran Spiegler and Kfir Eliaz are two others that come to mind with the same creativity and courage to embrace these models.)
Tyler Cowen is under-appreciated. Not as a blogger of course, he writes the most popular blog in economics and one of the most popular blogs full stop. It may sound strange, especially to readers of Marginal Revolution, but Tyler Cowen is an under-appreciated economist.
Here is his CV. Here is his google scholar listing. Here is the ranking of his economics department. If it were not for Marginal Revolution, very few economists would know who Tyler Cowen is.
But we all read Marginal Revolution. And we all know that Tyler is smarter, broader, more knowledgeable, more intuitive than most of us and our colleagues. If he wanted it to, his CV could run circles around ours. I don’t claim to know why he doesn’t want that, but I infer that Tyler believes he is innovating a new way to be a successful and influential economist without compromising on the very high standards that those of us in the old regime hold.
Public signals like Google scholar cites, and top-journal publications can’t measure his contribution to economics but we measure it privately every day when we read Marginal Revolution. And it deserves to be made public: Tyler Cowen is a great economist.
One doesn’t just accidentally know who Eric van den Steen is, let alone be able to summarize in a paragraph his contribution and its relation to the literature. I barely knew who he was and its my job as a member of Northwestern’s recruiting committees to know. For Tyler Cowen to be able to pick him out of the very many young economists and identify him as the most under-appreciated reveals that Tyler Cowen knows and reads every economist. I believe it is true.
And he understands them better than most of us. Look at what he wrote about Dale Mortensen. And the Mortensen-Pissarides model. Here’s Tyler re-arranging the literature on sticky prices, trade, and monetary policy. His piece on free parking shows a mastery of the lost art of price theory, whether or not you agree with his final conclusion. Look at his IO reading list for crying out loud. Finally, set aside an hour and watch him in his element speaking at Google about incentives and prizes.
So hail T-Cow! Wunder-(not)-kind!
The threat of the death penalty makes defendants more willing to accept a given plea bargain offer. But a tough-on-crime DA takes up the slack by making tougher offers. What is the net effect? A simple model delivers a clear prediction: the threat of the death penalty results in fewer plea bargains and more cases going to trial.
The DA is like a textbook monopolist but instead of setting a price, he offers a reduced sentence. The defendant can accept the offer and plead guilty or reject and go to trial taking his chances with the jury. Just like the monopolist, the DA’s optimal plea offer trades off marginal benefit and marginal cost. When he offers a stiffer sentence, the marginal benefit is that defendants who accept it serve more time. The marginal cost is that it is more likely that the defendant rejects the tougher offer, and more cases goes to trial. The marginal defendant is the one whose trial prospects make him just indifferent between accepting and rejecting the plea bargain.
Introducing the death penalty changes the payoff to a defendant who rejects a plea deal (his reservation value.) The key observation is that this change affects defendants differently according to their likelihood of conviction at trial. Defendants facing a difficult case are more likely to be convicted and suffer the increased penalty. (Formally, the reservation value is now steeper as a function of the probability of conviction.)
One thing the DA could do is increase the sentence in his plea bargain offer just enough that the pre-death-penalty marginal defendant is once again indifferent between accepting and rejecting. The rate of plea bargains would then be the same as before the death penalty.
But he can do better by offering an even tougher sentence. The reason: his marginal benefit of such a move is the same as it was pre-death penalty (the same infra-marginal defendants serve more time) but the marginal cost is now lower for two reasons. First, compared to the no-death penalty scenario, fewer defendants reject the tougher offer. Because we are moving along a steeper reservation value curve. Second, those who do reject now get a stiffer penalty (death) conditional on conviction.
The DA’s tougher stance in plea bargaining means that fewer defendants accept and more cases go to trial. Evidence? Here is one paper that shows that re-instatement of the death penalty in New York lead to no increase in the rate of plea bargains accepted (and a clear decrease in the size of plea bargain offers.)
Which type of artist debuts with obscure experimental work, the genius or the fraud? Kim-Sau Chung and Peter Eso have a new paper which answers the question: it’s both of these types.
