Self-Defeating Letter From An Adult To His 16-Year-Old Self?

April 19, 2012 in Uncategorized | Tags: , | by | Leave a comment

A key passage:

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?

Drawing:  Follow Your Heart from http://www.f1me.net

Tenure, The “Not Invented Here Syndrome” And Mad Men, Season 5, Episode 3.

April 18, 2012 in art of office politics | Tags: , | by | 4 comments

I am catching up on my Mad Men viewing after a spring break trip abroad. I watched three episodes in one sitting last night. In Episode 3, copywriter Peggy interviews candidates for an open position. She likes the work of Michael Ginsburg whose portfolio is labelled “judge not, lest you be judged”.  Her co-worker agrees with Peggy’s assessment of Ginsburg’s work but advises her not to hire him because, if Ginsburg turns out to be a better copywrite than Peggy, she risks losing her job to him. Later in the episode (or was in the next?), Pete humiliates Roger, taking credit for winning an account for the advertising company. Roger storms out. He says he was good to Pete when he was young, recruited him and look how he is lording it over Roger now. A portend of Peggy’s future?

Recruiting and peer review are plagued with incentive problems in the presence of career concerns. If you recruit somebody good, you risk the chance that they replace you later on. You have an incentive to select bad candidates. You have an incentive to denigrate other people’s good work (the NIH syndrome) for even deliberately promote their bad work in the hope that it fails dramatically and this allows you to leap over them in some career race. The solution in academia is tenure. If you have a job for life, you can feel free to hire great candidates. (Various psychological phenomena such as insecurity compromise this solution of course!) Peggy does not have tenure and even Roger who is a partner faces the ignominy of playing second fiddle to a young upstart. Watch out Peggy!

The Discouragement Effect

April 17, 2012 in Uncategorized | Tags: , , | by | 4 comments

Suppose you and I are playing a series of squash matches and we are playing best 2 out of 3.  If I win the first match I have an advantage for two reasons.  First is the obvious direct reason that I am only one match short of wrapping up the series while you need to win the next two.  Second is the more subtle strategic reason, the discouragement effect.  If I fight hard to win the next match my reward is that my job is done for the day, I can rest and of course bask in the glow of victory.  As for you, your effort to win the second match is rewarded by even more hard work to do in the third match.

Because you are behind, you have less incentive than me to win the second match and so you are not going to fight as hard to win it.  This is the discouragement effect.  Many people are skeptical that it has any measurable effect on real competition.  Well I found a new paper that demonstrates an interesting new empirical implication that could be used to test it.

Go back to our squash match and now lets suppose instead that it’s a team competition.  We have three players on our teams and we will match them up according to strength and play a best two out of three team competition.  Same competition as before but now each subsequent game is played by a different pair of players.

A new paper by Fu, Lu, and Pan called “Team Contests With Multiple Pairwise Battles” analyzes this kind of competition and shows that they exhibit no discouragement effect.  The intuition is straightforward:  if I win the second match, the additional effort that would have to be spent to win the third match will be spent not by me, but by my teammate.  I internalize the benefits of winning because it increases the chance that my team wins the overall series but I do not internalize the costs of my teammate’s effort in the third match.  This negative externality is actually good for team incentives.

The implied empirical prediction is the following.  Comparing individual matches versus team matches, the probability of a comeback victory conditional on losing the first match will be larger in the team competition.  A second prediction is about the very first match.  Without the discouragement effect, the benefit from winning the first match is smaller.  So there will be less effort in the first match in the team versus individual competition.

Daron Acemoglu Wins The Nemmers Prize

April 17, 2012 in Uncategorized | by | 2 comments

Daron’s buying the drinks the next time we meet.

From NU:

Acemoglu’s award of the 2012 Erwin Plein Nemmers Prize in Economics is “for fundamental contributions to the understanding of political institutions, technical change and economic growth.”

He is an extremely productive economist whose work is motivated by real-world questions that arise when facts are difficult to reconcile with existing theory. Acemoglu’s research covers a wide range of areas within economics, including political economy, economic development and growth, human capital theory, growth theory, innovation, search theory and network economics and learning.  His work has propelled him to the frontier of each of the variety of fields he has explored and he has been especially innovative in his most recent area of study dealing with the role of institutions in the political and economic development of nations.

Each of the prizes carries a $200,000 stipend, among the largest monetary awards in the United States for outstanding achievements in economics and mathematics. The 2012 prizes mark the 10th time Northwestern has awarded the two prizes and the fourth time the amount of the stipend has been increased.

The Nemmers prizes are given in recognition of major contributions to new knowledge or the development of significant new modes of analysis. Five out of 10 Nemmers economics prize winners have gone on to win a Nobel prize. (Those who already have won a Nobel prize are ineligible to receive a Nemmers prize.)

The Trough

April 17, 2012 in Uncategorized | Tags: , , , | by | 5 comments

My son and I went to see the Cubs last week as we do every Spring.

The Cubs won 8-0 and Matt Garza was one out away from throwing a complete game shutout, a rarity for a Cub.  The crowd was on its feet with full count to the would-be final batter who rolled the ball back to the mound for Garza to scoop up and throw him out.  We were all ready to give a big congratulatory cheer and then this happened.  This is a guy who was throwing flawless pitches to the plate for nine innings and here with all the pressure gone and an easy lob to first he made what could be the worst throw in the history of baseball and then headed for the showers.  Cubs win!

But this Spring we weren’t so interested in the baseball out on the field as we were in the strategery down in the toilet. Remember a while back when I wrote about the urinal game? It seems like it was just last week  (fuzzy vertical lines pixellating then unpixellating the screen to reveal the flashback:)

Consider a wall lined with 5 urinals. The subgame perfect equilibrium has the first gentleman take urinal 2 and the second caballero take urinal 5.  These strategies are pre-emptive moves that induce subsequent monsieurs to opt for a stall instead out of privacy concerns.  Thus urinals 1, 3, and 4 go unused.

