Scat And The Uncanny Valley

June 14, 2011 in Uncategorized | Tags: | by | 6 comments

The voice is the most expressive musical instrument and it also is the most directly connected to the creative engine.  Shouldn’t it be the premier instrument for improvisation?  That would be scat.  Indeed scat is the most expressive form of improvisation but it is not very popular.  A trumpet solo carries us along but scat just sounds weird.  Why is that?

The words “scat” and “virtuoso” leave Google cold.

Could it be that a big part of what we appreciate about improvisation is the awesome physical skill that comes from training on an external instrument?  Scatting is too easy.

Could it be akin to the uncanny valley?  Audiences feel uncomfortable watching animated characters that look too similar to real people.  Is scatting too much like singing?

Why are vocalists not using electronics to digitally transform their voice into something that sounds more less like a voice.  Then they could utilize the expressiveness and fluidity of the voice and fool the audience into thinking it was an instrument.  Autotune?

Would it be more attractive if the scat made sense?  Why are there no vocalists who take written lyrics and then improvise them into a melody?

Listen to Clark Terry.

If someone could make a trumpet sound like that they would be heralded as a genius.

Turing Test For Psychopaths

June 13, 2011 in Uncategorized | Tags: | by | 2 comments

via The Browser, This article was thoroughly engaging from start to finish.  It’s about a convict who faked insanity so that they would put him in the psycho ward instead of prison.  And then he realizes what a huge mistake that was.

Tony said the day he arrived at the dangerous and severe personality disorder (DSPD) unit, he took one look at the place and realised he’d made a spectacularly bad decision. He asked to speak urgently to psychiatrists. “I’m not mentally ill,” he told them. It is an awful lot harder, Tony told me, to convince people you’re sane than it is to convince them you’re crazy.

So he tries to be co-operative in the hospital to prove that he wasn’t really criminally insane.  According to his doctors that was a sure sign he belonged in the hospital.

I glanced suspiciously at Tony. I instinctively didn’t believe him about this. It seemed too catch-22, too darkly-absurd-by-numbers. But later Tony sent me his files and, sure enough, it was right there. “Tony is cheerful and friendly,” one report stated. “His detention in hospital is preventing deterioration of his condition.”

Then he tried the opposite.

After Tony read that, he said, he started a kind of war of non co-operation. This involved staying in his room a lot. On the outside, Tony said, not wanting to spend time with your criminally insane neighbours would be a perfectly understandable position. But on the inside it demonstrates you’re withdrawn and have a grandiose sense of your own importance. In Broadmoor, not wanting to hang out with insane killers is a sign of madness.

Eventually his doctors figured out that he had been faking it.  But of course the willingness to fake criminal insanity in order to go to the psycho ward is all the more reason to stay there.

But then I read Maden’s next line: “Most psychiatrists who have assessed him, and there have been a lot, have considered he is not mentally ill, but suffers from psychopathy.”…

Faking mental illness to get out of a prison sentence, Maden explained, is exactly the kind of deceitful and manipulative act you’d expect of a psychopath.

A psychopath is basically someone who appears perfectly normal on the surface but lacks normal moral restraints that make people socially fit. And just as it is hard to prove that you are not a psychopath it becomes really easy to conclude that everybody else is one.

My mind drifted to what I could do with my new powers. If I’m being honest, it didn’t cross my mind to become some kind of great crime fighter, philanthropically dedicated to making society a safer place. Instead, I made a mental list of all the people who over the years had crossed me and wondered which of them I might be able to expose as having psychopathic character traits.

 

 

 

Using Social Media To Test Bandwagon Effects

June 12, 2011 in Uncategorized | Tags: , , , | by | 2 comments

Bandwagon effects are hard to prove.  If an artist is popular, does that popularity by itself draw others in?  Are you more likely to enjoy a movie, restaurant, blog just because you know that lots of other people like it to?  It’s usually impossible to distinguish that theory from the simpler hypothesis:  the reason it was popular in the first place was that it was good and that’s why you are going to like it too.

Here’s an experiment that would isolate bandwagon effects.  Look at the Facebook like button below this post.  I could secretly randomly manipulate the number that appears on your screen and then correlate your propensity to “like” with the number that you have seen.  The bandwagon hypothesis would be that the larger number of likes you see increases your likeitude.

Abundantly Sordid Links

June 10, 2011 in Uncategorized | by | 2 comments

  1. At what point do you suspect the impossible? Never-ending shampoo edition.
  2. Basketball and crack pie.
  3. DIY Crab Canon. (happy to have found this blog.)
  4. Bach on the glass harp.
  5. Miles Davis Septet in Oslo 1972.  Check out Keith Jarrett.
  6. So Pitted!
  7. Homicide Studies, Theory and Practice.

Freakonomics Podcast on Parenting

June 10, 2011 in Uncategorized | Tags: , , | by | 2 comments

It’s great, but what’s even greaterer is that they made a transcript of the whole thing and so what would take you an hour to listen to you can read in about 5 minutes.  I read it from start to finish.  Featuring appearances by Josh Gans, Valerie Ramey, Betsey Stevenson, Justin Wolfers and others.

The transcript is here.

