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The City of Oakland, Calfornia has become the first city to specifically tax the sale of medical marijuana. And The State of California is considering legislation to legalize the sale of (non-medical) marijuana an impose a tax of $50 per ounce. My sources estimate the current retail price to be about $300 per ounce. This is an early stage but that would put the tax at roughly the same rate as cigarettes in California (87 cents per pack which retails at around $7).
Other taxes are being considered:
Republican state Sen. Jack Murphy’s proposed “pole tax” would have charged patrons of strip clubs a $5 entrance fee. The bill was not approved.
Quoting an interview with a Somali Pirate in Wired. (Tricorne tip: Snarkmarket.)
1. Bargaining Power of Pirates
Often we know about a ship’s cargo, owners and port of origin before we even board it. That way we can price our demands based on its load. For those with very valuable cargo on board then we contact the media and publicize the capture and put pressure on the companies to negotiate for its release.
2. Bargaining Power of Foreign Negotiators
Armed men are expensive as are the laborers, accountants, cooks and khat suppliers on land. During long negotiations our men get tired and we need to rotate them out three times a week. Add to that the risk from navies attacking us and we can be convinced to lower our demands.
3. Intensity of Competitive Rivavlry
The key to our success is that we are willing to die, and the crews are not.
4. The Value of Hostages
Hostages — especially Westerners — are our only assets, so we try our best to avoid killing them. It only comes to that if they refuse to contact the ship’s owners or agencies. Or if they attack us and we need to defend ourselves.
5. The Threat of the Navy
Whenever we reach an agreement for the ransom, we send out wrong information to mislead the Navy about our exact location. We don’t want them to know where our land base is so that our guys on the ship can manage a safe escape. We have to make sure that the coast is clear of any navy ships before we leave. That said, there is no guarantee that we won’t be shot or arrested, but this has only happened once when the French Navy captured some of our back up people after the pirates left the Le Ponnant.
At Volokh Conspiracy, Ilya Somin writes:
This week, many of my former students will be undergoing the painful experience of taking the Virginia bar exam. My general view on bar exams is that they should be abolished, or at least that you should not be required to pass one in order to practice law. If passing the exam really is an indication of superior or at least adequate legal skills, then clients will choose to hire lawyers who have passed the exam even if passage isn’t required to be a member of the bar. Even if a mandatory bar exam really is necessary, it certainly should not be administered by state bar associations, which have an obvious interest in reducing the number of people who are allowed to join the profession, so as to minimize competition for their existing members.
What changes would we see if it was no longer necessary to pass the bar in order to practice law? We can analyze this in two steps. First, hold everything else about the bar exam fixed and ask how the market will react to making it voluntary.
The first effect would be to encourage more entry into the profession. Going to law school is not as much of a risk if you know that failing the bar is not fatal. There would be massive entry into specialized law education. Rather than go to a full-fledged law school, many would take a few practical courses focused on a few services. Traditional law schools would respond by becoming even more academic and removed from practice.
Eventually the bar will be taken only by high-level lawyers who work in novel areas and whose services require more creativity and less paper pushing. But the bar will no longer be the binding entry barrier to these areas. The economic rationale for the entry barrier is to create rents for practicing lawyers so that they have something to lose. This keeps them honest and makes their clients trust them.
Now reputation will provide these rents. Law firms, even moreso than now, will consist of a few generalist partners who embody all of the reputation of the firm and then an army of worker-attorneys. All of the rents will go to the partners. The current path of associate-promoted-to-partner will be restricted to only a very small number of elites.
As a result of all this, competition actually decreases at the high end.
All of these changes will alter the economics of the bar exam itself. Since the bar is no longer the binding entry barrier, bar associations become essentially for-profit certification intermediaries. This pushes them either in the direction of becoming more selective, extracting from further increases in rents at the high end or less selective and becoming effectively a driver’s license that everyone passes (and pays a nominal fee.) Which direction is optimal depends on elasticities. Probably they will offer separate high-end and low-end exams.