So naturally we turn our attention to The Trough.

A continuous action space.  Will the trough induce a more efficient outcome in equilibrium than the fixed array of separate urinals?  This is what you come Cheap Talk to find out.

Let’s maintain the same basic parameters. Assume that the distance between the center of two adjacent urinals is d and let’s consider a trough of length 5d, i.e. the same length as a 5 side-by-side urinals (now with invincible pink mystery ice located invitingly at positions d/2 + kd for k = 1, 2, 3, 4.) The assumption in the original problem was that a gentleman pees if and only if there is nobody in a urinal adjacent to him. We need to parametrize that assumption for the continuos trough. It means that there is a constant r such that he refuses to pee in a spot in which someone is currently peeing less than a distance r from him.  The assumption from before implies that d < r < 2d.  Moreover the greater the distance to the nearest reliever the better.

The first thing to notice is that the equilibrium spacing from the original urinal game is no longer a subgame-perfect equilibrium. In our continuous trough model that spacing corresponds to gentlemen 1 and 2 locating themselves at positions d/2 and 7d/2 measured from the left boundary of the trough.  Suppose r <= 3d/2. Then the third man can now utilize the convex action space and locate himself at position 2d where he will be a comfortable distance 3d/2>= r away from the other two. If instead r > 3d/2, then the third man is strictly deterred from intervening but this means that gentleman number 2 would increase his personal space by locating slightly farther to the right whilst still maintaining that deterrence.

So what does happen in equilibrium? I’ve got good news and bad news. The good news first. Suppose that r < 5d/4. Then in equilibrium 3 guys use the trough whereas only 2 of the arrayed urinals were used in the original equilibrium. In equilibrium the first guy parks at d/2 (to be consistent with the original setup we assume that he cannot squeeze himself any closer than that to the left edge of the trough without risking a splash on the shoes) the second guy at 9d/2 and the third guy right in the middle at 5d/2. They are a distance of 2d> r from one another, and there is no room for anybody else because anybody who came next would have to be standing at most a distance d< r from two of the incumbents. This is a subgame perfect equilibrium because the second guy knows that the third guy will pick the midpoint and so to keep a maximal distance he should move to the right edge. And foreseeing all of this the first guy moves to the left edge.

Note well that this is not a Pareto improvement. The increased usage is offset by reduced privacy.They are only 2d away from each other whereas the two urinal users were 3d away from each other.

Now the bad news when r >5d/4.  In this case it is possible for the first two to keep the third out.  For example suppose that 1 is at 5d/4  and 2 is at 15d/4.  Then there is no place the third guy can stand and be more than 5d/4 away hence more than r from the others.  In this case the equilibrium has the first two guys positioning themselves with a distance between them equal to exactly 2r, thus maximizing their privacy subject to the constraint that the third guy is deterred.  (One such equilibrium is for the first two to be an equal distance from their respective edges, but there are other equilibria.)

The really bad news is that when r is not too large, the two guys even have less privacy than with the urinals. For example if r is just above 5d/4 then they are only 10d/4 away from each other which is less than the 3d distance from before.  What’s happening is that the continuous trough gives more flexibility for the third guy to squeeze between so the first two must stand closer to one another to keep him away.

Instant honors thesis for any NU undergrad who can generalize the analysis to a trough of arbitrary length.

Living Together Before Marriage Leads To Divorce?

April 16, 2012 in Uncategorized | Tags: , | by | 5 comments

Sandeep wrote one of our most popular posts on this topic.  There was a survey that showed some correlation between pre-marital cohabitation and divorce.  Sandeep said its probably just a selection effect.

First, suppose one partner is reluctant to get married and has doubts about the relationship. More information would be helpful to decide whether to stay together or break up. If the couple cohabit, that will give them valuable information.  On the other hand, couples who are more confident about their relationship are more likely to get married straight away.  Hence, more stable couples are less likely to live together before marriage than less stable couples.  Living together per se is not the problem.  The real problem is that a deeper source of instability is correlated with cohabitation.

Second – and this theory is implicit in the research – more religious couples are less likely to get divorced and less likely to live together before marriage.  Again, selection explains the data and not cohabiting per se.

Now the Internet is back again with a new theory:  “sliding in.”

She was talking about what researchers call “sliding, not deciding.” Moving from dating to sleeping over to sleeping over a lot to cohabitation can be a gradual slope, one not marked by rings or ceremonies or sometimes even a conversation. Couples bypass talking about why they want to live together and what it will mean.

As in, no-sliding-in before marriage.  Because if you do, you might actually get locked in:

Sliding into cohabitation wouldn’t be a problem if sliding out were as easy. But it isn’t. Too often, young adults enter into what they imagine will be low-cost, low-risk living situations only to find themselves unable to get out months, even years, later. It’s like signing up for a credit card with 0 percent interest. At the end of 12 months when the interest goes up to 23 percent you feel stuck because your balance is too high to pay off. In fact, cohabitation can be exactly like that. In behavioral economics, it’s called consumer lock-in.

Does this make any sense?  Isn’t a couple who goes straight to the sliding in before getting married ultimately just as locked in as a couple who completely abstains from sliding in until they are locked in by the bonds of wedlock?

The Broken Voting System on American Idol

April 15, 2012 in Uncategorized | Tags: , , , , | by | 6 comments

Reality shows eliminate contestants one at a time. Shows like American Idol do this by holding a vote. The audience is asked to vote for their favorite contestant and the one with the fewest votes is eliminated.