Suppose that a new composer is choosing a debut project and he can try a composition in a conventional style or he can write 4’33”, the infamous John Cage composition consisting of three movements of total silence. Critics understand the conventional style well enough to assess the talent of a composer who goes that route. Nobody understands 4’33” and so the experimental composer generates no public information about his talent.
There are three types of composer. Those that know they are talented enough to have a long career, those that know they are not talented enough and will soon drop out, and then the middle type: those that don’t know yet whether they are talented enough and will learn more from the success of their debut. In the Chung-Eso model, the first two types go the experimental route and only the middle type debuts with a conventional work.
The reason is intuitive. First, the average talent of experimental artists must be higher than conventional artists. Because if it were the other way around, i.e. conventional debuts signaled talent then all types would choose a conventional debut, making it not a signal at all. The middle types would because they want that positive signal and they want the more informative project. The high and low types would because the positive signal is all they care about.
Then, once we see that the experimental project signals higher than average talent, we can infer that it’s the high types and the low types that go experimental. Both of these types are willing to take the positive signal from the style of work in exchange for generating less information by the actual composition. The middle types on the other hand are willing to forego the buzz they would generate by going experimental in return for the chance to learn about their talent. So they debut conventionally.
Now, as the economics PhD job market approaches, which fields in economics are the experimental ones (generates buzz but nobody understands it, populated by the geniuses as well as the frauds) and which ones are conventional (easy to assess, but generally dull and signals a middling type) ?
Drug addicts across the UK are being offered money to be sterilised by an American charity.
Project Prevention is offering to pay £200 to any drug user in London, Glasgow, Bristol, Leicester and parts of Wales who agrees to be operated on.
The first person in the UK to accept the cash is drug addict “John” from Leicester who says he “should never be a father”.
Probably everyone would agree that a better contract would be one that offers payment for regular use of contraception, rather than irreversible sterilization. Sterilization is probably a “second-best” because it is easier to monitor and enforce.
But it takes sides in the addict’s conflicting preferences over time. He is trading off money today versus children in the future. For some, that’s what makes it the right second-best. For others that’s what makes it exploitation.
Here is more.
Suppose I want to divide a pie between you and another person. It is known that the other person would get value 
My goal is to allocate the pie efficiently. If both of you are selfish, then this means that I would like to give all the pie to him if 
But what if you are inequity averse? Inequity aversion is a behavioral theory of preferences which is often used to explain non-selfish behavior that we see in experiments. If you are inequity averse your utility has a kink at the point where your total pie value equals his. When you have less than him you always like more pie both because you like pie and because you dislike the inequality. When you have more than him you are conflicted because you like more pie but you dislike having even more than he has.
In that case, my objective is more interesting than when you are selfish. If
And its now much easier to get you to tell me the truth. You will always tell me the truth when your value of
So inequity aversion has a very clear implication for an experiment like this. If the experimenter is promising always to divide the pie equitably and is asking the subject to report his value of
I would be curious to see if there are any experiments like this.
I am looking for a Northwestern student who can help me with a very small data collection task. PhD student preferred. It wouldn’t take more than a few hours and I would pay you the standard RA rate plus eventual fame and glory.
Apart from a certain solitary activity, all other sensations caused by our own action are filtered out or muted by the brain so that we can focus on external stimuli. There is a famous experiment which demonstrates an unintended consequence of this otherwise useful system.
You and I stand before each other with hands extended. We are going to take turns pressing a finger onto the other’s palm. Each of us has been secretly instructed to each time try and match the force the other has applied in the previous turn.
But what actually happens is that we press down on each other progressively harder and harder at every turn. And at the end of the experiment each of us reports that we were following instructions and it was the other that was escalating the pressure. Indeed, the subjects in these experiments were asked to guess the instructions given to their counterpart and they guessed that the others were instructed to double the pressure.