My bottom line is that banning the bar increases welfare but perhaps for different reasons than Somin has in mind. Routine services will become more competitive and this is good. Increased concentration at the high end is probably also good because market power means less output and for the kinds of lawyering they do, reduced output is welfare-improving.
The governing body of international swimming competition FINA is instituting a ban on the high-tech swimsuits that have been used to set a flurry of new world records.
In the 17 months since the LZR Racer hit the market and spawned a host of imitators, more than 130 world records have fallen, including seven (in eight events) by Michael Phelps during the Beijing Olympics.
Phelps, a 14-time Olympic gold medalist, applauded FINA’s proposal that racing suits be made of permeable materials and that there be limits to how much of a swimmer’s body could be covered. The motion must be approved by the FINA Bureau when it convenes Tuesday.
I see two considerations at play here. First, they may intend to put asterisks on all of the recent records in order to effectively reinstate older records by swimmers who never had the advantage of the new suits. For example,
Ian Thorpe’s 2002 world best in the men’s 400 meters freestyle final was thought to be as good as sacred but Germany’s Paul Biedermann swam 3 minutes 40.07 to beat the mark by one hundredth of a second and take gold.
Its hard to argue with this motivation, but it necessitates a quick return to the old suits in order to give current swimmers a chance to set un-asterisked records while still at their peak. However the ban does not go into effect until 2010.
Don’t confuse this with the second likely motivation which is to put a halt to a technological arms race. That is also the motivation behind banning performance-enhancing drugs. The problem with an arms race is that every competitor will be required to arm in order to be competitive and then the ultimate result is the same level playing field but with the extra cost of the arms race.
On the other hand, allowing the arms race avoids having to legislate and litigate detailed regulations. If we just gave in and allowed performance-enhancers then we would have no drug tests, no doping boards, no scandals. If we ban the new swimsuits we still have to decide exactly which swimsuits are legal. And we go back to chest- and leg-hair shaving. Plastic surgery to streamline the skin?
Swimsuits don’t cause harm like drugs do. Since the costs are relatively low, there is a legitimate argument for allowing this arms race and avoiding having to navigate a new thicket of rules.
The world is divided into creators and collectors. Creators have the ability to conjure up inspiration and bring something new into the world. There are not many creators. The rest of us can be collectors.
Fortunately for us the world creates things for us and we get to experience them. That’s a beautiful life by itself, but for those of us who want to be creative, it also provides us with a diverse supply of themes, ideas, examples, scenarios, characters… that we can put into our collections. Then we can categorize, analyze, and recombine them into something that is just as uniquely our own as the brand new things that creators create.
Pharmaceutical research is a great analogy. There are two ways to create a new physical substance for some purpose. The first is to focus on the purpose and devote resources to try to synthesize something new. The second is to gather articles existing in nature and see what they do and how they work and try to utilize them in a new way.
The second approach is easier because you are just collecting stuff that already exists. Plus, the stuff in nature is certain to be better than what can be created now because it has been under development for eternity. On the other hand, collecting is less focused on any one purpose. What you wind up with is just what you find. The best you can do is direct your search.
(Incidentally, arguments for enviornmental conservation based on genetic diversity translate to arguments for cultural conservation to preserve memetic diversity.)
To be a good collector you decide on themes you are interested in and have some feel for. Then you keep these themes in your mind and you go around your life always looking for specimens that fit your themes. And you write them down. (I email myself.) It is a life of constant awareness, of intense passivity.
How many of us could write great novels? Almost none of us could sit down now and create a novel. But all of us have many years left to collect that novel and write it when the collection is complete. Decide today what your novel is about.
At Marginal Revolution Alex Tabarrok takes an interesting perspective on the minimum wage increase. Consider an employer who pays more than the minimum wage. How would that employer be affected?
Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals.
(Based on this conclusion, he looks suspiciously on claims by some employers that they are cheering the minimum wage for moral reasons.)
While it is true that a rise in the minimum wage will raise the costs of their rivals, this is not the end of the story, and looking one step further can reverse the conclusion. Firms have to compete for workers and if my rival must pays a higher wage, then my own workers now find her to be a more attractive employer at the margin. To restore the balance, I will typically have to raise my own wage.