Last week on American Idol something very surprising happened. The two singers who were considered to have given the best performances the night before, and who were strong favorites to win the whole thing received among the fewest votes. Indeed a very strong favorite, Jessica Sanchez was “voted off” and only survived because the judges kept her alive by using their one intervention of the season.

The problem in a nutshell is that American Idol voters are deciding whom to eliminate but instead of directly voting for the one they want to eliminate, they are asked to vote for the person they don’t want eliminated.  This creates highly problematic strategic incentives which can easily lead to a strong favorite being eliminated.

For example suppose that a large number prefers contestant S to all others. But while they agree on S, they disagree about the ranking of the other contestants and they are interested in keeping their second and third favorites around too.

The supporters of S have a problem:  maintaining support for S is a public good which can be undermined by their private incentives.  In particular some of them might be worried that their second favorite contestant needs help. If so, and if they think that S has enough support from others, then they will switch their vote from S to help save that contestant. But if they fail to coordinate, and too many of the S supporters do this, then S is in danger of being eliminated.

This problem simply could not arise if American Idol instead asked audiences to vote out the contestant they want to see eliminated. Consider again the situation described above.  Yes there will still be incentives to vote strategically, indeed any voting system will give rise to some kind of manipulation.  But a strong favorite like S will be insulated from their effects. Here’s why.  An honest voter votes for the contestants she likes least.  A strategic voter might vote instead for her next-to-least favorite.  She might do this if she thinks that voting out her least-favorite is a wasted vote because not enough other people will vote similarly.  And she might do this if she thinks that one of her favorite contestants is a risk for elimination.

But no matter how she tries to manipulate the vote it will be shifting votes around for her lower-ranked contestants without undermining support for her favorite. Indeed it is a dominated strategy to vote against your favorite and so a heavily favored contestant like S could never be eliminated in a voting-out system as it can with the current voting-in system.

Princeton Conference in Political Economy, 2012, Day 1

April 13, 2012 in Uncategorized | by | Leave a comment

I am attending this conference organized by Marco Battaglini for the first time. Stream of conference blogging (and hence perhaps completely incorrect!).

Eric Weese, Efficiencies of Scale in Local Public Good Production,

If Wilmette and Winnetka become one municipality, they can combine their firefighter services and enjoy economies of scale. Each city council might vote and if both agree, they can become Willetka. How big are such efficiencies of scale? It turns out that this kind of merger scenario arose in Japan and Weese studies. The Japanese central government sought to reduce transfers to local municipalities by encouraging mergers. Before the central government intervened, there was little incentive to merge as it would lead to less transfers. You can restrict the merger model using this phase. This is work in progress so there were some preliminary estimates of the size of economies of scale. Weese can compare his estimates to central government estimates and finds they are reasonably good. The empirical methodology might be useful in other coalition formation scenarios. There are no transfers between municipalities before merger hence there is nontransferable utility. The estimation procedure accounts for this issue.

Steve Matthews, Achievable Outcomes of Dynamic Contribution Games

More general than public good contribution games but easiest to motivate the paper that way. So, suppose players are contributing to a public good. They can contribute as much as they want and as many times as they want. The game has an infinite horizon. But once they have contributed, players can only add to the contribution and not take any money away, so there is some commitment. All achievable contributions lie in the “undercore”, hence there is no Folk Theorem. Gradual contribution can help to resolve the free rider problem as each player becomes “pivotal” in public good provision. This intuition obtains from :threshold” pubic goods with zero-one production. But what about the no threshold case? Suppose an efficient contribution profile is asymmetric and involves contributions by some players but not others. Then, with gradual contribution, at some point, some player prefers not to contribute as he is contributing to other player’s utility more than his own. This prevents implementability of efficient outcomes and hence also shows he Folk Theorem does not obtain. This just one example. There are results for discounting and no discounting for general and specific settings.

Stelios Michalopoulos, Divide and Rule or Rule the Divided

How do precolonial vs post colonial institutions affect economic development? Many ethnic groups end up in different countries after European colonization. Across country within ethnicity variation is studied. And then within country across ethnicity variation. But the GDP data is crap. But there is great satellite data on light density. Lights are public goods and public good provision is highly correlated with income. Surprisingly, the same ethnic group in different countries do not display much variation. But pre-colonial ethnic institutions are the only robust correlate of economic development.

I’ll see how much energy I have to blog on day 2 given I am presenting.

Sordid Links

April 13, 2012 in Uncategorized | by | Leave a comment

  1. Lavatory self-portraits in the Flemish style.
  2. The reply-all game.
  3. Keith Richards’ letter to his Aunt about a bloke named Mick Jagger.
  4. Snoop Dogg’s book that you can smoke.
  5. How that guy hacked Press Your Luck.

Perverse Incentives In British Divorce Law

April 13, 2012 in Uncategorized | Tags: , , | by | 3 comments

In most of the US there is “no-fault” divorce.  Either party can petition for divorce without having to demonstrate to the court any reason to legitimize the petition. The divorce is usually granted even if the other party wants to remain married.

In England, you must prove to the judge that there is valid reason for the divorce, even if both parties want to separate. This is particularly problematic when only one party wants to separate but doesn’t have a valid reason for it. Then they must make the marriage sufficiently unpleasant for the spouse so that the spouse will a) want a divorce and b) have a verifiable good reason for it.  For example:

One petition read: “The respondent insisted that his pet tarantula, Timmy, slept in a glass case next to the matrimonial bed,” even though his wife requested “that Timmy sleep elsewhere.”

 or

The woman who sued for divorce because her husband insisted she dress in a Klingon costume and speak to him in Klingon. The man who declared that his wife had maliciously and repeatedly served him his least favorite dish, tuna casserole.

and most egregious of all

“The respondent husband repeatedly took charge of the remote television controller, endlessly flicking through channels and failing to stop at any channel requested by the petitioner,” one petition read.