Kefi Restaurant, New York

June 9, 2011 in food and wine | by | 1 comment

You never know what you will run across in New York –  a monument celebrating the Nobel Prize or a fossil shop with a great collection of dinosaur teeth.  A couple of blocks further north on Columbus, there is Kefi, a casual modern Greek restaurant. The top floor was already full by 7 pm and we were led to the basement.  At first, we were pleased.  There were fewer diners and pleasant conversation seemed feasible.  Food was ordered and some delicious morsels started to arrive. A warm fingerling potato salad with green beans and feta was delicious, an oregano based dressing adding a depth to the simple ingredients.  The spreads for sharing were generic and the Mythonos beer had a funky toothpastey taste that took some getting used to. Some ups, some downs.

Then the trouble started.  There is a room in the restaurant basement that can be used for private functions. We could hear a band practicing. We feared the Greek version of a mariachi band marching from table to table demanding payment to depart.  It wasn’t that bad but once the private function actually started and the band was in full flow, conversation became hard.  I pitied the table right next to the private function room.   More food arrived and was quite good if rich.  By that point, desert was out of the question and we went elsewhere for a late digestif.

Not sure I’ll be going back.

Superman vs Dash and Delay of Gratification

June 9, 2011 in Uncategorized | Tags: | by | 2 comments

Here’s the abstract of a recent paper in the Journal of Clinical Child and Adolescent Psychology.

We examined middle-class Israeli preschoolers’ cognitive self-transformation in the delay of gratification paradigm. In Study 1, 66 un-caped or Superman-caped preschoolers delayed gratification, half with instructions regarding Superman’s delay-relevant qualities. Caped children delayed longer, especially when instructed regarding Superman’s qualities. In Study 2 with 43 preschoolers, with the respective relevant superhero qualities emphasized (i.e., patient vs. impulsive), Superman-caped children tended to delay longer than Dash-caped children. In Study 3, 48 preschoolers delayed gratification after being instructed to pretend to be Superman or a child with the same patient qualities, or after watching a video of Superman, with or without pretend instructions. Invoking Superman led to longer delays and instructions regarding Superman’s qualities tended to lead to longer delays than watching the Superman video. In accounting for the data, we differentiated cognitive transformations of the reward’s consummatory value and cognitive transformations as basic intellectual processes.

Gat glide:  Not Exactly Rocket Science.

Monkey Strategy

June 8, 2011 in Uncategorized | Tags: , | by | Leave a comment

An article in the journal Neuron documents an experiment in which monkeys were trained to play Rock Scissors Paper.  When a monkey played a winning strategy he was likely to repeat it on the next round.  When he played a losing strategy he was likely to choose on the next round the strategy that would have won on this round.  The researchers were interested in how monkeys learn and they interpret the results as consistent with “regret”-based learning.

Unfortunately in the experiment the monkeys were playing against a (minimax-randomizing) computer and not other monkeys.  With this as a control it would now be interesting to see if they follow the same pattern when they play against another monkey.  (With this pattern, the winning monkey would be negatively serially correlated.)

Vueltiao volley: Victor Shao.

The Losers’ Curse And The Linkden IPO

June 8, 2011 in Uncategorized | Tags: , | by | 3 comments

Linkedin’s IPO followed the familiar pattern.  Priced to initial investors at $45/share, the stock soared to a peak of $120/share on the first day of trading and closed at around $90.  “Money was left on the table.” Felix Salmon has a good summary of different opinions about this and he briefly discusses auctions as an alternative to the traditional door-to-door IPO.  You will recall that Google used an auction when it went public.

Like Mr. Salmon you might think that the winner’s curse would prevent an auction from discovering the right price and ensuring that money is not left on the table.  The price-discovery properties of an auction rely on partially informed investors bidding according to their private information and this information thereby being reflected in the price.  But a (potentially) winning bidder foresees that his win would mean that most other bidders bid less than he and that therefore “the market” is more pessmistic about the value of the firm than he is.  Anticipating this, he underbids.  Since all informed investors do this, the auction price will understate the value of the firm.  Money will be left on the table again.

But an IPO is a multi-unit auction.  Many shares are up for sale.  A new strategic feature arises in these auctions, the loser’s curse.  If you are outbid, then you know that many informed investors were more optimistic than you and this will make you regret having bid too low.  This strategic force pushes you to raise your bid.

And in fact, as shown by Pesendorfer and Swinkels, for large auctions, under some quite general conditions, a uniform-price sealed bid auction produces a sales price which comes very close to the market’s best estimate of the value of the firm.  No money is left on the table.

A New Avenue For Experimental Game Theory

June 7, 2011 in Uncategorized | Tags: , | by | 1 comment

Via Mind Hacks, a story in the New York Times about twins conjoined at the head in such a way that they share brain matter and possibly consciousness.

Twins joined at the head — the medical term is craniopagus — are one in 2.5 million, of which only a fraction survive. The way the girls’ brains formed beneath the surface of their fused skulls, however, makes them beyond rare: their neural anatomy is unique, at least in the annals of recorded scientific literature. Their brain images reveal what looks like an attenuated line stretching between the two organs, a piece of anatomy their neurosurgeon, Douglas Cochrane of British Columbia Children’s Hospital, has called a thalamic bridge, because he believes it links the thalamus of one girl to the thalamus of her sister. The thalamus is a kind of switchboard, a two-lobed organ that filters most sensory input and has long been thought to be essential in the neural loops that create consciousness. Because the thalamus functions as a relay station, the girls’ doctors believe it is entirely possible that the sensory input that one girl receives could somehow cross that bridge into the brain of the other. One girl drinks, another girl feels it.