For example, this would be true if I have to compete with my rival for workers but workers have a higher disutility of working for me.
Now this assumes that the minimum wage does not create a shortage of jobs for my rival, i.e. excess supply of labor. There is good empirical evidence that the minimum wage does not have this effect.
However, if the rival has elastic demand for labor, then the conclusion can be reversed yet again. Increasing the minimum wage cuases the rival to employ fewer workers which increases labor supply for me and allows me to lower my wage. So in addition to raising my rival’s costs, the minimum wage lowers my own costs.
Note however that in the equilibrium of this last model there is a shortage of minimum wage jobs. This means that the marginal high-wage worker would prefer to quit and go work for the minimum-wage firm but is unable to because there are no vacancies there. That doesn’t sound very realistic.
One of the simplest and yet most central insights of information economics is that, independent of the classical technological constraints, transactions costs, trading frictions, etc., standing in the way of efficient employment of resources is an informational constraint. How do you find out what the efficient allocation is and implement it when the answer depends on the preferences of individuals? Any institution, whether or not it is a market, is implicitly a channel for individuals to communicate their preferences and a rule which determines an allocation based on those preferences. Understanding this connection, individuals cannot be expected to faithfully communicate their true preferences unless the rule gives them adequate incentive.
As we saw last time there typically does not exist any rule which does this and at the same time produces an efficient allocation. This result is deeper than “market failure” because it has nothing to do with markets per se. It applies to markets as well as any other idealized institution we could dream up.
So how are we to judge the efficiency of markets when we know that they didnt have any chance of being efficient in the first place? That is the topic of this lecture.
Let’s refer to the efficient allocation rule as the first-best. In the language of mechanism design the first-best is typically not feasible because it is not incentive-compatible. Given this, we can ask what is the closest we can get to the first best using a mechanism that is incentive compatible (and budget-balanced.) That is a well-posed constrained optimization problem and the solution to that problem we call the second best.
Information economics tells us we should measure existing institutions relative to the second best. In this lecture I demonstrate how to use the properties of incentive-compatibility and budget balance to characterize the second-best mechanism in the public goods problem we have been looking at. (Previously the espresso machine problem.)
I am particularly proud of these notes because as you will see this is a complete characterization of second-best mechanisms (remember: dominant strategies)for public goods entirely based on a graphical argument. And the characterization is especially nice: any second-best mechanism reduces to a simple rule where the contributors are assigned ex ante a share of the cost and asked whether they are willing to contribute their share. Production of the public good requires unanimity.
For example, the very simple mechanism we started with, in which two roomates share the cost of an espresso machine equally, is the unique symmetric second-best mechanism. We argued at the beginning that this mechanism is inefficient and now we see that the inefficiency is inevitable and there is no way to improve upon it.
Here are the notes.
90 minutes, interspersed with Jarrett recordings spanning decades. The interview covers early influences, the american quartet, the trio, what he looks for in “sidemen”, obeying the left hand and his recent solo work. Jarrett seems particularly enthused about recent solo performances with a legendary London 2008 recording due out this fall.
Smartphones are valuable because they make it possible to substitute tasks over time and across locations. As a result we are freer to be where we want to be when we want to be even if we have work to do. So when you see, say a parent thumbing away on his iPhone at an otherwise family function, before you judge him remember that without his iPhone he might not be there at all.
The stakes are formidable. Experts estimate that contraband accounts for 12 percent of all cigarette sales, or about 657 billion sticks annually. The cost to governments worldwide is massive: a whopping $40 billion in lost tax revenue annually. Ironically, it is those very taxes — slapped on packs to discourage smoking — that may help fuel the smuggling, along with lax enforcement and heavy supply. (A pack of a leading Western brand that costs little more than $1 in a low-duty country like Ukraine can sell for up to $10 in the U.K.) That potential profit offers a strong incentive to smugglers.
I have argued that legalization of marijuana would not ease the drug war, and might even intensify it. This series of articles about black market tobacco provides a possible preview of the incentives that would be created by a regulated and taxed market for marijuana. Legalization may just replace the current war on drugs with a battle to protect tax revenues on legal marijuana and to protect monopoly power by legitimate producers.