Those examples and more here.  Gat get Markus Mobius.

Does The “Agency Model” Lead to Higher E-Book Prices?

April 11, 2012 in Uncategorized | Tags: , , , | by | 4 comments

Josh Gans gives a handy benchmark model where the answer is no.

MODEL 1: Wholesale Pricing

Suppose that a book publisher charges a price of p to a retailer. Then, based on this, the retailer sets a price to consumers of P and earns (P – p)(a – P).

In this case, the retailer’s optimal price is:

P* = (a + p)/2

Given this, the publisher’s demand is Q = a – P* or Q = (a-p)/2. The publisher chooses p to maximize its profits of pQ which results in a price of p* = a/2. This implies that the final equilibrium price under the wholesale pricing model is:

P* = 3a/4

MODEL 2: Agency

Under an agency model, the publisher sets P directly while the retailer receives a share, s, of revenues generated. The publisher, thus, chooses P to maximize its profits of (1-s)PQ. This generates an optimal price of:

P* = a/2

Conclusion

Regardless of s, the price under the agency model is lower than the price under a wholesale pricing model. The reason is that the agency model avoids double marginalization. The comment here does not reflect other effects arising from ‘most favored customer’ clauses that can apply in both wholesale pricing and agency models and are discussed further in Gans (2012).

Rewarding And Punishing For Random Events

April 11, 2012 in art of office politics, economics | by | Leave a comment

You are Chair of your Department and the Department hires two people at the senior level. It is hard to hire at the senior level and many people congratulate you on your success. But the candidates were proposed by others and wooed by others. One is moving because of a divorce and the other is a lemon who is despised by his former colleagues. All you did as Chair was handle the admin stuff and yet everyone still congratulates you. If you had failed to hire, they would have blamed you, even though all that happened was that a marriage worked out and a lemon went elsewhere.

This kind of stuff happens all the time. Why?

The simplest explanation comes from the Principal-Agent model with the Chair as the Agent and the Department as the Principal. In an optimal contract, the Agent is punished for low output and rewarded for high even though in equilibrium we know he has already sunk high effort and output reflects a random shock. If we forgave the agent low output – after all it was a random shock – it would undercut the Agent’s ex ante incentive to exert effort. Similarly, the Department should venerate or denigrate the Chair based on success or failure at senior hiring. Otherwise, you would never work at all on senior recruiting.

Sticking Your Fingers In Your Ears And Saying “Blah Blah Blah”

April 11, 2012 in Uncategorized | Tags: , | by | 1 comment

You are categorically opposed to some policy. She on the other hand is utilitarian and while she believes the policy is effective based on her current information she could be persuaded otherwise. You would like to persuade her if you could and in fact you have some information that might but it’s not guaranteed.

She opens the debate about the policy, states her arguments in favor and invites you to give any arguments against. But you are not interested in her information. You are categorically opposed to the policy and nothing would persuade you otherwise.

Moreover you are not even going to engage in the debate by trying to persuade her with your information. Because to do so would be to implicitly acknowledge that this is a debate that could be won by the side with the stronger argument.  That entails the risk that she and any observer might judge her arguments to be stronger and take an even firmer position in favor.

You are better off shutting down that front of the debate and insisting that it must be decided as a matter of principle, not utilitarianism.

What Is Your Behavioral Welfare Analysis Of This?

April 10, 2012 in Uncategorized | Tags: , | by | 2 comments

I heard this story on NPR yesterday.

At some point, you likely received a present from a prepaid gift card from the person who wasn’t exactly sure what you’d want. Residents of New Jersey may not be able to buy them for much longer. American Express has pulled its gift cards from the state, and other big industry players are threatening to do the same. They oppose a new law that would allow New Jersey to claim unused gift card balances after two years. NPR’s Joel Rose reports.

As you may know, huge sums of money are loaded onto gift cards that are never redeemed.  The gift card “industry” leverages a wedge between your overly optimistic belief that you will not lose your gift card and the vendor’s knowledge that with quite high probability you will.  Is it welfare improving to prevent the vendor from profiting from this wedge?  Whatever welfare theory you are basing your conclusion on, it is not revealed preference, so what is it?  (Never mind that it’s the greedy government essentially trying to capture the same wedge.  Let’s assume for the sake of argument the unspent balance was automatically remitted to the purchaser of the card.)

Why doesn’t market competition already erode these profits?  (“Try our gift cards instead.  You will get any unpaid balance back, indeed with interest.”)

Related question.  Peet’s coffee has shrunk the size of their gift cards so that they are even easier to lose.  They do give you the choice whether you want a large gift card or a small one.  Are they being nice?

It Gets Better

April 9, 2012 in Uncategorized | Tags: , , | by | 4 comments

This is a personal note for a friend.  Read it when you get turned down for tenure.

I was an Assistant Professor at Northwestern, came up for tenure according to schedule and was denied.  Fired.  Canned.  Sent packing.  It sucked.

But actually it wasn’t so bad.  First of all even if you never get tenure anywhere you have like the greatest job ever.  I live in a neighborhood full of people who earn 10 times what I do and they are all 10 times less happy than me.  I once asked an investment banker whose daughter is in my daughter’s class how much of his salary he would sacrifice for the non-pecuniary benefits of an academic (doing whatever interests you, freedom to set your own schedule, university culture) and the best estimate we could come up with is that being an investment banker sucks big time.

