Nazareth Sweets, 4638 N Kedzie Ave, Chicago, IL

July 23, 2010 in food and wine | Tags: , | by | 1 comment

I’m revisiting old haunts to try to get back into my Chicago equilibrium.  Today, I ended up at Nazareth Sweets to pick up baklava for a party tonight.  An assortment of 40-50 sets you back, wait for it……..$14!  The pricing is the opposite of Pasticceria Natalina.

I am worried abut the calorific content but luckily it’s far enough from Evanston that I do not end up there too often.  I love the walnut baklava and the bamya. The knaffeh is repulsive in my opinion.  At the risk of causing an uproar, I somewhat concur with an earlier post of Jeff’s on Asian desserts as far as his point extends to knaffeh from the Middle East.  Anyway, it is always good to buy some knaffeh – have some after one piece of walnut baklava so it grosses you out and you don’t eat any more dessert.

Sordid Links

July 23, 2010 in Uncategorized | by | Leave a comment

  1. Where’s Missy?
  2. The Luxuriant Flowing Hair Club For Scientists.
  3. Bruce Lee’s screen test.  (If you click on only one sordid link this summer, this should be the one.)
  4. Try your hand at synaesthesia.
  5. Cross-subsidization.
  6. Using curry to fight global warming.
  7. Not a lot of living in these rooms.

David Levine and Jie Zheng on Experiments

July 23, 2010 in Uncategorized | Tags: , , | by | 2 comments

Despite what you have read, theory holds up just fine.

The relationship between economic theory and experimental evidence is controversial. One could easily get the impression from reading the experimental literature that economic theory has little or no significance for explaining experimental results. The point of this essay is that this is a tremendously misleading impression. Economic theory makes strong predictions about many situations, and is generally quite accurate in predicting behavior in the laboratory. Most familiar situations where the theory is thought to fail, the failure is to properly apply the theory, and not in the theory failing to explain the evidence.

Which is not to say theory doesn’t have its problems.

That said, economic theory still needs to be strengthened to deal with experimental data: the problem is that in too many applications the theory is correct only in the sense that it has little to say about what will happen. Rather than speaking of whether the theory is correct or incorrect, the relevant question turns out to be whether it is useful or not useful. In many instances it is not useful. It may not be able to predict precisely how players will play in unfamiliar situations.4 It buries too much in individual preferences without attempting to understand how individual preferences are related to particular environments. This latter failing is especially true when it comes to preferences involving risk and time, and in preferences involving interpersonal comparisons – altruism, spite and fairness.

How Supermodels Are Like Toxic Assets

July 22, 2010 in Uncategorized | Tags: , , | by | Leave a comment

It’s actually a really great article, you should check it out.  It has this:

The fashion modeling market also has a formal mechanism in place, known as the “option,” to ensure all tastemakers get in on the action. An option is an agreement between client and agent that enables the client to place a hold on the model’s future availability. Like options trading in finance markets, an option gives the buyer the right, but not the obligation, to make a purchase. In the modeling market, it enables clients to place a hold on the model’s time, but unlike finance options trading, model options come free of cost; they are a professional courtesy to clients, and also a way for agents to manage models’ hectic schedules.

And it even has this:

In behavioral economics, Coco Rocha’s success is a case of an information cascade. Faced with imperfect information, individuals make a binary choice to act (to choose or not to choose Coco) by observing the actions of their predecessors without regard to their own information. In such situations, a few early key individuals end up having a disproportionately large effect, such that small differences in initial conditions create large differences later in the cascade.

The Invention of Sarcasm

July 20, 2010 in Uncategorized | Tags: , , , , | by | 6 comments

Sarcasm is a way of being nasty without leaving a paper trail.

If I say “No dear, of course I don’t mind waiting for you, in fact, sitting out here with the engine running is exactly how I planned to spend this whole afternoon” then the literal meaning of my words leaves me completely blameless despite their clearly understood venom.

This convention had to evolve.  If it didn’t already exist it would be invented. A world without sarcasm would be out of equilibrium.

Because if sarcasm did not exist then I have the following arbitrage opportunity: I can have a private vindictive chuckle by giving my wife that nasty retort without her knowing I was being nasty.  The dramatic irony of that is an added bonus.

That explains the invention of sarcasm.  But it evolves from there.  Once sarcasm comes into existence then the listener learns to recognize it.  This blunts the effect but doesn’t remove it altogether.  Because unless its someone who knows you very well, the listener may know that you are being sarcastic but it will not be common knowledge.  She feels a little less embarrassment about the insult if there is a chance that you don’t know that she knows that you are insulting her, or if there was some higher-order uncertainty.  If instead you had used plain language then the insult would be self-evident.