What’s happening is that the brain magnifies the sensastion caused by the other’s pressing and mutes the sensation caused by our own. Thus, each of us underestimates the pressure when it is caused by our own action. (In a control experiment the force was mediated by a mechanical device –and not the finger directly– and there was no escalation.) So each subject believes he is following the instructions but in fact each is contributing equally to the escalating pressure.
You are invited to extrapolate this idea to all kinds of social interaction where you are being perfectly polite, reasonable, and accomodating, but he is being insensitive, abrasive, and stubborn.
For while O’Donnell crusaded against masturbation in the mid-1990s, denouncing it as “toying” with the organs of procreation and generally undermining baby making, the facts are to the contrary. Evidence from elephants to rodents to humans shows that masturbating is—counterintuitively—an excellent way to make healthy babies, and lots of them. No one who believes in the “family” part of family values can let her claims stand.
You will find that opening paragraph in an entertaining article in Newsweek (lid lob: linkfilter.) It surveys a variety of stories suggesting that masturbation serves an adaptive role and was selected for by evolution. The stories given (hygiene, signaling (??)) are mostly of the just-so variety, but this is a case where we don’t need to infer exactly the reason. We can prove the evolutionary advantage of masturbation by a simple appeal to revealed preference.
There are lots of ways we can touch ourselves and among these, Mother Nature has revealed a very clear preference. You cannot tickle yourself. Because the brain has a system for distinguishing between stimuli caused by others and stimuli caused by ourselves. Nature puts this system to good use: such a huge fraction of sensory information comes from incidental contact with yourself that it has to be filtered out so that we can detect contact with others.
Mother Nature could have used this same system to put an end to masturbation once and for all: simply detect when its us and mute the sensation. No gain, no Spain. Instead, she made an exception in this case. She must have had a good reason.
The most widely cited study on the effect of cell phone usage on traffic accidents is this one by Redelmeier and Tibshirani in the New England Journal of Medicine. Their conclusion is that talking on the phone leads to a fourfold increase in accident risk.
Their method is interesting. It’s called a case crossover design, and it works like this. We want to know the odds ratio of an accident when you talk on the phone versus when you don’t. Let’s write it like this, where 
But we have no way of estimating numerator or denominator from traffic accident data because we would need to know the counterfactuals of how often people drive (with and without talking on the phone) and don’t have accidents. Case crossover studies are based on a little algebraic trick which transforms the odds ratio into something we can estimate, with just a little more data. Using Bayes’ rule and two lines of algebra, we can rewrite it like this.
From accident data we can estimate the first term on the right-hand-side. We just calculate the fraction of accidents in which someone was talking on the phone. The finesse comes in when we estimate the second term. We don’t want to just estimate the overall frequency of cell phone use because we estimated the first term using a selected sample of people who had accidents. They may be different from the population as a whole. We want the cellphone usage rates for the people in our sample.
Case crossover studies take each person in the data who had an accident and ask them to report whether they were talking on the phone while driving at the same time of day one week before. Thus, each person generates their own control case. It’s a valid control because its the same person, driving at the same time, and on average therefore under the same conditions. These survey data are used to estimate the second term.
It’s really clever and its used a lot in epidemiological studies. (People get sick, some were exposed to some potential hazard, others not. The method is used to estimate the increase in risk of getting sick due to being exposed to the hazard.)
I have never seen it in economics however. In fact, this was the first I ever heard of it. So its natural to wonder why. And it doesn’t take long before you see that it has a serious weakness when applied to data with a lot of heterogeneity.
To see the problem, suppose that there are two types of people. The first group, in addition to being generally accident prone are also easily distracted. Everyone else is a safe driver and talking on cellphones doesn’t make them any less safe. Then our sample of people who actually had accidents would consist disproportionately of the first group. We would be estimating the effect of cell phone use on them alone. If they make up a small fraction of the population then we are drastically overestimating the increase in risk.
It’s fair to say that at best we can use the estimate of 4 as an upper bound on the risk ratio averaging over the entire population. That population average could be zero and still be consistent with the findings from case crossover studies. And there is no simple way to remedy the problems with this method. So I think there is good reason to approach this question from a different direction.