But you will get tenure somewhere.  Some places will want to put you on a fresh, probably shortened clock, you could go for that.  But the other option is to ride out your lame-duck year.  Universities are civilized enough to give you over one year notice before you are out on your ass.  All the papers that have been in journal review purgatory will finally get published in that year and in the next year you will probably have a tenured offer.

It does kinda suck though to be dead man walking for a whole year surrounded by your executioners.

But the joke is going to be on them once you get tenured because here’s a little secret that only you, I, and our chairmen know:  when you are finally tenured you will be making more money than most of them.  Here’s a simple model.  Professor A is employed by Department B and Departments C and D are considering making A an offer.  Whatever they offer, Department B is going to match it, and you with your lexicographic preference of money first, avoid-the-hassle-of-moving second, will stay at department B.  Since it’s costly to recruit you and make you an offer and that won’t be accepted in equilibrium anyway, Departments C and D don’t bother, B has no offer to match, and A, despite his new higher rank continues to live in Assistant Professor poverty.  On the other hand when A is exogenously separated from B, he has a credible commitment to take the highest offer from C or D.

Failure rules.

(I must caution you however.  As with any rejection, at first you will not be able to shake the hope that your current department will eventually see the error of its ways and hire you back after one year with tenure, Full Professor even.  Don’t get your hopes up.  That never happens.)

Drawing:  Part of Your World from http://www.f1me.net

Andalucia – A Short Family Travel Guide

April 9, 2012 in Uncategorized | Tags: , | by | 3 comments

For a much-needed Spring Break holiday, we faced the Naples FL vs “somewhere exotic yet family friendly” trip dilemma. I was firmly in the Naples FL camp but was outvoted so we ended up in Andalucia. Here are my tips for a trip with young kids.

First, do not fly Iberia across the Atlantic. They are on strike a lot of the time. Our flight out got cancelled because of a strike and we have (so far!) narrowly escaped a cancellation of our return trip. For local trips, you are stuck with Iberia or Spanish trains which can also go on strike (or you can drive).

Since we actually got here, things have gone pretty smoothly.

Granada

If you are driving in, you can avoid the city by using the ring road and access the Alhambra parking lots and deposit yourself there. You can walk down via the pedestrian walkway just outside the Alhambra walls. This walk is wonderful in itself.

Book ahead for the Alhambra and get your tickets from the machines near the entrance hall. Tickets sell out quickly each morning and people start lining up at 6 am if they forget to book ahead. I can’t do justice to the Alhambra in this brief post but can confirm that there is enough interest to satisfy young boys – the castle watchtowers are fun, all the water canals that feed the gardens are fascinating and this is enough to sustain them on the walk through the Nasrid Palace. BTW, you have to arrive at the Palace at the specific time on your ticket.

The main other activity I enjoyed was the walk up the Albayzin hill, the old Moorish quarter. You are transported to an earlier time and you traipse up winding, narrow streets up the hill to the Mirador de San Nicholas for a spectacular view of the Alhambra

We did not have a good meal. The recommended place in the guidebooks is Bodegas Castenada. We had a passable meal and had to send the bill back when we noticed that it had many items added on. We loved the gelato at Los Italianos near the cathedral.

Our trip was shortened by the cancellation of our flight so we actually ended up not staying in Granada but in the countryside at El Amparo, a kind of B&B run by a British couple, Jeff and Sally Webb. It was extremely good value and we got a two bedroom. There were many other families staying. We all loved it even thought he swimming pool was not open as the weather was pretty cold. It is a bit isolated so you can’t just pop out to pick up provisions. But Jeff was great. He is a great cook and is happy to lay on toasted sandwiches for those with tapas ennui. El Amparo is a ten minute drive to Alhama de Granada which has many nice restaurants and is spectacularly located on a gorge. We had several short hikes including ones to a Roman bridge and Moorish dungeons.

Cordoba

The main attraction is the Mezquita, the former church, then Moorish mosque, now Christian Cathedral. The majority of the interior is made up of symmetrical arches designed to resemble date trees. These are simple and starkly beautiful. In one corner, the mihrab has ornate designs but non-traditionally does not point directly towards Mecca. And yet the decorations are appropriate and do not go over the top into kitsch. It is easy to imagine the devotion the architecture might have inspired. The cathedral is plonked right in the middle and could not be more different in style. No communication between religions.

The Jewish quarter is right outside the Mezquita. We mainly encountered the tourist shops before kid tiredness drove us home.

Seville

A real city. And we arrived here in Easter Week, Semana Santa. Each church has its own procession, many in the middle of the night. We woke many times. Navigating the town was hard with processions and crowds preventing any easy route from A to B from ever being fully completed. On Easter Sunday we latched onto a procession. The drummers announced the arrival of the main float. Cloaked and hatted devotees tossed candies to kids. A band followed the float. At many points we stopped so the men carrying the float could be swapped out. Their fervor and effort signaled the strength of their belief.

The Moorish Alcazar took us back to the pre-Christian era. I must admit to the notion that I actually prefer it to the Alhambra. Less hectic, the palace being equally beautiful and the gardens magnificent. Or it could be that we had good weather in Seville finally and it rained while were in the Alhambra. Try out the simple maze and play hide and seek in the peacock-filled gardens.

We finally had a meal without fried calamari, patatas bravas or tortilla. Pacador near the Alameda de Hercules displayed a level of sophistication we had not encountered so far on our trip, at least at the tapas level. As usual, they padded the bill but we noticed despite the vino tinto we had imbibed.

Now we have a kid with the flu so we are just resting in our overpriced and under-maintained apartment. We will skip the cathedral.

I have loved the trip and we could easily spend another week in Andalucia and enjoy it more. But in Naples FL I know where the CVS is when I need ibuprofen for kids.