  1. The story is very interesting and moving.  Worth a read.
  2. I would like to see them play Rock-Scissors-Paper.
  3. More generally, experimental game theory suffers from a mutliple-hypothesis problem.  We assume rationality, and knowledge of the others’ strategy. Departures from theoretical predictions could come from violations of either of these two.  The twins present a unique control.

Losing Control Of Your Weiner

June 7, 2011 in Uncategorized | by | 2 comments

In their daily lives, politicians tell truths, half truths, do not tell the whole truth or just outright lie.  Elections, media questioning, the cut and thrust of policy debate force them into situations where they confront these choices.  If they take the easy route and veer from the truth, they either get away with it or are caught out. If they get away with it, they learn that they can tell half truths and survive. So, they will do it again.  Perhaps, they will go even further and outright lie.

The rest of us in our daily lives are not pushed to constantly debate and live in the media spotlight.  We have few opportunities to learn what happens if we lie.  Perhaps, we assume that that route leads to discovery, ignominy and ruin.  This assumption is not tested frequently as we are rarely put in positions where we have to experiment.  Hence the assumption survives for longer is a kind of personal self-confirming equilibrium.  Our inner (Anthony) Weiner is suppressed by the fear of discovery.  But in the realm of politics Congressman Anthony Weiner  released his inner Weiner many years ago with impunity and started his slide down the slippery slope

This simple theory assumes symmetry – we are all alike but the environment in which we live is different. An even simpler theory assumes asymmetry – the types of people who go into politics are more prone to Weinerisms than the rest of us.

Anatomy Of A Perfectionist

June 6, 2011 in Uncategorized | Tags: , | by | 2 comments

Perfectionism seems like an irrational obsession.  If you are already very close to perfect the marginal benefit from getting a little bit closer is smaller and smaller and, because we are talking about perfection, the marginal cost is getting higher and higher.  An interior solution seems to be indicated.

But this is wrong.  There is a discontinuity at perfection, a discrete jump up in status that can only be realized with literal perfection.  Too see why, consider a competitive diver who performs his dive perfectly.  Suppose that the skill of a diver ranges from 0 to 100, say uniformly distributed, and that only divers of skill greater than 80 can execute a perfect dive.  Then conditional on a perfect dive, observers will estimate his skill to be 90.  But if his dive falls short of perfection, no matter how close to perfection he gets, observers’ estimate of his skill will be bounded above by 80.  That last step to perfection gives him a discontinuous jump upward in esteem.

Now of course in contests like diving, the competitors choose the difficulty of their dives.  This unravels the drive to perfectionism because in fact the observers will figure out that he has chosen a dive that is easy enough for him to perfect.  In equilibrium a diver of skill level q chooses a dive which can be perfected only by divers whose skill is q or larger.  And then the choice of dive will perfectly reveal his skill.  The discontinuity goes away.

But many activities have their level of difficulty given to us, and even among those where we can choose, most activities are not as transparent as diving. At a piano recital you hear only the pieces that the performers have prepared. You know nothing about the pieces they practiced but then shelved.   The fame from pitching perfect game is not closely approximated by the notoriety of the near-perfect game.

You get to see only the blog post I wrote, not the ones that are still on the back burner.

(Drawing: Wait! from www.f1me.net)

Room With(out) a View: Network Effects and Office Choice

June 6, 2011 in art of office politics, economics | by | 1 comment

Kellogg is raising money for a new building.  The Dean and the Great and the Good and doing fundraising. Various committees are in charge of deciding how people should be allocated to offices. Given by lack of political acumen and seniority, I know I will be next to the men’s restroom in the basement.  The absence of amy ambiguity about the outcome means I am spending no time agonizing about my decision. But I imagine many of my colleagues are looking at proposed plans and wondering if they can get the corner office.  Or will they prefer to be close to friends and co-authors at the cost of giving up a great view of the lake and fit young undergrads playing soccer on the lakeside fields?

Last week’s economic theory seminar speaker, Mariagiovanna Baccara, has a paper with several co-authors that offers an answer.   The paper documents the experience of the faculty at an unnamed (but easily guessable) professional school which moved into a new building.  The school decided to use a random serial dictatorship mechanism: the professors were split into four equivalence classes by rank (full professors, assistant  etc.).  Within each class, the order in which each player could choose an office was determined randomly.  If there are no externalities, this mechanism achieves an efficient allocation.  The first player to move gets the penthouse suite, the second player, the next best corner office etc.  But if players care about which players they end up next to, the procedure is not efficient.  Each player will not fully internalize the effects of his choice on others.

Before the move, the professors sat within departments and small clusters of like-minded fellow researchers.  If the value of this and other networks is small, we would expect players to choose the “room with a view” strategy, picking the best physical location from the remaining offices.  The authors compare the allocation that would have resulted if faculty chose offices based on physical characteristics alone with the allocation that actually arose. They find, for example, that co-authors are 36% more likely to be together in the actual allocation that the simulated allocations.