As I described before, if cell phone distractions increase accident risk we would see it by comparing the population of drivers to drivers with hearing impairment, who don’t use cell phones. And it turns out that the data exist. In the NHTSA’s database of traffic accidents, there is this variable:
P18 Person’s Physical Impairment
Definition: Identifies physical impairments for all drivers and non-motorists which may have contributed to the cause of the crash.
And “deaf” is impairment number 9.
(WordPress doesnt allow automatic pushing of updates so you will have to click refresh to see updates.)
And here we are waiting outside the Royal Swedish Academy of Sciences.
The crowd is gathering, everyone here is really tall.
From my understanding, the committee is inside meeting right now, holding the final vote to decide the 2010 Nobel Prize in Economic Sciences.
I am not sure exactly what happens if the committee’s recommendation doesn’t pass this final vote. Maybe then they just put the prize up for auction.
Which of course means that either Milgrom will win, given his expertise, or Mankiw would win, given his textbook riches.
On the other hand if it came down to arm wrestling, Matt Rabin would be the 2010 Laureate.
I am sure Matt would share it. That’s how he rolls.
Can you wear tie-dye to the December ceremony? Do they make tie-dye tuxedos?
Speaking of tie-dye, some guy just brushed by me, whispering “ice-cold Econometricas.”
It’s definitely getting a little grungy out here as the crowd begins to gather. Some people, probably grad students, just rolled out of a VW bus.
They’re apparently doing the whole Nobel tour, they just drove from Norway where the Peace prize was announced. I don’t think they have tickets.
Oh wait its a Saab.
Ok while we are waiting here’s some Nobel trivia for you. Did you know that Alfred Nobel’s original instruction was to give the Prize for research published in the previous year?
They stopped doing that when one of the recipients’ work was discredited after already winning the prize. Now they wait like 10 years before giving the prize.
A little different in economics of course because the publication process already takes 10 years. The work is already established by the time it is published.
Which means of course it is sure to be discredited already by then.
Hey I can hear music inside the building, I think its getting ready to start. Is that John Mayer?
I must tell you I am feeling a little out of sorts. The ligonberries I had for breakfast are messing with me.
Ok we are entering the auditorium!
The crowd is enourmous. There is a definite rumble as the excitement starts to build.
The guy next to me just handed me a bag of peanuts and motioned to pass it on. I thought that was a little strange, but I did it.
Money coming the other way…
Hey this is it! The lights are dimming. There is a giant video screen.
A silhouette of a face has just been projected on the screen. Could that be the 2010 Nobel laureate?
I just noticed the guy next to me is waving a pennant and eating cotton candy. Where did he get that?
The feeling of suspense here is overwhelming. People are actually whistling and cheering. They are doing the wave! There are fireworks in the auditorium.
A streaker! Stenciled across his posterior: “Backward Induction.” Not sure what that means. Must be a physicist, still disgruntled about the whole Economics Nobel thing.
Ernst Fehr just tackled him!
OK, the distraction is over, now the light is blazing white hot from the big screen. Everybody is squinting and shielding their eyes as they try to make out the face.
It’s coming into focus! And now there’s a name below the face.
It seems like the louder the crowd roars the clearer the image becomes. It’s deafening now.
Some people are exploding into cheers, they must be able to make out the name. Ahh… I can see it now. The 2010 Nobel Laureate in Economics is…
Carl Yastrzemski!!!!
?!
Definitely a surprise pick by the Nobel committee! People are scrambling for their laptops to file their reports. This is huge!
I must say I was not expecting this. I am supposed to write a summary of the work and I really am caught off guard by this one.
And here I was worried that I would have a hard time figuring out Dick Thaler’s contribution to economics, sheesh what am I gonna do with Carl Yastrzemski??
I think he may be the first to win the Triple Crown and the Economics Nobel.
OK, its time for the big phone call. On the big screen now you see they are dialing and waiting. The phone is ringing.
Hey my phone is ringing! Gonna answer it.