The Upside Of Media Bias

April 8, 2012 in Uncategorized | Tags: , | by | 9 comments

People complain that American mainstream media are becoming more and more polarized. There is a tradition in American journalism that the journalist should be objective and report the facts without judgment. Opinion pieces and Editorials are relegated to the back pages.

Nowadays those standards are eroding. Fox News, MSNBC, and CNN have discernible biases but still pander to the idea that they provide objective journalism. Meanwhile there is the perception that this trend is degrading the quality of information.

From a narrow perspective that may be true. I learn less from Fox News if they selectively report information that confirms the preconceptions of their audience. But media bias makes the media as a group more informative, not less.

Suppose I have a vast array of media sources which are scattered across the left-right spectrum. When a policy is being debated I look at all of them and find the pivotal outlet: all those to the left of it are advocating the policy and all those to the right are opposed. Different policies will have different cutoff points, and that cutoff point gives me a very simple and informative statistic about the policy. If the range is more narrow or more sparsely distributed this statistic is simply less informative.

Another way of saying this is that there is social value from having advisors with extreme biases. When I am thinking about a policy that I am predisposed to like, I learn very little from an unbiased source but I learn a lot if a source with my bias is opposed to the policy or a source with the opposite bias is in favor of it. It must be especially good or bad for these extremists to go against bias.

Consider The Equilibrium

April 5, 2012 in Uncategorized | Tags: , , | by | 11 comments

Bicycle “sprints.”  This is worth 6 minutes of your time.

Thanks to Josh Knox for the link.

An Actual Turing Machine

April 4, 2012 in Uncategorized | Tags: | by | Leave a comment

This guy built an actual Turing machine.

My goal in building this project was to create a machine that embodied the classic look and feel of the machine presented in Turing’s paper. I wanted to build a machine that would be immediately recognizable as a Turing machine to someone familiar with Turing’s work.

The video is precious.

The Division of Labor in Pop Music

April 4, 2012 in Uncategorized | Tags: | by | 1 comment

This is an absolutely fantastic article, I highly recommend it.

Most of the songs played on Top Forty radio are collaborations between producers like Stargate and “top line” writers like Ester Dean. The producers compose the chord progressions, program the beats, and arrange the “synths,” or computer-made instrumental sounds; the top-liners come up with primary melodies, lyrics, and the all-important hooks, the ear-friendly musical phrases that lock you into the song. “It’s not enough to have one hook anymore,” Jay Brown, the president of Roc Nation, and Dean’s manager, told me recently. “You’ve got to have a hook in the intro, a hook in the pre-chorus, a hook in the chorus, and a hook in the bridge.” The reason, he explained, is that “people on average give a song seven seconds on the radio before they change the channel, and you got to hook them.”

The article goes into great detail about the creative process.  They are clearly master craftspeople.  Once they have a hit, they find a star to give it to.

Rihanna is often described as a “manufactured” pop star, because she doesn’t write her songs, but neither did Sinatra or Elvis. She embodies a song in the way an actor inhabits a role—and no one expects the actor to write the script. In the rock era, when the album was the standard unit of recorded music, listeners had ten or eleven songs to get to know the artist, but in the singles-oriented business of today the artist has only three or four minutes to put her personality across. The song must drip with attitude and swagger, or “swag,” and nobody delivers that better than Rihanna, even if a good deal of the swag originates with Ester Dean.

You might think that a story like this will confirm your cynicism about pop music but in fact it will make you appreciate it much much more.

Pari-Mutuel NCAA Pool

April 4, 2012 in Uncategorized | Tags: , | by | 5 comments

If you give them the chance, Northwestern PhD students will take a perfectly good game and turn it into a mad science experiment.  First there was auction scrabble, now from the mind of Scott Ogawa we have the pari-mutuel NCAA bracket pool.

Here’s how it worked.  Every game in the bracket was worth 1000 points. Those 1000 points will be shared among all of the participants who picked the winner of that game.  These scores are added up for the entire bracket to determine the final standings.  The winner is the person with the most points and he takes all the money wagered.

Intrigued, I entered the pool and submitted a bracket which picked every single underdog in every single game.  Just to make a point.

Here’s the point.  No matter how you score your NCAA pool you are going to create a game with the following property:  assuming symmetric information and a large enough market, in equilibrium every possible bet will give exactly the same expected payoff.  In other words an absurd bet like all underdogs will win is going to do just as well as any other, less absurd bet.

This is easy to see in simple example, like a horse race where pari-mutuel betting is most commonly used.  Suppose A wins with twice the probability that B wins. This will attract bets on A until the number of bettors sharing in the purse when A wins is so large that B begins to be an attractive bet. In equilibrium there will be twice as much money in total bet on A as on B, equalizing the expected payoff from the two bets. One thing to keep in mind here is that the market must be large enough for these odds to equilibrate. (Without enough bettors the payoff on A may not be driven low enough to make B a viable bet.)

It’s a little more complicated though with a full 64 team tournament bracket. Because while each individual matchup has a pari-mutuel aspect, there is one key difference.  If you want to have a horse in the second-round race, you need to pick a winner in the first round.  So your incentive to pick a team in the first round must also take this into account.  And indeed, the bet share in a first round game will not exactly offset the odds of winning as it would in a standalone horse race.

On top of that, you aren’t necessarily trying to maximize the expected number points.  You just want to have the most points, and that’s a completely different incentive.  Nevertheless the overall game has the equilibrium property mentioned above.