It is possible to estimate network effects a bit better. Aware of the possible inefficiencies of their mechanism, the designers relied on the Coase Theorem to help them out: The mechanism allowed faculty to exchange offices in exchange for cash from their research accounts.  If arbitrary exchanges are implemented say between 10 faculty, then ex post exchange will achieve the surplus maximizing allocation.  The initial allocation determined via the dictatorship will simply determine the status quo from which bargaining begins but not the final allocation: the famous idea of property right neutrality.  But large scale exchanges involve transactions costs and there were few exchanges observed and the ones observed involved two professors.  So the authors look at pairwise stable allocations.  Combined with various separability assumptions on preferences, this equilibrium notion allows them to estimate network effects.  They find co-authorship is more important than department affiliation and friendship.  Once these effects are estimated and utilities identified, we can ask the value left on the table by pairwise stable allocations.  The authors find an allocation that gives a 183% increases in utility compared to the implemented allocation.

As other schools move buildings, they will use other mechanisms.  It will be interesting to study their experience.

Confidence And Success

June 5, 2011 in Uncategorized | Tags: | by | 7 comments

Let’s start with the premise that self-confidence leads to greater success.  (Now, you may object because most of the highly self-confident people you know are not as good as they think they are.  But the premise is simply that they are more successful than they would otherwise be, not that their self-confidence is fully validated.)

Is it because confidence by itself makes you more successful?  You can do some interesting behavioral economics with that assumption but here’s another channel that requires less of a leap.  When you are confident in yourself you try harder, you take more chances, you let your intuitions run.  But that by itself doesn’t make you any more successful than the next guy.  Indeed it probably will make you less successful because your intuitions are probably wrong.

But it means that you will find that out sooner.  And if you are confident enough, when your first foray fails you will believe in yourself enough to regroup and try again. Even if your confidence doesn’t make it any more likely that these successive attempts pay off, you will still be more successful in the long run because you will learn faster what doesn’t work, and those lessons won’t demoralize you.

And once we have this, then it follows that confidence per se can make you more successful.  Because confidence signals this ability to roll with the punches and that will be rewarded by others.

The “Hold-Up Problem” Is Kryptonite for Superman

June 2, 2011 in art of office politics, economics | by | 7 comments

You’ve seen Thor, are about to go to the X Men prequel and are waiting to see Captain America.  But where is Superman?

It turns out that a copyright issue has bedevilled the Superman character for many years.  Jerry Siegel and Joe Shuster signed away rights to the Superman character to DC comics for $130 over seventy years ago.  As the character literally and figuratively took off in the movies and in comic books, Siegel and Shuster got little share in the revenue.  But the Copyright Act of 1976 allowed the original owners and their heirs to reclaim ownership if it turned out the value of their invention had become clearer over time and they had been underpaid.  Siegel’s heirs used the law to eventually achieve joint ownership in 2008.  Since then, investment in the Superman character has languished.

The reasons are simple and are related to the classic hold-up model of Grossman-Hart.  Any gain from investment in Superman made by DC Comics will have to be shared with the Siegel heirs.  This acts like a tax on investment and hence generates underinvestment.  It is better of the ownership is in just one hand.  But this amplifies the hold-up problem – it is obvious that DC Comics should own the rights to Superman. After all, they have the expertise in the comic book business and in the brand extensions.  But how will they decide the price they will pay the Siegels to get 100% ownership? The present discounted value of the franchise going forward will be the key determinant. Hence, DC Comics (Warner Bros is also involved) have the incentive to destroy the value of the franchise to get a good price.  Fans lament that this is what is happening:

Perhaps the most damning part of the decision document was the revelation that executives at Warners shared fans’ cynicism about Superman’s potential (Remember, Warners and DC were the defendants in this case):

Defendants’ film industry expert witness, Mr. [John] Gumpert, termed Superman as “damaged goods,” a character so “uncool” as to be considered passe, an opinion echoed by Warner Bros. business affairs executive, Steven Spira… Indeed, Mr. [Alan] Horn [Warner Bros. President] admitted to being “daunted” by the fact that the 1987 theatrical release of Superman IV had generated around $15 million domestic box office, raising the specter of the “franchise [having] played out.”

Almost as surreally, DC and Warners apparently argued to the court that

Superman was equivalent [in terms of public recognition and financial value] to a low-tier comic book character that appeared mostly on radio during the 1930s and 1940s and that has not been seen since a brief television show in the mid-1960s (the Green Hornet); an early 20th century series of books (Tarzan) or a 1930s series of pulp stories (Conan) later intermittently made into comic books and films; or a television, radio, and comic book character from the 1940s and 1950s, much beloved by my father, that long ago rode off into the proverbial sunset with little-to-no exploitation in film or television for decades (The Lone Ranger).

And these are the people in charge of the character?!?

(Hat Tip: Scott Ashworth)

Why Is It A Crime To Park Facing The Wrong Way?

June 1, 2011 in Uncategorized | Tags: , | by | 91 comments

There is typically a fine for parking your car on the street facing the wrong direction, i.e. against traffic.  What is the harm in that?