In sync with increased regulation and taxes on tobacco in recent years, the black market has thickened.
Yet, despite the exposés, the lawsuits, and the settlements, the massive trade in contraband tobacco continues unabated. Indeed, with profits rivaling those of narcotics, and relatively light penalties, the business is fast reinventing itself. Once dominated by Western multinational companies, cigarette smuggling has expanded with new players, new routes, and new techniques. Today, this underground industry ranges from Chinese counterfeiters that mimic Marlboro holograms to perfection, to Russian-owned factories that mass produce brands made exclusively to be smuggled into Western Europe. In Canada, the involvement of an array of criminal gangs and Indian tribes pushed seizures of contraband tobacco up 16-fold between 2001 and 2006.
Salakot salute: Terry Gross.
Never ask a woman if she is pregnant right? The explanation given to me is that if it turns out she is not pregnant you are in big trouble. But, what if I keep quiet and she really is pregnant. Then she’s thinking “he doesn’t think I am pregnant. That means he thinks I am actually fat in real life. Bastard.” So I am not sure I agree with the conventional wisdom here.
Maybe you are just being cautioned against equivocation. If you ask then you don’t know and whatever the answer is, your uncertainty reveals that you considered it a possibility that she’s fat. Under this theory the right strategy is to use your best judgement and just come out and pronounce it with no hesitation.
Via BoingBoing, here is a lovely list of kludges under the heading of “worst evolutionary designs.” My favorite
6 Shark-fetus teeth. A few shark species have live births (instead of laying eggs). The Jaws juniors grow teeth in the womb. The first sibling or two to mature sometimes eat their siblings in utero. Mmm … siblings.
I mention viviparous sharks in my paper “Kludged” becuase most sharks lay eggs and requires a large and coordinated mutation to switch to live birth without producing a fatal misfit. This example shows that whatever doesn’t kill it only makes it more kludgey.
Kids are taught that when crossing the street, they should check for oncoming cars by looking left, then right, then left again. Why left again? Isn’t that redundant? You already looked left.
You could imagine that the advice makes sense because during the time he was looking right, cars appeared coming from the left that he did not see when he first looked left. But then wasn’t the first left-look a waste? Maybe not because at the first step if he saw cars coming from the left then he knows that he doesn’t have to look right yet. But then shouldn’t he insert a look-right at the beginning in hopes that he can pre-empt an unnecessary look-left?
I thought for a while and in the end I could not come up with a coherent explanation for the L-R-L again sequence. When you can’t find an example, you prove the counter-theorem. Here it is.
Take any stochastic process for arrival of cars. Consider the L-R-L again strategy. Consider the first instance when the strategy reveals that it is safe to cross. Let t be the moment of that instance that the L-R-L again strategy looks to the left for the second time.
Now, consider the alternative strategy R-L. This strategy begins by looking right, then when there is no car coming from the right it looks left and if there is no car coming from the left he crosses. If he is using R-L there are two possibilites.
- The traffic from the right is not clear until time t. In this case, by definition of t, he will next look left and see no traffic and cross.
- The traffic from the right clears before t. Here, he looks left and either sees clear traffic and crosses or sees traffic. In the latter case he is now in exactly the same situation as if he was following L-R-L from the beginning. He waits until the traffic from the left clears and then re-initializes R-L.
In all cases, he crosses safely no later than he would with L-R-L again, and in one case strictly sooner. That is, the strategy R-L dominates the strategy L-R-L. Three further observations.
- This does not mean that R-L is the optimal strategy. I would guess that the optimal strategy depends on the specific stochastic process for traffic. But this does say definitively that L-R-L is not optimal and is bad advice.
- He might get run over by a car if after looking left for the last time he crosses without noticing that a car has just appeared coming from the right. But this would also happen in all the same states when using L-R-L. Crossing the street is dangerous business.