It’s Sandeep! “Hey Sandeep you are never going to believe this!”
S: “Jeff, did you forget you were going to blog the Nobel announcement?”
J: “No man, I am here, I am on it. Carl Yastrzemski! Can you believe that?”
S: “What are you talking about? Look at the clock man, you overslept. You missed the whole thing. Diamond, Mortensen, and Pissarides got it, exactly as I predicted last week. This is a big day for Northwestern and you missed it! Who the hell is Carl Yastrzemski?”
J: “Overslept? Huh? Wait, I was there. Where am I? Oh man, I thought I set my alarm. They said 11AM.”
S: “GMT you idiot. You know what GMT means don’t you?”
J: “Give-or-take a Minute or Two?”
S: “Aiee! That’s it, I’m taking my kids out of the American public school system today. Bye”
Congratulations to the new laureates!! Way to go Dale!!
I will be live blogging the Nobel announcement. Tune in here just before 11AM GMT.
The District of Columbia is testing a system to allow overseas military personnel submit absentee electronic ballots via the internet. Obviously security is a major concern and the followed a suggestion often made by the security community to open the system to the public and allow white-hat hackers to try and find exploits. Here is the account of one team who participated and found a vulnerability within 36 hours.
By formatting the string in a particular way, we could cause the server to execute commands on our behalf. For example, the filename “ballot.$(sleep 10)pdf” would cause the server to pause for ten seconds (executing the “sleep 10” command) before responding. In effect, this vulnerability allowed us to remotely log in to the server as a privileged user
As a result, deployment of the system has been delayed.
This is exactly the kind of open, public testing that many of us in the e-voting security community — including me — have been encouraging vendors and municipalities to conduct.
But it could have turned out differently. If a black-hat got there first, they could fix the vulnerability after first leaving themselves a backdoor. Then the test comes out looking like a success, it goes live, and …
Tyler Cowen invites us to ponder this game:
Rejection Therapy is a real life game with one rule: to be rejected by someone every single day, for 30 days consecutive. There are even suggestion cards available for “rejection attempts” (although they are not essential to the game).
I am not sure about rejection as therapy, any more than the general principle that it is therapeutic to expose yourself to new, perhaps uncomfortable experiences all the time.
But rejection is a very simple yardstick by which to judge how often and how hard you are trying, how high you are aiming. We should push those margins as far as they can go, up to the point of negative marginal returns. We have not passed that threshold until the rejection rate is positive.
So, whether or not it is an end in itself, a daily dose of rejection is the hallmark of a life lived to the fullest.
Ariel Rubinstein wrote the Afterword for the 2007 reprinting of the book that launched Game Theory as a field, von Neumann and Morgenstern’s Theory of Games and Economic Behavior. Here is a representative excerpt:
Others (including myself) think that the object of game theory is primarily to study the considerations used in decision making in interactive situations. It identifies patterns of reasoning and investigates their implications on decision making in strategic situations. Accordingto this opinion, game theory does not have normative implications and its empirical significance is very limited. Game theory is viewed as a cousin of logic. Logic does not allow us to screen out true statements from false ones and does not help us distinguish right from wrong. Game theory does not tell us which action is preferable or predict what other people will do. If game theory is nevertheless useful or practical, it is only indirectly so. In any case, the burden of proof is on those who use game theory to make policy recommendations, not on those who doubt the practical value of game theory in the first place.
And, by the way, I sometimes wonder why people are so obsessed in looking for “usefulness” in economics generally and game theory in particular. Should academic research be judged by its usefulness?
Tam o’Shanter Toss: Russ Roberts
Poker players know that the eyes never lie. Indeed your eyes almost always signal your intentions for the simple reason that you have to see what you intend to do.
This is an essential difference between communication with eye movement/eye contact and other forms of communication. The connection between what you know and what you say is entirely your choice and of course you will always use this freedom to your advantage. But what you are looking at and where your eyes move are inevitably linked.
Naturally your friends and enemies have learned, indeed evolved to exploit this connection. Even the tiniest changes in your gaze are detectable. As an example, think of the strange feeling of having a conversation with someone who has a lazy eye.