Economic theory suggests that penalties should be attached to behaviors that are correlated with crime and not necessarily to criminal behavior itself.  For example, price fixing may be impossible to detect, but conspiracy to fix prices may be much easier.  It makes sense to make cheap talk a crime even though the talk itself causes no harm.

When you car is parked facing the wrong way its a sure sign that A) you previously committed the crime of driving the wrong way and B) you will soon do it again.

 

Chicken Everywhere: Brinkmanship over the Debt Limit

June 1, 2011 in Uncategorized | by | 1 comment

The last time the Republicans in the House stuck in their heels and voted against legislation proposed by the President, the Dow fell 777 points.  The President was George W. Bush and he was asking the House to approve TARP. A few days later, the House – Democrats and Republicans alike – blinked and approved the legislation.

This time the President is a Democrat and he is demanding that the Congress approve an increase in the debt limit. The stakes are high and if the debt limit is not raised we might see another collapse in the Dow.  Who will blink first?

One answer is that we must ask who will get blamed by voters if the deal does not get made.  In 2008, a Republican President was at odds with Republicans in the House.  The further the Dow fell, the more the Republicans looked as if they were to blame.  In 2011, each side can hope to pass the buck and blame the other if the debt limit is not raised.  The side the voters blame will suffer in the next election.  So both sides will dig in and other things remaining equal the war of attrition is worse.

Another answer is that the correct audience the politicians are playing to is not the voters but Wall Street. The collapse of AIG caught everyone by surprise but the risks of not increasing the debt limit have been discussed for months.  Wall Street will suffer if the Government cannot pay owners of Treasury bonds.  They and their lobbyists have the politicians’ attention.  The campaign donations will dry up if the politicians play havoc with debt repayment.  In this scenario, the war of attrition will peter out as each side chickens out in the face of declining donations.

The Welfare Economics of Elevator Travel

May 31, 2011 in Uncategorized | Tags: , | by | 39 comments

Do you get annoyed when someone boards the elevator with you only to ride up one floor? The stairs are right there, could they not just walk up a single flight? Well, consider this.  Someone boards the elevator on the first floor with a 3rd floor destination,  but instead of getting off at floor 2 and walking the last flight of stairs, they ride all the way to 3.

Doesn’t seem as annoying, right?  So what explains the difference? It can’t be that you are just appalled at their laziness. Because riding to floor N rather than getting of at N-1 is just as lazy.  It must be the externality.

Getting on the elevator only to ride up a single floor delays everybody else. The decision to ride to the second floor rather than the third isn’t the same because whichever he chooses the elevator is going to have to stop once.

Ah, but what if he gets on, floor 2 is already pushed but 3 is not. Then the tradeoff is the same.  Because if he were to get off at floor 2 and walk he would spare everyone else the additional stop at 3. So you get annoyed at a single-floor rider you if and only if you get annoyed at this marginal-floor rider.

Well, not quite.  Becuase there is one more difference.  After he makes the sunk decision to get on the elevator, but before he makes the marginal decision, the problem changes.  In particular, as he is riding he gains some new information:  he can observe how many other people get on the elevator and are going to be affected by his decision.

This puts the marginal-floor rider in a different position than the single-floor rider in terms of social welfare. Because the single-floor rider’s decision whether to board at all is made without knowing how many other riders will be on the elevator.  The marginal-floor rider can condition his decision on the number of riders.

Indeed, this means that you may even have cause to forgive Mr. Single-Floor and yet be annoyed at Ms. Marginal-Floor.   He may have reasonably expected that few people, if any, were going to be inconvenienced.  But if it turns out that the elevator is nearly full then the sum total of their delay due to Mr. SF’s decision to board is a sunk cost, but it’s an avoidable cost for Ms. MF.  If she doesn’t get off at 2 and walk an extra flight, you all have plenty of reason to be annoyed.

This is all very important.

Also, this explains the otherwise inexplicable glass elevators, and raises the puzzle of why we don’t see them in office buildings.

The First Hit is Fake

May 31, 2011 in Uncategorized | Tags: | by | 2 comments

Via Eli Dourado, an article in Slate by Ray Fisman on how counterfeit handbags are the gateway to the real thing.

Yet a preliminary studyfocused on counterfeit sales in China—the source of all those fake handbags in Chinatown and just about everywhere else—suggests that in many cases the sale of fakes may not be so bad for legitimate brands. The study, by Northwestern economist Yi Qian, examined the counterfeit market in the wake of well-publicized cases of food poisoning and exploding gas tanks in China, when enforcement efforts were diverted from policing fashion copycats and toward monitoring drugs, food, and gas. Counterfeit factories flourished, but surprisingly, this led to an increase in sales for high-end products in the years that followed.

Here’s one model.  A fake raises your status among everyone who’s fooled. How much is that boost in status worth?  Reducing enforcement makes it cheaper to buy a fake and find out.  Some will learn that it’s worth more than they thought. But since not everyone is fooled by a fake they are nowwilling to pay more for the real thing to increase status on the extensive margin.  These people would not have bought Prada without having first experimented with the cheap fake.

Who Gets More Pleasure From Sex?