- I believe that the rationale for the L-R-L advice is based on the presumption that the child will not be able to resist looking left at the beginning. Starting by looking right is very counterintuitive. Under this theory, the longhand for the advice is “Go ahead and look left at the beginning, but when you see that the traffic is clear, make sure you look right as well before crossing. And if you see traffic and have to wait for it to clear, don’t forget to look left again before starting out because a car may have appeared in the time you were looking right.”
Most of classical economic theory is built on the foundation of revealed preference. The guiding principle is that, whatever is going on inside her head, an individual’s choices can be summarized as the optimal choice given a single, coherent, system of preferences. And as long as her choices are consistent with a few basic rationality postulates, axioms, this can be shown mathematically to be true.
Most of modern behavioral economics begins by observing that, oops, these axioms are fairly consistently violated. You might say that economists came to grips with this reality rather late. Indeed, just down the corridor there is a department which owes its very existence to that fact: the marketing department. Marketing research reveals counterexamples to revealed preference such as the attraction effect. Suppose that some people like calling plans with lots of free minutes but high fees (plan A) and others like plans with fewer free minutes but lower fees (plan B). If you add a plan C which is worse on both dimensions than plan A, suddenly everybody likes plan A over plan B because it looks so much better by comparison to plan C.
The compromise effect is another documented violation. Here, we add plan C which has even more free minutes and lower fees than B. Again, everyone starts to prefer B over A but now because B is a compromise between the extreme plans A and C.
Do we throw away all of economic theory becuase this basic foundation is creaking? No, there has been a flurry of research recently that is developing a replacement to revealed preference which posits not a single underlying preference, but a set of preferences and models individual choices as the outcome of some form of bargaining among these multiple motivations. Schizonomics.
Kfir Eliaz and Geoffrey de Clippel have a new paper using this approach which provides a multiple-motivation explanation for the attraction and compromise effects. Add this to papers by Feddersen and Sandroni, Rubinstein and Salant, Ambrus and Rosen, Manzini and Mariotti, and Masatilioglu-Nakajima-Ozbay and one could put together a really nice schizonomics reading list.
The No Trade Theorem says that two traders with common prior beliefs will not find a mutally beneficial speculative trade provided they began with a Pareto efficient allocation. There is in fact a converse. If the traders do not share a common prior, then they can always find such a trade.
My kids demonstrated this experimentally today in the car coming home from Evanston’s Dixie Kitchen and Bait Shop (Recommended by Barack Obama!) Two kids have identical rubber alligator swag from the restaurant. 3 year old believes that 6 year old has his alligator and demands a swap. 6 year old insists that all gators are with their rightful owners. There is common knowledge that they disagree about this and therefore by Aumann’s famous theorem they do not share a common prior.
Dad takes temporary posession of both rubber reptiles. In plain view of the 6 year old, Dad pretends to switch but doesn’t. Sleight of hand deceives 3 year old. Alligators returned to original owners. Viola, Pareto improvement.
I forgot to get my commission.
To remind you, reCAPTCHA asks you to decipher two smeared words before you can register for, say, a gmail account. One of the words is being used to test whether you are a human and not a computer. The reCAPTCHA system knows the right answer for that word and checks whether you get it right. The reCAPTCHA system doesn’t know the other word and is hoping you will help figure it out. If you get the test word right, then your answer on the unkown word is assumed to be correct and used in a massive parallel process of digitizing books. The words are randomly ordered so you cannot know which is the test word.
Once you know this, you many wonder whether you can save yourself time by just filling in the first word and hoping that one is the test word. You will be right with 50% probability. And if so, you will cut your time in half. If you are unlucky, you try again, and you keep on guessing one word until you get lucky. What is the expected time from using this strategy?
Let’s assume it takes 1 second to type in one word. If you answer both words you are sure to get through at the cost of 2 seconds of your time. If you answer one word each time then with probability 1/2 you will pass in 1 second, with probability 1/4 you will pass in 2 seconds, probability 1/8 you pass in 3 seconds, etc. Then your expected time to pass is
Is this more or less than 2? Answer after the jump.
Actually it is in Seatauket, but you won’t notice that you have crossed any boundary. It’s called Sushi Ichi.