Given that Mother Nature reveals such a strong evolutionary advantage for reading another’s gaze the question then arises why we have not evolved to mask it from those who would take advantage? The answer must be that it would in fact not be to our advantage.
With any form of communication, sometimes you want to be truthful and other times you want to deceive. The physical link between your attention and your gaze means that, for this particular form of communication you can’t have it both ways. Outright deception being impossible, at best Nature could hide our gaze altogether, say by uniformly coloring the entire eye.
But she chose not to. By Nature’s revealed preference, this particular form of honesty is evolutionarily advantageous, at least on average.
There’s only so much time in the day so we can’t talk about everything. Given the opportunity cost, ideas that are obviously bad aren’t worth talking about, even if you are someone who always considers both sides of every issue. This means that if you discuss an idea you demonstrate that you don’t think it’s obviously bad, even if what you conclude from your discussion is that the idea is obviously bad.
Now if I think that an idea is obviously bad and I hear a friend, or politician, or media outlet engage in a discussion of both sides of that issue, I conclude that they have the wrong priorities, even if they ultimately agree with me on the idea. Therefore, my friends, politicians who want my vote, and media who want me to listen to them will not even bring up ideas that I think are obviously bad. Even if I am wrong.
You can subscribe to a service and receive calls reminding you that you are awesome (ht MR).
You can probably think of people who would buy this service thinking it will bolster their self-esteem. You might even imagine that you yourself would get a little boost from having someone call you personally and tell you that you rock. But you probably think that this is leveraging some kind of behavioral, kludgy, semi-rational wiring in your personality and that you would quickly get de-sensitized to it.
But I disagree. I think that it would be a valuable motivator even for the most hyper-rational among us. Because it’s not a trick at all but really just a way to preserve mindsets over time. Suppose I tell you about something great I did. Then later on, when I am about to take on some challenge, like let’s say I am about to give a big lecture to an intimidating audience, you call me and remind me of the great thing I did. And you add your own interpretation of why it was great and how it shows that I am awesome. I don’t need to believe anything about your motivations, your reminder restores my brain to the state it was in when I myself was thinking about how great I am and why. And if your added color convinces me that you honestly agree with me then all the better.
Simply “writing it down” or memorizing the state of mind is not a perfect substitute. At a very minimum this is simply based on cost-minimization. Someone else is doing the remembering for me and that is worth something. But it’s even more than that.
If you have been following me it will come as no surprise that I have no trouble at all remembering what an stupendous guy I am and all the super-amazing feats of astounding splendifery I have accomplished in my life. Yet even with that overflowing supply of memories of greatness, I still get nervous in the face of a challenge. When that happens I have my daughter repeat something she once said to me at a minor moment of greatness: “you’re so smart daddy.” The memory of that moment is imprinted on the sound of her voice. That sound hooks into the vivid edges of my direct experience of the event. Immediately it’s “oh yeah, that’s how it’s done” and my perspective on the situation is totally new. And yet on the surface all she is doing is duplicating a memory that I had in there already.
Daughters are great, and not just for fueling your ego, but they cost more than $40 a month. By comparison, Awesomeness Reminders look like a pretty good deal.
They say you can’t compare the greats from yesteryear with the stars of today. But when it comes to Nobel laureates, to some extent you can.
The Nobel committee is just like a kid with a bag of candy. Every day (year) he has to decide which piece of candy to eat (to whom to give the prize) and each day some new candy might be added to his bag (new candidates come on the scene.) The twist is that each piece of candy has a random expiration date (economists randomly perish) so sometimes it is optimal to defer eating his favorite piece of candy in order to enjoy another which otherwise might go to waste.
The empirical question we are then left with is to uncover the Nobel committee’s underlying ranking of economists based on the awards actually given over time. It’s not so simple, but there are some clear inferences we can make. (Here’s a list of Laureates up to 2006, with their ages.)