May 30, 2011 in Uncategorized | Tags: , , , | by | 16 comments

Clearly the reason that sex is so pleasurable is because that motivates us to have a lot of it.  It is evolutionarily advantageous to desire the things that make us more fit. Sex feels good, we seek that feeling, we have a lot of sex, we reproduce more.

But that is not the only way to get motivated.  It is also advantageous to derive pleasure directly from having children.  We see children, we sense the joy we would derive from our own children and we are motivated to do what’s necessary to produce them, even if we had no particular desire for the intermediate act of sex.

And certainly both sources of motivation operate on us, but in different proportions. So it is interesting to ask what determines the optimal mix of these incentives. One alternative is to reward an intermediate act which has no direct effect on fitness but can, subject to idiosyncratic conditions together with randomness, produce a successful outcome which directly increases fitness.   Sex is such an act. The other alternative is to confer rewards upon a successful outcome (or penalties for a failure.)  That would mean programming us with a desire and love for children.

The tradeoff can be understood using standard intuitions from incentive theory. The rewards are designed to motivate us to take the right action at the right time. The drawback of rewarding only the final outcome is that it may be too noisy a signal of whether he acted.  For example, not every encounter results in offspring. If so, then a more efficient use of rewards to motivate an act of sex is to make sex directly pleasurable. But the drawback of rewarding sex directly is that whether it is desirable to have sex right now depends on how likely it is to produce valuable offspring.  If we are made to care only about the (value of) offspring we are more likely to make the right decision under the right circumstances.

Now these balance out differently for males than for females. Because when the female becomes pregnant and gives birth that is a very strong signal that she had sex at an opportune time but conveys noisier information about him.That is because, of course, this child could belong to any one of her (potentially numerous) mates. Instilling a love for children is therefore a relatively more effective incentive instrument for her than for him.

As for love of sex, note that the evolutionary value of offspring is different for males than for females because females have a significant opportunity cost given that they get pregnant with one mate at a time. This means that the circumstances are nearly always right for males to have sex, but much more rarely so for females. It is therefore efficient for males to derive greater pleasure from sex.

(It is a testament to my steadfastness as a theorist that I stand firmly by the logic of this argument despite the fact that, at least in my personal experience, females derive immense pleasure from sex.)

Drawing:  Misread Trajectory from www.f1me.net

How To Open A Bag of Charcoal

May 29, 2011 in Uncategorized | by | 95 comments

In time for Memorial Day I am here to share with you the results of painstaking research.  You come to Cheap Talk for Economic Theology, existentially challenged theater reviews, and poetry, and today you are getting the instruction manual for summer.  (Let’s hope it stops raining in time.)

I’m talking about those rugged paper bags of hardwood charcoal that are bound at the top with a zipper-like string seam that looks as if it was made to cleanly unravel.   Sometimes it doesn’t and then you can yank and yank to no avail. And even when it does there seems to be some magic involved, like the gods of charcoal are smiling down on you.  Well, I’m telling you its all science and you can make it happen every time with three simple steps.

Step 1:  Orient yourself.  There is a front and a back.  The front side has clean loops, the back side string is ragged and knotted at the end.  Pictures:

Front Side

Back Side

 You have to pull the string from the back side.  It unravels from left to right.

Step 2:  Understand what you are doing.  There are really two strings here woven together.  There is a string on the front side which is pushed through in loops through each of the little holes in the bag.  Then a string on the back side is threaded through them also in a looping fashion.  The end of the string on the left side is then knotted onto the leftmost loop.  What you need to do is remove that knot and free up the end of the backside string so that you can pull it.

Unraveling

Step 3:  The endgame.  Once you have the end of the backside string all there is left to do is pull and the whole apparatus becomes unraveled. You can then extract the frontside string leaving you with two strings in your hand, a flap of paper to lift off the bag (and recycle) and finally a wide open bag of non-fossil fuel.  No hassle, no pointless yanking, no scissors. Works every time.

[vimeo http://vimeo.com/12164830]

More French Open Notes

May 29, 2011 in Uncategorized | Tags: , , | by | 1 comment

How does the additional length of a 5 set match help the stronger player? Commenters to my previous post point out the direct way: it lowers the chance of a fluke in which the weaker player wins with a streak of luck. But there’s another way and it can in principle be identified in data.

To illustrate the idea, take an extreme example. Suppose that the stronger player, in addition to having a greater baseline probability of winning each set, also has the ability to raise his game to a higher level. Suppose that he can do this once in the match and (here’s the extreme part) it guarantees that he will win that set. Finally, suppose that the additional effort is costly so other things equal he would like to avoid it. When will he use his freebie?

Somewhat surprisingly, he will always wait until the last set to use it. For example, in a three set match, suppose he loses the first set. He can spend his freebie in the second set but then he has to win the third set. If he waits until the third set, his odds of winning the match are exactly the same. Either way he needs to win one set at the baseline odds.

The advantage of waiting until the third set is that this allows him to avoid spending the effort in a losing cause. If he uses his freebie in the second set, he will have wasted the effort if he loses the third set. Since the odds of winning are independent of when he spends his effort, it is unambiguously better to wait as long as possible.