Go there for lunch. Tell them how much you want to spend and what kind of -tarian you are. Then ask them to prepare whatever is best to fit those constraints. You won’t be disappointed. It doesn’t hurt that there is a fishmonger right next door.
A taxi driver has a fixed cost: he has to get out of bed, get into his cab and start roaming the streets. He is compensated by a fixed rate per mile. The combination of these two creates a basic incentive problem which explains a lot of common frustration with cab rides. In order for the fixed rate to compensate the cab driver for his fixed costs, it must be set above the flow marginal cost of driving. The implication is that the cab driver always has an incentive to extend your trip longer than is necessary. And he has an incentive to reject short trips. And they saturate airports but you can’t find them in your neighborhood, etc, etc…
Senator Kaufman from Delaware asked Judge Sotomayor about the Leegin case which overturned the per se illegality of resale price maintanence.
Senator Kaufman: But what’s the role of the court in using economic theory to interpret acts of Congress?
SOTOMAYOR: Well, you don’t use economic theory to determine the constitutionality of congressional action. That is a different question, I think, than the one that Leegin addressed.
What Leegin addressed was how the court would apply congressional act, the antitrust laws, to a factual question before it. And that’s a different issue, because that doesn’t do with questioning the economic choices of Congress. That goes to whether or not, in reviewing the action of a particular defendant, what view the court is going to apply to that activity.
SOTOMAYOR: In the Leegin case, the court’s decision was, “Look, we have prior case law that says that this type of activity is always anti-competitive,” and the court, in reconsidering that issue in the Leegin case, said, “Well, there’s been enough presented in the courts below to show that maybe it’s not in — some activities anti- competitive. And so we’re not going to subject it to an absolute bar; we’re going to subject it to a review under rule of reason.”
That’s why I said it’s not a question of questioning Congress’ economic choices or the economic theories that underlay its decisions in a legislation. They weren’t striking down the antitrust laws. What the Court was trying to do was it figure out how it would apply that law to particular set of facts before it.
Remember the joke about the man who asks a woman if she would have sex with him for a million dollars? She reflects for a few moments and then answers that she would. “So,” he says, “would you have sex with me for $50?” Indignantly, she exclaims, “What kind of a woman do you think I am?” He replies: “We’ve already established that. Now we’re just haggling about the price.” The man’s response implies that if a woman will sell herself at any price, she is a prostitute. The way we regard rationing in health care seems to rest on a similar assumption, that it’s immoral to apply monetary considerations to saving lives — but is that stance tenable?
A brilliant article on the basic economics of scarcity, with a focus on the current health care debate.
The anti-trust division of the Justice Department and FTC are reviewing potentially anti-competitive practices by the dominant providers of wireless services. In my previous post on the subject I discussed the theory of exclusive contracts as illegal barriers to entry. In this post I will take up the conventional argument that an exclusive agreement can spur investment by providing a guaranteed return.
AT&T absorbed significant upfront costs by developing and expanding their 3G network at a time when only the Apple iPhone was capable of using its higher speeds and advanced capabilities. AT&T and Apple entered into a relationship in which AT&T would be the exclusive provider of 3G wireless services for the iPhone and this guarantees AT&T a stream of revenue which would eventually recoup their investment and turn a profit. If this exclusive contract were to be scrutinized by anti-trust authorities, AT&T could be expected to argue that without protection from future competition these revenues would not be guaranteed and they would not have been able to make the investment in the first place.
Putting this argument in its proper light requires paying close attention to the distinction between total profits and incentives at the margin. To justify an exclusive contract on efficiency grounds it is not enough to show that exclusivity raises total profits, it must be shown that in addition it adds to the marginal incentives to invest in the new technology.
Imagine that AT&T has no contract with Apple. The worry is that a competitor will develop a rival 3G network and compete with AT&T for Apple’s business. If this happens, AT&T is left out in the cold and makes a loss on its investment. On the other hand, if AT&T has a contract to be the exclusive iPhone 3G provider, then Apple cannot unilateraly break this contract and deal with the new entrant. Of course if the new provider was a more attractive partner, perhaps because of lower costs or a better technology, Apple could try to buy out of the contract, but AT&T would not accept any payment less than what it would get from insisting on the exclusive contract.