And even when its your spouse and she is very accustomed to your use of sarcasm, the convention still serves a purpose.  Now you start to use the tone of your voice to add color to the sarcasm.  You can say it in a way that actually softens the insult.  “Dinner was delicious.” A smile helps.

But you can make it even more nasty too.  Because once it becomes common knowledge that you are being sarcastic, the effect is like a piledriver.  She is lifted for the briefest of moments by the literal words and then it’s an even bigger drop from there when she detects the sarcasm and knows that you know that she knows …. that you intentionally set the piledriver in motion.

Sarcasm could be modeled using the tools of psychological game theory.

Civilian Deaths and Radicalization: Strategic Complements?

July 20, 2010 in Uncategorized | Tags: , , | by | Leave a comment

Regional data is available on civilian deaths from insurgent activity and counterinsurgent activity in Afghanistan.  There is also data on the level of insurgent attacks.  In principle, this might allow an analysis of the impact of civilian deaths on insurgent and insurgent support.  If civilian deaths caused by insurgents cause an increase in support for counterinsurgents, perhaps the local population will give information about insurgent location to the opposite side.  Then, insurgent attacks will decline.  If civilian deaths caused by caused counterinsurgent activity increase support for insurgents, perhaps insurgents find more recruits leading to more attacks in the future etc etc.

A recent paper by Condra et al attempts to study these issues.  One key finding:

“Counterinsurgent-generated civilian casualties from a typical incident are responsible for 6 additional violent incidents in an average sized district in the following 6 weeks.”

Are the causal statements water-tight?  I wasn’t sure but certainly the questions are apt.  This account summarizes many of the study’s findings.

Managing Suspense

July 20, 2010 in Uncategorized | Tags: , | by | 3 comments

I wrote previously about the equilibrium effects of avoiding spoilers.  You might want to strategically generate spoilers to counteract these effects.  I just discovered that a website exists for generating spoilers: shouldiwatch.com.

The premise is that you have recorded a sporting event on your DVR and you want to enjoy watching it.  Enjoyment has something to do with the resolution of uncertainty.  So you have preferences for the time path of uncertainty resolution.  Maybe you want your good news in lumps and your bad news revealed gradually.  Maybe you like suspense.  A mechanism can fine tune and enhance these.

But it always cuts two ways.  A spoiler creates a discrete jump in your beliefs at the beginning followed by another effect on your beliefs as the game unfolds.  For example, ShouldIWatch.com allows me to set a program that will warn me when the Lakers beat the Celtics by more than 10 points.  The idea is that I don’t want to watch a blowout.  But there is an effect on my beliefs: knowing that it is not a blowout changes my expectations at the beginning of the game.  Then there is a second effect during the game:  if the Lakers take a 15 point lead, I am expecting a come-back by the Celtics.  In return for the increased excitement at the beginning I pay with reduced excitement in the interim.

This trade-off could make for a cool model.  An event will unfold over time. An observer cares about the outcome and cares about the path of his beliefs but will watch the event after it is over. A mechanism is a program which knows the full path of the event and reveals information to the observer before and while he watches the event.  Design the mechanism which maximizes the observer’s overall expected value taking into account this tradeoff.

File this under psychological mechanism design.

S**t Squirter in Delhi

July 20, 2010 in economics | Tags: | by | 5 comments

If Indian capitalism has left you behind, your remaining options are begging or a scam to rip off tourists.  A British journalist encountered this scam:

“I was emerging from an underpass in Connaught Place when a shoeshine man came up to me, and whispered into my ear the word “shit”. He then pointed at my right shoe on which sat, to my amazement, a small slug of brownish goo. He offered to wipe it off, in return for 100 rupees – but I suspected something was, well, afoot, and I cleaned it with a few leaves. Some months later it happened again and I had a minor altercation with the shoeshine man. One day, I decided I’d photograph the person who had squirted my shoe. But I was daydreaming as I wandered through the underpass – and was squirted again. This time, I’m embarrassed to say, I became incandescent with rage. To the consternation of passers by, and to my everlasting shame, I grabbed the man and rubbed the filth off my shoe on to his trousers.”

It seems more original than the “Come into my carpet shop – I give you good price” scam but it has a rich history:

“I also heard about older versions of the scam, in Cairo during the Second World War, and most unexpectedly in a book published in 1948, The Otterbury Incident by Cecil Day-Lewis. There is one scene in which boys hidden in a cellar use flit guns to spray the shoes of passers-by with muddy water. Two other boys are waiting a little way off, next to a sign reading “SHOE-SHINE – 3d”. Flit guns were a household device for spraying insecticide – and they’re still used in India.”