This strategy has the following implications which would show up in data.

  1. In a five set match, the score after three sets will not be the same (statistically) as the score in a three set match.
  2. In particular, in a five-set match the stronger player has a lower chance of winning a third set when the match is tied 1-1 than he would in a three set match.
  3. The odds that a higher seeded player wins a fifth set is higher than the odds that he wins, say, the second set.  (This may be hard to identify because, conditional on the match going to 5 sets, it may reveal that the stronger player is not having a good day.)
  4. If the baseline probability is close to 50-50, then a 5 set match can actually lower the probability that the stronger player wins, compared to a 3 set match.

This “freebie” example is extreme but the general theme would always be in effect if stronger players have a greater ability to raise their level of play.  That ability is an option which can be more flexibly exercised in a longer match.

French Open Notes

May 28, 2011 in Uncategorized | Tags: | by | 6 comments

  1. One implication of a theory I have written about before is that a best of 5 set match confers a greater advantage on the stronger player than a best of 3 set match.  (The basic idea is that the 5 sets gives the stronger player more flexibility in timing his bursts of effort.)  Here are some data that would shed light: compare men’s versus women’s  Grand Slam matches in terms of the probability that a higher-seeded player will win.  Even better:  divide the data into non-Grand Slam and Grand Slam matches. Ask how much more likely a higher-seeded player wins a Grand Slam match versus a non-Grand Slam match.  Do this for both women and men.  Then do the difference-in-differences.  This gives you a nice control because women play 3 sets whether its a Grand Slam or not. Men play 5 sets in Grand Slams and 3 sets in almost all non-Grand-Slam events.
  2. Four Grand Slams, only three surfaces.  It’s time the US Open switched to ice.  (with skates.)

Sordid Links

May 27, 2011 in Uncategorized | by | Leave a comment

  1. In honor of de Balzac.
  2. Photolog of dinner at Next, with gripe about ticketing.
  3. Mashable Big Mac.
  4. Did the dopamine spike before or at the moment of reward?  Science needs to know.
  5. Man milk.
  6. Beautiful card trick.

Rational Choice Theory Goes to (Chicago) Schools: Why is Your Child Having Pancake and Sausage on a Stick For Breakfast?

May 27, 2011 in Uncategorized | by | Leave a comment

Step 1: Show me the money.

Given the differential between federal reimbursements and the cost of the meals, the breakfast plan “has the potential to create $8.9 million of new revenue,” according to an internal document. C.P.S. gets as much as $1.76 per student for a meal costing about a buck.

Step 2: Maximize volume via food offerings

One classic—a sausage wrapped inside a pancake on a stick, to be dipped into syrup—was likely filled with saturated fat and calories, [a nutritionist] said. A cold alternative was Rice Krispies, Cheerios and Kellogg’s Frosted Mini-Wheats—all of which she found benign—and skim milk.

For the four days, there was not a piece of fresh fruit, there was insufficient whole grains and the orange juice was 100 percent juice but included apple and pear juice (“a money saver”), she said.

Step 3: Parents Revolt.

Meredith Crowley, a CPS parent, said she is upset that the district is serving dessert for breakfast, citing menu items such as chocolate cereal and Rice Krispie bars. She said the district implemented the program largely to generate revenue and plug a budget hole.

“Please give someone at CPS a red pen and ask them to go through the menu at Chartwell’s, ditch the desserts, red-line the Rice Krispie bars, freeze the Frosted Mini-Wheats,” Crowley said. “I will not stand back and let CPS balance the budget on the backs of poor children.”

Ads Implant False Memories

May 26, 2011 in Uncategorized | Tags: , | by | Leave a comment

From Jonah Lehrer:

One week later, all the subjects were quizzed about their memory of the product. Here’s where things get disturbing: While students who saw the low-imagery ad were extremely unlikely to report having tried the popcorn, those who watched the slick commercial were just as likely to have said they tried the popcorn as those who actually did. Furthermore, their ratings of the product were as favorable as those who sampled the salty, buttery treat. Most troubling, perhaps, is that these subjects were extremely confident in these made-up memories. The delusion felt true. They didn’t like the popcorn because they’d seen a good ad. They liked the popcorn because it was delicious.

The article is interesting, you should check it out. These stories always sound impossible to believe.  It just doesn’t seem so easy to manipulate memories.  But it’s not all that surprising when you think about it.

  1. You have dreams where impossible things happen, where people you know have changed dramatically out of the blue, or where your life is completely changed. And when you have a dream like that you say “this is strange” and then you accept it as true and go on.  It’s incredibly easy for you to believe in impossible things.  And often you do it by convincing yourself that in fact its been like this all along.
  2. False memories sound impossible, but on the other hand we forget things all the time.  Forgetting something is not all that different from a false memory. “Where did you put your keys?”  “I didn’t put them anywhere.  Somebody else must have put them somewhere.”  And then you find the keys and remember that in fact you did put them there.  You have not just forgotten something but you have believed in the false memory that the thing never happened.

How Do Restaurants Decide Your Wait Time?

May 26, 2011 in Uncategorized | by | 5 comments

You go into a restaurant and ask them the wait time for a table for two.  The hostess says 45 minutes.  Is she making it up off the top of her head?