Thus, with an exclusive contract, when a competitor appears AT&T is guaranteed a minimal payoff equal to the total revenue it would earn if it rejected any buyout and insisted on the exclusive deal. This is the basis of the conventional intuition supporting exclusive dealing. But what exactly determines this payoff?
The key to understanding this is to consider that once the contract is in place and AT&T’s investment is sunk, the two parties are in a situation of bilateral monopoly. There is some total surplus that will be generated from their mutual agreement and this surplus will be divided between the two through some bargaining. The exclusive contract determines the status quo from which they will bargain and the amount of surplus to divided is the gain from Apple switching to the new rival. Investment by AT&T improves the value to Apple from dealing with AT&T and while this raises AT&T’s status quo it also reduces the gain to switching to the new rival, and hence the bargaining surplus, by exactly the same amount. In the resulting bilateral monopoly bargaining, these effects exactly counteract one another and the net result is that the contract adds nothing to AT&T’s marginal incentives to invest.
This is the insight of Segal and Whinston in their RAND paper “Eclusive Contracts and Protection of Investment.”
Ultimately, an exclusive contract only shifts surplus to the investing party in a lump sum, independent of the level of investment. There are two implications of this.
- It cannot be argued that exclusive contracts are necessary for protection of investments. The shifting of surplus could be just as easily achieved by replacing the exclusive contract with a lump-sum cash payment to AT&T.
- However, the argument described here cannot be the decisive plank in any anti-trust litigation. If an anti-trust investigation were to go forward, AT&T/Apple could argue that instead of using the lump-sum payment (which may have been complicated if the size of the payment required is large) they chose to use an exclusive contract to do the surplus shifting. That is, just noticing that exclusive contracts are not necessary, does not imply that they are not useful. At best, there would have to be a finding that the exclusive contract had some other anti-competitive intent, and the arguments here would just be used to disarm any defense on the basis of necessity.
In Japan, robots makeup a measurable fraction of the manufacturing workforce:
In 2005, more than 370,000 robots worked at factories across Japan, about 40 percent of the global total, representing 32 robots for every 1,000 manufacturing employees, according to a report by Macquarie Bank. A 2007 government plan for technology policy called for one million industrial robots to be installed by 2025. That will almost certainly not happen.
Robots are apparently the first to be let go in Japan in a recession. And the cuts go even deeper.
Roborior by Tmsuk — a watermelon-shape house sitter on wheels that rolls around a home and uses infrared sensors to detect suspicious movement and a video camera to transmit images to absent residents — has struggled to find new users. A rental program was scrapped in April because of lack of interest.
Here is the story from the New York Times.
kwik, serv, kleen, EZ, FasTrak, thru, etc.
There are certain words in certain contexts that Americans purposefully misspell in a way that is half ingratiating, half condescending. I am not talking about txting where the purpose of the misspelling is to economize on characters. Instead these words are usually associated with low-end commercial products and the misspellings predate the internet.
Here’s what you get when you search google maps for the word “kwik” (and you happen to be in Stony Brook, NY.) My favorite: Kwik Ezee.
It has always fascinated me. There seems to be a common theme. It is not a movement toward phonetic spelling. Is it an attempt to be kool? Is it a way of saying “Come to KwikiMart and get your Cheezits. And don’t worry we won’t judge you for it, hey, we can’t even spell!!” The letter k apparently has a special attraction.
Sandeep says that this doesn’t happen in Britain and I believe him, but here is a google maps search that says otherwise.
Does this happen in your language? Is your language phonetically challenged like English? What’s your theory of kwaint misspellings? Any good examples (English or otherwise)?
I will be traveling this week so my blogging will be unusually light sound.
CAPTCHAs are everywhere on the web now. They are the distorted text that you are asked to identify before being allowed to register for an account. The purpose is to prevent computer programs from gaining quick access to many accounts for nefarious purposes (spam for example.)
reCAPTCHA piggy-backs on CAPTCHA. You are asked to identify two words. The first is a standard CAPTCHA. If you enter the correct word you identify yourself as a human. The second is a word that has been optically scanned from a book that is being digitized. It has found its way into this reCAPTCHA because the computer doing the optical character recognition was not able to identify it. If you have identified yourself as a human via the first CAPTCHA, your answer to the second word is assumed to be correct and used in the digital translation. You are digitizing the book.