FYI: A Flit gun is a hand-pumped insecticide sprayer used to dispense Flit, a brand-name insecticide widely used against flies and mosquitoes between 1928 and the mid-1950s. Although named after the well-known brand, “Flit gun” became a generic name for this type of dispenser.

Seepage

July 19, 2010 in Uncategorized | Tags: , , | by | 5 comments

BP’s cap on the ruptured gulf coast oil well is a two-edged sword.  On the one hand, there is a good chance it will hold and the problem will be solved.   On the other hand,  the cap makes it harder to verify whether this solution has failed.

The cap means that pressure is diverted elsewhere underground.  Right now there is a camera in place pointing at the capped part of the well.  When the cap was not in place this camera made it common knowledge whether oil was flowing into the gulf and it made quite clear how much.  With the cap however, “seepage” in other locations can only be measured by noisy tests that can easily be disputed by both parties.

For example, BP will cite:

Some seepage from the ocean floor is normal in the Gulf of Mexico, according to University of Houston professor Don Van Nieuwenhuise.

“A lot of oil that’s formed naturally, by the Earth, ends up escaping or leaking to the surface in the form of natural seeps and yes, there are a lot of these all around the world,” he said.

and the government will argue:

“If the well remains fully shut in until the relief well is completed, we may never have a fully accurate determination of the flow rate from this well. If so, BP — which has consistently underestimated the flow rate — might evade billions of dollars of fines,” Markey, D-Massachusetts, said in a letter to Allen released Sunday.

The deadweight loss of negotiation and litigation means that even if the risk to the gulf is substantially reduced by having the cap in place, it may still be better to uncap the well and seek solutions (such as extraction of the flowing oil) that can be monitored directly by the camera that is already there.

David Blackwell

July 19, 2010 in Uncategorized | Tags: | by | Leave a comment

A mathematician who was very important for economic theory, he died last week. Here are a number of thoughtful remembrances.

  1. Rajiv Sethi.
  2. Jesus Fernandez-Villaverde.
  3. Eran Shmaya.
  4. New York Times.

If I missed yours I am very sorry, please post a link in the comments.

Review: A Parallelogram

July 19, 2010 in Uncategorized | Tags: | by | 3 comments

At Steppenwolf Theater in Chicago.  Bruce Norris is the playwright.

This guy I know is saying that a theater critic is always the bad guy. He’s like “the playwright is so special just because he wrote the play in the first place, but the critic never gets credit for his part.  I mean the word ‘critic’ already carries such a negative connotation.”

Maybe its because reviews are so pointless.  I mean what can a review actually accomplish?  OK maybe you might convince some people to see the play or not to see the play, and maybe you might shed some light on some kind of deep meaning, but really what does that matter in the long run?

Hold on a sec, I don’t like the way that sounds.  I don’t think I really believe that and I certainly don’t like the way it feels.  Let’s do that again.  Back up.

The female lead in the play takes off her shirt once.  And the reality show Top Chef is featured in a crucial scene.

Now I am sure to have an impact.  You don’t mind spoilers do you?  Well, it doesn’t matter.  It’s just a play and even if you do know what’s going to happen, there is nothing you can do about it because its already written and its going to unfold just that way no matter who is there watching.  Do you smell smoke?

On the other hand, this review is being written right now and it can change at any moment.  Did you hear that?  She just said that this review is going to suck.  You didn’t hear that?  There, she said it again.  You didn’t hear that?

_________

I’m not going to bother with this review any more.  I know you just think I am making stuff up and you’re not going to listen to me anyway so what’s the point? So I’ll tell you about the dinner we had before the play.  Even though I know that I will get bored of that by the end of this paragraph (yes, she told me that too.)  But that’s kinda sad isn’t it?   I mean it was a nice dinner.  It made me happy.  I had rhubard consomme, I should at least be able to write a nice review of that.  But look, I am already bored of telling you about dinner.

OK, you wanna hear about the play again right?  That’s why you are still with me through all this.  OK good.  It ends tragically.  Everybody dies.  Even I die. You don’t believe me, see I told you you wouldn’t.  There I go, messing it up again.  You gave me another chance and I blew it.  I can’t let it end this way, let’s try again. Back up.

OK, you wanna hear about the play again right?  That’s why you are still with me through all this.  OK good.  It’s beautiful and touching and it ends well and everybody goes home feeling warm and fuzzy.

Hey this is great.  This is what a review is all about.  Why am I always being such a downer?  Nobody wants to read my ponderous reviews.  From now on I am going to write nice, normal reviews and everyone is going to love them and everyone is going to love me.