I have always wondered about this.  It turns out that some restaurants have a more sophisticated approach.  They use software sold to them by opentable to estimate wait time.  There is one employee whose job it is to wander round going table to table eyeballing the state of the meal.  How many people are eating dessert?  Have they paid or are they waiting for the check?  This information and more is inputted into the software.  The software then churns out an estimated wait time by size of table. This much I know.

What I don’t know is whether the hostess then adds or subtracts a fudge factor as a function of wait time.  For example, if there is excess demand but the queue is short do you underestimate the wait time to encourage people to stay?  The paradigmic incentives in the Crawford-Sobel Cheap Talk model arise for the restaurant.

Arguments About Regulation

May 25, 2011 in Uncategorized | Tags: | by | 3 comments

There’s a good reason to fear regulation even if you can imagine beneficial regulation.  You may be suspicious of government agencies’ motives or competence to implement it. Giving power to an agent when we can’t rely on her to use it in a beneficial way is often a bad idea.

But the same kind of fear, viewed through a mirror, often argues in favor of regulation.  Take for example financial regulation.  We may understand that if investors, managers, or insurers could be assumed to act reliably in ways that are consistent with their self-interest then markets would work well and there would be no rationale for regulation.

But should we predicate laissez faire on the assumption that they don’t make mistakes, that they perfectly fathom the complex path to their self-interest?  If we can’t be sure, then giving them the power to do damage is often a bad idea.

(Drawing:  Negative Space from www.f1me.net)

Betsey Stevenson is a Great Economist

May 24, 2011 in Uncategorized | Tags: , , | by | 8 comments

She wrote this convincing essay on happiness and parenting.  Parents seem to be less happy but we shouldn’t read too much into that.  She brings together all kinds of economic theory and data and along the way she cites a paper I like very much by Luis Rayo and Gary Becker:

Nobel Prize–winning economist Gary Becker, writing with Luis Rayo, has argued this contrary position. In their view, while “happiness and life satisfaction may be related to utility, they are no more measures of utility than are other dimensions of well-being, such as health or consumption of material goods.”[5] Or having kids. Children may make you less happy, but still raise your utility. Devout neoclassical reasoning leads Becker and Rayo to infer from the fact that we are having kids that they raise your utility (or at least they raise the utility of those who make this choice).

Rayo and Becker argued that happiness should be thought of as the carrot that gets us to make good decisions.  But happiness is a scarce resource.  There’s a limit to how happy you can be.  So it has to be used in the most economical way.  In their theory the most economical way to use happiness is to give an immediate, and completely transitory boost of happiness to reward good outcomes.  You have sex, you get rewarded.  It results in conception, that’s another reward.  But then you are back to the baseline so as to maximize the range available for further rewards (and penalties) motivating behavior going forward.  Bygones are bygones.

With that theory it makes no sense to look at a cross section of the population, compare how happy are people who did X relative to people who didn’t do X, and conclude on the basis of that whether its good to do X.

And by the way, if there is anything we can expect evolutionary incentives to have a good handle on, its whether or not to have kids.  That’s the whole ballgame.  If happiness is there to motivate us to succeed evolutionarily then you better have  a good argument why Nature got it wrong.  One place to look might be on the quantity/quality tradeoff.  Perhaps the relative price of quality versus quantity has declined in modern times and Nature’s mechanism is tuned to an obsolete tradeoff. If so, then people feel a motivation to have more kids than they should.  The prescription then would be to resist the temptation you feel to have another kid and instead invest more in the ones you have.  Unless you want to be happy.

Consider The Equilibrium

May 24, 2011 in Uncategorized | by | 1 comment

Browser bookmarklet that inserts a real-time third-party auction into the checkout screen of an online retailer.

So here’s the basic premise behind Gilt-ii. Everyday at noon ET, Gilt releases daily price cuts on luxury goods. There are limited quantities of these goods, and most of these items become unavailable within in minutes fo the sale opening. That’s why many shoppers on the site put things in their cart, where they have ten minutes to decide if they want to purchase the item, even if they aren’t necessarily sold on the idea of buying the item.

Gilt-ii’s bookmarklet allows those who have the items in their carts to transform into risk-free auctioneers, selling items to any Gilt shoppers who are accessing a “Sold Out – Item in Members’ Carts” message. When a user running “Gilt-ii” opens their shopping cart, their items are automatically registered for auction and displayed to out of luck buyers in the “Gilt-ii Auctions” box right into the item details page. From the auctions box, buyers submit bids on their desired items. As bids are made, they are displayed to the auctioneers right inside their shopping cart — if they see a price that they like, they can accept the bid and Gilt-ii will automatically handle the money transfer between users and change the shipping information at check out to that of the bidder. Auctioneers spend nothing until someone agrees to purchase the item from them.

As a Gilt shopper, I have experienced the letdown of not being able to purchase a coveted item (at a pretty good deal) because I didn’t act fast enough or I wasn’t able to check the site exactly when the sale started. Not only does Gilt-ii give shoppers a chance to purchase these already sold items, but it gives other Gilt shoppers the opportunity to make a few bucks off of purchases on the site by auctioning off items.

Pith helmet pitch:  Mallesh Pai