According to Wikipedia 20 years of the New York Times archive has been digitized with the help of reCAPTCHA. And, “provides about the equivalent of 160 books per day, or 12,000 manhours per day of free labor.”
The first reaction to this is obvious. The labor is not free. In fact it costs exactly 12,000 man hours. Lots of things can be produced with 12,000 man hours. Lots of leisure can be consumed in 12,000 hours. Is digitizing the New York Times the best use of this people-time? On top of that the reCAPTCHA is a tax which reduces the quantity of online accounts transacted and that is a deadweight loss.
But it is just a few seconds of your time right? Something about that seems to change the calculation. I bet most people would say that they don’t mind giving away two seconds of their time. Part of this is due to an illusion of marginal vs total. People are tempted to treat the act as a gift of two seconds of their time in return for a whole digitized library. But in fact they are giving away two seconds of their time for one digitized word.
A second part of this is due to a scale illusion. You may successfully convince said reCAPTHArer that she is just getting a tiny fraction of the book for her two seconds but she will probably still say that she is happy with that. But if you ask her whether she is willing to contribute 1000 seconds for 500 words, probably not. And, to take increasing marginal costs out of the question, if you asked her whether she thought digitizing the New York Times is worth how many thousands of woman-hours of (dispersed) ucompensated labor she again might start to see the point.
But still, not everybody. And I think there must be some sound rationale underneath this. I would not argue that digitizing books is the necessarily the highest priority public good, but the mechanism is inherently linked to deciphering words. True, we could require everyone who signs up at Facebook to donate 1 penny to fight global warming but A) it is never possible to know exactly what “1 penny toward fighting global warming” means whereas there is no way to redirect my contribution if I decipher a word. That is not a liquid asset. And B) two seconds of most people’s time is worth less than 1 penny (we are talking about Facebook users remember) and we don’t have a micro-payments system in place to go down to fractions of pennies.
Perhaps what we have here is a unique opportunity to utilize a public-goods contribution mechanism that transparent and non-manipulable and guarantees to each contributor that he will not be free-ridden on: everyone else is committed to the same contribution.
He writes the blog Game Theorist and he is the author of the book Parentonomics. Here he is on the BBC sharing his wisdom on potty training and peas. (About 2/3 of the way in.)
Consider a hierarchical organization which promotes to level n+1 the most competent worker in level n. In the organization’s steady state the workers will be sorted into the jobs where they are least competent. (Porkpie ping: Mindhacks)
You need a lot of chessboards for this one, but on top of winning some money you will impress your pals. Challenge a large even number of people to play chess simultaneously and blindfolded. Ask for 2-1 odds against each opponent. Play White against half and Black against the other half. Even if your chess is crap, you are guaranteed to make money.
Here’s how. You mentally associate each game you are playing White with a game in which you are playing Black. You start with the opponents against whom you are playing Black and you remember their moves. Then when you arrive at the associated board in which you are playing White, you just copy the move from the other board. Wait for the response and then copy that move on the associated board in which you are playing Black. Keep doing this. You are effectively making each associated pair play each other. You will average a draw on each pair and so with 2-1 odds you will make money.
All that is required from this is to be able to keep a few moves in your head. If you can do that, you can do this blindfolded and really make an impression. If your memory isn’t up to that, you can skip the blindfold and use the board positions as a mnemonic to help you remember.
Here is a video of this trick in action from Derren Brown.
See the press release here. The practical significance of this is that trade in IOUs is subject to standard regulation. Brokers or other intermediaries facilitating trade between buyers and sellers must be registered as exchanges with the SEC. In related news, the three largest banks in California will stop redeeming IOUs tomorrow. Its going to be a nice summer for the Check Cashers. Note that the IOUs pay 3.75% interest, tax free.
Cheap Talk 