(Now keep in mind the assumptions of symmetric information and a large market.  These are both likely to be violated in your office pool.  But in Scott’s particular version of the game this only works in favor of betting longshots. First of all the people who enter basketball pools generally believe they have better information than they actually have so favorites are likely to be over-subscribed. Second, the scoring system heavily favors being the only one to pick the winner of a match which is possible in a small market. )

In fact, my bracket, 100% underdogs, Lehigh going all the way, finished just below the median in the pool.  (Admittedly the market wasn’t nearly large enough for me to have been able to count on this.  I benefited from an upset-laden first round.)

Proving that equilibrium of an NCAA bracket pool has this equilibrium property is a great prelim question.

Against Common Knowledge

April 3, 2012 in Uncategorized | Tags: , , | by | 1 comment

Twitter has finally acknowledged a long-suspected bug that makes users automatically unfollow accounts for no apparent reason, and now that it’s working on a fix, many would rather keep the bug to cover the awkwardness of manually unfollowing people. Time to admit you’re just sick of your friends’ updates, folks.

Of course, Twitter power users like Reuters’ Anthony De Rosa don’t really want to automatically lose followers, but it’s sort of funny for him to tweet “one benefit of the unfollow bug is it gives me an excuse if someone gets upset i unfollowed them.” De Rosa’s far from the only one. It seems likehundreds reacted with the same sentiment on hearing the news. That’s because it’s true that sometimes you keep following some idiot just because you don’t want the drama of dropping them. Look at how many people publiclycomplain about losing a follower. Well, tweeters, it’s time for us to take responsibility for our actions just a little bit more. Take a cue from The Awl’s Choire Sicha and embrace the hate.

The link came from Courtney Conklin Knapp, who I believe still follows me but I can’t be sure.

Thoughts Left Lying Around

April 3, 2012 in Uncategorized | by | 3 comments


  1. Nobody ever loses for being too slow to do what Simon says.
  2. One argument against any “Privacy Bill of Rights:”  If private entities have unfettered rights to use your (voluntarily relinquished) private data then that guarantees the government can’t monopolize it.
  3. Can you tell what language someone speaks if you only hear them laugh?
  4. I need dry erase markers in burgundy, grey, aquamarine, etc.  It says something about academics’ total lack of style that they are always red, green, blue, black. 
  5. I saw the 2011 The Three Musketeers on a plane.  So that we would understand they were French the characters spoke with British accents. Except d’Artagnon who spoke like a Yankee. This is a general phenomenon where to an American movie audience British accent=any historical non American squares or evil geniuses.
  6. Look at what google Ngram gives for ‘2001.’  Peaks at the turn of three centuries.  Think you know why?  Well now look at 2002, 2003, 2004, etc. The effect fades out at about 2020. Best theory gets a prize.

Implicit Collusion Fails For Pizza Stores in NYC

April 2, 2012 in economics, teaching | by | 4 comments

Via NYT,

It’s best to start at $1.50 a slice.

That is what pizza was selling for about a year ago at a family business that is a combination vegetarian Indian restaurant, candy store and pizza parlor on Avenue of the Americas (also known as Sixth Avenue), between 37th and 38th Streets. It is called Bombay Fast Food/6 Ave. Pizza.

Then a Joey Pepperoni’s Pizza opened near the corner of 39th and Avenue of the Americas, offering pizza for $1, a price that has in recent years been favored by a number of New York pizza establishments.

So Bombay/6 Ave. Pizza shrank its price to $1 too.

All was good until last October, when a third player entered the drama.

A 2 Bros. Pizza, part of an enlarging New York chain of 11 shops that sell slices for a dollar, opened virtually next door to Bombay/6 Ave. Pizza. The only separation is a stairwell that leads up to a barbershop and hair salon.

Price stability at a buck all around persisted until eight days ago, when both 2 Bros. and Bombay/6 Ave. Pizza began selling pizza for the eye-catching price of 75 cents a slice, tax included — three slender quarters.

There is a sign that some parties hope things get better:

For his part, Eli Halali made it clear that 75 cents was a temporary price point. He said he could not make money at that level and eventually would return to $1. He said that if Bombay/6 Ave. Pizza went back to $1, he would as well.

But emotions may overcome reason:

If it didn’t, he said, it better watch out.

His father, Joshua Halali, who acts as a consultant to 2 Bros., said, “I suggested to my children to go to 50 cents.”

Oren Halali said, “We might go to free pizza soon.”

Eli said: “We have enough power to wait them out. They’re not going to make a fool of us.”

The brothers said they are also contemplating adding fried chicken to the Avenue of the Americas store to intensify the pressure on Bombay/6 Ave. Pizza.

Meanwhile, Mr. Patel remains intransigent. “We’re never going back to $1,” he said. “We’re going lower.”

“We may go to 50 cents,” Mr. Kumar said. Of his next-door rival, he said: “I want to hit him. I want to beat him.”

Differentiation may protect them. Yelp reviewers love the Indian items at Bombay Fast Food. The Halalis should introduce some Middle Eastern items. And perhaps Bombay Fast Food should just get out of the pizza business. This will allow pizza prices to go up. Then, pizza sales will stop cannibalizing profits from the Indian food operation.

Does Coaching Matter?

April 2, 2012 in Uncategorized | Tags: , , , | by | 5 comments

In basketball the team benches are near the baskets on opposite sides of the half court line. The coaches roam their respective halves of the court shouting directions to their team.

As in other sports the teams switch sides at halftime but the benches stay where they were. That means that for half of the game the coaches are directing their defenses and for the other half they are directing their offenses.

If coaching helps then we should see more scoring in the half where the offenses are receiving direction.

This could easily be tested.

Sordid Links

March 30, 2012 in Uncategorized | by | 1 comment


 

  1. Nipples at The Met, updated regularly.
  2. Mine do differential equations.
  3. Silent but deadly debunked.
  4. A cookbook you can eat.
  5. R. Crumb on other people.
  6. Why I Tweet.