Ick, it already feels wrong.  I just can’t pretend like that.  But I’ve already written all this stuff and its come out all wrong.  I need to start over.  Back to the beginning.

_____

This guy I know is always saying that a theater critic is always the bad guy…

Taking One for the Team

July 19, 2010 in Uncategorized | by | 2 comments

You and a partner are employed on a joint project.  The probability of success depends on your joint effort and, if the project succeeds, you both get a payoff of one.  Effort is costly.  This scenario is loosely based on Holmstom’s classic Moral Hazard in Teams model.  In one version of this model there is a free-rider problem.

That’s the case where you and your partner agree that both your costly efforts contribute to the success of the project.  The harder you work, the more likely success is for you but also the more likely is success for your partner.  You do not take the positive externality into account in your effort choice and exert too little effort from the perspective of your partnership.  This is the free-rider problem.  If somehow either you or your partner could be inspirational and motivate both of you to work for the “common good”, the team would get closer to the joint surplus maximizing solution and everyone would be better off.  The partners share a common “vision” but have to be motivated to work towards it.

But there is another scenario.  In this one, you and your partner disagree about the direction in which the organization should be going.  You think his costly effort reduces the probability of success.  He thinks the same about your effort.  Your effort exerts a negative externality on your partner and vice-versa.  Each player does not take this into account and exerts too much effort from the perspective of the partnership.  In fact if both players exerted no effort what so ever, they would both be better off according to each of their payoff functions.  There is no jointly shared vision in this organization.

Actually, if you are in this latter situation, doing nothing is doing good.  Your costly effort is bad for both of you and it is selfish of you to work.  So, slack off and go to the beach.  You will be taking one for the team.

How To Teach a 41-Year-OId To Play the Piano

July 18, 2010 in Uncategorized | Tags: , , , | by | 3 comments

Step 1: The 41-year-old should begin by having his first child when he is 32.

Step 2: when the child is 6 she should begin taking piano lessons.

Step 3: the 41-year-old’s mother should consistently beat him at golf.

Step 4: At age 39, notice that you can hit the ball twice as far as your mother and therefore there is no good reason she should always win. Notice that as long as your ball is always closer to the hole than your mother’s you will win.

Step 5: Use this strategy to actually beat your mother at golf for the first time.

Step 6: Notice that the same strategy applies to playing the piano vis a vis the now 7-year-old daughter.

Step 7: Begin attending daughter’s piano lessons and learning all of her pieces with the plan that you will always be a better pianist than her, even when she is a concert-playing professional.

Step 8: Around age 40 notice that this is going a little slowly and so its time to start learning some serious pieces.

Step 9: At age 41, learn to play Children’s Song #6 by Chick Corea.

It’s not very good. My hands get tired toward the end of the fast sections and you can see that I lose the rhythm a bit. Also I am rushing. (still ahead of my daughter though 🙂

I have never taken piano lessons, but I think I might start.

Rudesheimer Magdalenenkreuz, Spatlese, Josef Leitz, 2008

July 17, 2010 in Uncategorized | by | Leave a comment

We are reliving our Riesling dinner at Oleana wine by wine.  I found the Leitz Magdalenenkreuz on sale for $18 at Binnys.  The great thing about Riesling is that it goes with all types of food.   We had it for dessert with nuts and fruits.  The fruits kill the sweetness and leave a hint of lemon and acid.  The nuts accentuate the taste apple, pear and lychee.  This wine would go well with Asian food.  I would have liked more minerality and acid.  It has only 8% alcohol so you can drink away freely.

Sordid Links

July 16, 2010 in Uncategorized | by | 3 comments

  1. This review of the new David Mitchell novel is pretty close.  I would add this.  Mitchell has total mastery of prose and microstructure, yes, but here he’s trying to be conventional and in many places I was just bored. I prefer Number9Dream with no attempt whatsoever at macrostructure. What should I read next?
  2. Somehow it’s more funny when phones do this than when my kids do.
  3. The Grateful Dead sing the star-spangled banner.
  4. Mother’s Day makes Mothers want to cheat on their husbands.
  5. Caffeine overdose calculator.
  6. Krakow prison tattoos preserved in formaldehyde.

Grilled Watermelon and Tomato Salad

July 15, 2010 in Uncategorized | Tags: | by | 5 comments

The memory of watermelon and tomato soup still fresh in my mind, this recipe came across my google reader.  Grilled watermelon and heirloom tomato salad.