To see that it is not so simple, note that just because X got the prize and Y didn’t doesn’t mean that X is better than Y. It could have been that the committee planned eventually to give the prize to Y but Y died earlier than expected (or Y is still alive and the time has not yet arrrived.)
When would the committee award the prize to X before Y despite ranking Y ahead of X? A necessary condition is that Y is older than X and is therefore going to expire sooner. (I am assuming here that age is a sufficient statistic for mortality risk.) That gives us our one clear inference:
If X received the prize before Y and X was born later than Y then X is revealed to be better than Y.
(The specific wording is to emphasize that it is calendar age that matters, not age at the time of receiving the prize. Also if Y never received the prize at all that counts too.)
Looking at the data, we can then infer some rankings.
One of the first economists to win the prize, Ragnar Frisch (who??) is not revealed preferred to anybody. By contrast, Paul Samuelson, who won the very next year is revealed preferred to kuznets, hicks, leontif, von hayk, myrdal, kantorovich, koopmans, friedman, meade, ohlin, lewis, schulz, stigler, stone, allais, haavelmo, coase and vickrey.
Outdoing Samuelson is Ken Arrow, who is revealed preferred to everyone Samuelson is plus simon, klein, tobin, debreu, buchanan, north, harsanyi, schelling and hurwicz (! hurwicz won the prize 37 years later!), but minus kuznets (a total of 25!)
Also very impressive is Robert Merton who had an incredible streak of being revealed preferred to everyone winning the prize from 1998 to 2006, ended only by Maskin and Myerson (but see below.)
On the flipside, there’s Tom Schelling who is revealed to be worse than 28 other Laureates. Leo Hurwicz is revealed to be worse than all of those plus Phelps. Hurwicz is not revealed preferred to anybody, a distinction he shares with Vickrey, Havelmo, Schultz (who??), Myrdal (?), Kuznets and Frisch.
Paul Krugman is batting 1,000 having been revealed preferred to all (two) candidates coming after him: Williamson and Ostrom.
Similar exercises could be carried out with any prize that has a “lifetime achievement” flavor (for example Sophia Loren is revealed preferred to Sidney Poitier, natch.)
There’s a real research program here which should send decision theorists racing to their whiteboards. We deduced one revealed preference implication. Question: is that all we can deduce or are there other implied relations? This is actually a family of questions that depend on how strong assumptions we want to make about the expiration dates in the candy bag. At one extreme we could ask “is any ranking consistent with the boldface rule above rationalizable by some expiration dates known to the child but not to us?” My conjecture is yes, i.e. that the boldface rule exhausts all we can infer.
At the other end, we might assume that the committee knows only the age of the candidates and assumes that everyone of a given age has the average mortality rate for that age (in the United States or Europe.) This potentially makes it harder to rationalize arbitrary choices and could lead to more inferences. This appears to be a tricky question (the infinite horizon introduces some subtleties. Surely though Ken Arrow has already solved it but is too modest to publish it.)
Of course, the committee might have figured out that we are making inferences like this and then would leverage those to send stronger signals. For example, giving the prize to Krugman at age 56 becomes a very strong signal. This would add some noise.
Finally, the kid-with-a-candy-bag analogy breaks down when we notice that the committee forms bundles. Individual rankings can still be inferred but more considerations come into play. Maskin and Myerson got the prize very young, but Hurwicz, with whom they shared the prize, was very close to expiration. We can say that the oldest in a bundle is revealed preferred to anyone older who receives a prize later. Plus we can infer rankings of fields by looking at the timing of prizes awarded to researchers in similar areas. For example, time-series econometrics (2003) is revealed preferred to the theory of organizations (2009.)
The Bottom Line: There is clear advice here for those hoping to win the prize this year, and those who actually do. If you do win the prize, for your acceptance speech you should start by doing pushups to prove how virile you are. This signals to the world that you were not given the award because of an impending expiration date but that in fact there was still plenty of time left but the committee still saw fit to act now. And if you fear you will never win the prize, the sooner you expire the more willing will the public be to believe that you would have won if only you had stuck around.
Cheap Talk 