Broccoli Vs. Health Insurance Vs. Wheat

March 30, 2012 in Uncategorized | by | 12 comments

Broccoli vs. Health Insurance

You can’t eat broccoli without paying for it. You can get health insurance without paying for it because hospitals are obligated to treat you if you turn up at the ER door. This means society is providing health insurance for free to some people. They are being subsidized by the people who pay for health insurance. There is no such issue with broccoli. Note I am using the phrase health insurance not health care as some of the justices tried to make a distinction between the two.

We can turn heath insurance into broccoli by denying care at the ER door to the uninsured. This is feasible as healthcare services are excludable. Whether society wants to do that are not is a political judgement. Hence, elections are the right mechanism to determine this issue.

Broccoli vs. Wheat

Via the New Yorker,

the Commerce Clause of Article I, Section 8 of the Constitution, [gives] Congress the power

To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.

How has this been interpreted? Again, via the New Yorker:

In the famous 1942 case of Wickard v. Filburn, the Court said that the federal government’s authority extends to any activity that “exerts a substantial economic effect” on commerce crossing state lines.

The case involved Roscoe Filburn, an Ohio farmer who wanted to grow more wheat than he had been allotted under quotas introduced during the Great Depression to drive up prices. In deciding against Filburn and in favor of the Department of Agriculture, the justices pointed out that the actions of individual wheat farmers, taken together, affect the price of wheat across many states. That is what gives the federal government the power to limit their actions.

This argument can be made for any good, private or public. Hence, the externality argument made above is not necessary under this precedent. Also, Justice Scalia, Roberts etc can be forced to buy broccoli by law.

What is then the limiting principle? The commerce clause has no limiting principle, according to me, a non-lawyer. The limiting principle is the imposed by politics: any politician who seeks to regulate the broccoli market must run for election. This politician will reach the limit of his political career.

(Edit: Changed “eat” to “buy” re broccoli and “free insurance” to “care”  re healthcare.)

Fun With Constitutional Accounting

March 29, 2012 in Uncategorized | Tags: , , , , | by | 11 comments

Instead of a mandate to buy insurance and a penalty of $X if you do not comply, what if everyone’s taxes are raised by $X and anyone who complies with the mandate receives a refund of $X? Does that make it constitutional?

The Sacred And The Profane: Property Rights And The Hold Up Problem

March 29, 2012 in art of office politics, economics, teaching | by | 1 comment

From a local paper,

The nationally recognized Piven Theatre Workshop would play a leading role in the revitalization of the Noyes Cultural Arts Center, occupying renovated space and a state-of-the-art theater in the building under a plan that received backing Monday from a city committee…

With past efforts to change things at the city owned building “not going as smoothly, as easily as we wanted,” the new plan seems to heading the city in the right direction, said Alderman Judy Fiske, in whose 1st Ward the building is located….

Piven Theatre officials are proposing to occupy the southern one-third of the building and would extensively renovate the area with new classrooms, rehearsal space, offices and a new theater, he said……

The building, which leases space at below-market rates to artists, faces substantial repairs, including a new roof and heating and air conditioning system.

City officials have looked at a new model for operating the center, a former school building, including asking tenants to take a greater role in the building’s upkeep.

Because of the ambiguity, Piven officials told [officials] last fall they were likely moving out of the building, and possibly out of Evanston…

Clear property rights are necessary to resolve the hold up problem.

But a battle to establish property rights can generate a war of attrition and hence the hold up problem. For the Church of thew Holy Sepulchre inthe Old City in Jerusalem:

The primary custodians are the Eastern Orthodox, Armenian Apostolic, and Roman Catholic Churches, with the Greek Orthodox Church having the lion’s share. In the 19th century, the Coptic Orthodox, the Ethiopian Orthodox and the Syriac Orthodox acquired lesser responsibilities…

Under the status quo, no part of what is designated as common territory may be so much as rearranged without consent from all communities. This often leads to the neglect of badly needed repairs when the communities cannot come to an agreement among themselves about the final shape of a project….A less grave sign of this state of affairs is located on a window ledge over the church’s entrance. Someone placed a wooden ladder there sometime before 1852, when the status quo defined both the doors and the window ledges as common ground. The ladder remains there to this day, in almost exactly the same position it can be seen to occupy in century-old photographs and engravings.

If one church fixes something, they then claim property rights over the thing they fix. Hence, all repair is vetoed

A Menu Of Fines Is A Budget Constraint

March 28, 2012 in Uncategorized | Tags: | by | 1 comment

The schedule of compensation for postal workers suffering the loss of various body parts:

Compensation Schedule:
The following is a table which shows the number of weeks payable for each schedule member if the loss or loss of use of the function or part of the body is total:

Member Weeks ( x your pay) Member Weeks ( x your pay)
Arm 312 Loss of hearing – monaural 52
Leg 288 Loss of hearing – binaural 200
Hand 244 Breast 52
Foot 205 Kidney 156
Eye 160 Larynx 160
Thumb 75 Lung 156
First finger 46 Penis 205
Great toe 38 Testicle 52
Second finger 30 Tongue 160
Third finger 25 Ovary (including Fallopian Tube) 52
Toe other than great toe 16 Uterus/cervix 205
Fourth finger 15 Vulva/vagina 205

Compensation for loss of binocular vision or for loss of 80 percent or more of the vision of an eye is the same as for loss of the eye. The degree of loss of vision or hearing for a schedule award is determined without regard to correction; that is, improvements obtainable with use of eyeglasses and hearing aids are not considered in establishing the percentage of impairment.

The source is here.  Finally you know what it is that costs an arm and a leg.  12 testicles.

(Mortarboard mash:  Adriana Lleras-Muney)