I put 3/4-inch thick slices of watermelon on a charcoal grill for about 1 minute, then cut them into these circles using a stainless steel measuring cup (I don’t have cookie cutters.)  This kind of salad you want to break out the fleur de sel. Drizzle with olive oil, the good stuff, and a squeeze of lemon juice.  Basil from the garden.  Fantastic.  It’s going into my regular summer repetoire.

Oh, and this is the 1000th Cheap Talk post.

Option Value and Chicago Parking Privatization

July 15, 2010 in economics | Tags: | by | 7 comments

Chicago somewhat controversially privatized its parking meters.  Now you have to walk over to a machine, put in money or a credit card, get the receipt and put in on your dashboard – the meters are defunct.  It’s $1.25/hour so it’s still way cheaper than parking in a private lot. And now the machines work, unlike many that were installed earlier.

And here’s the cool thing: Suppose you’ve paid for two hours, only use up an hour and drive off and park somewhere else.  As long as parking costs the same in new spot where your car ends up and the parking rate is the same, your receipt is still valid and you do not have to pay for more parking.  There is less chance of wasting quarters like you do now when you leave the meter with time on it.

The fact that the receipt gives you option value means you might put in extra.  The company makes more money potentially because of this.  Also, with a meter, the next person to park might get lucky and get some time paid for by someone else.  This is a classic positive externality – each individual parker does not take into account and skimps on how much they out into the meter.  This cannot happen anymore because your receipt stays in your car (or goes into the trash) and not to someone else. So, they have to pay for their time themselves.  Another round of extra money for the parking company.

But, all in all, it not as bad as people thought originally.  And I love my durable receipt.

Plants Can Think?

July 15, 2010 in Uncategorized | Tags: , , | by | 1 comment

This is a very interesting article that has the unfortunate title “Plants Can Think And Remember.” (Unfortunate because the many links to it that I have seen come with snarky comments like “Whatcha gonna do now vegetarians??”)

It reminds me of a great joke:  Three scientists are on the committee to decide mankind’s greatest invention.  The engineer is arguing for the internal combustion engine, the doctor is arguing for the X-ray machine and Martha Stewart is arguing for the Thermos.  “The Thermos, you’ve got to be kidding?”  Sez Martha “Well you see it keeps hot things hot and cold things cold.”  They look perplexed.  “Yeah, big deal.”  Martha:  “How does it know??”

The article is about some pretty sophisticated ways that plants respond to signals in their environment.  That is very cool.  Kudos to the Plant Kingdom.  But while, there may be something in the underlying research that justifies saying that plants “think”, I rather doubt it, and it is definitely not to be found in this journalistic account.  Look:

In their experiment, the scientists showed that light shone on to one leaf caused the whole plant to respond.

“We shone the light only on the bottom of the plant and we observed changes in the upper part,” explained Professor Stanislaw Karpinski from the Warsaw University of Life Sciences in Poland, who led this research.

When I light a match to the coals at the bottom of my charcoal chimney, eventually all of them ignite and turn red even the ones on the top.  My charcoal can think.

Then there’s stuff about “memory.”  But I already knew that plants had memory.  When I give my grass water today, it is green next week.  When I don’t give my grass water today, it is brown next week.  The grass changes its color next week depending on whether I give it water today.  It remembers.

The Shapes of Countries

July 15, 2010 in Uncategorized | Tags: , , | by | 8 comments

This is Asia:

More here. Why am I posting this?

The Transparency Illusion

July 15, 2010 in Uncategorized | Tags: , | by | Leave a comment

Here’s an experiment you can do that will teach you something.  Get a partner.  Think of a famous song and clap out the melody of the song as you sing it in your head.  You want your partner to be able to guess the song.

Out of ten tries how often do you think she will guess right?  Well she will guess right a lot less than that.  This is the illusion of transparency which is very nicely profiled in this post at You Are Not So Smart.  We overestimate how easily our outward expressions communicate what is in our heads.

This should be an important element of behavioral game theory because game theory is all about guessing your partner’s intentions.  As far as I know, biases in terms of estimates of others’ estimates of my strategy is untapped in behavioral game theory.  Its effects should be easily testable by having players make predictions about others’ predictions before the play of a game.

There are games where I want my partner to know my intentions.  For example I want my wife to know that I will be picking up coffee beans on the way home, so she doesn’t have to.  Of course I can always tell her, but if I overestimate my transparency we might have too little communication and mis-coordinate.

Then there are games where I want to hide my intentions.  In Rock-Scissors-Paper it shouldn’t matter.  I might think that she knows I am going to play Rock, and so at the last minute I might switch to Scissors, but this doesn’t change my overall distribution of play.

It should matter a lot in a casual game of poker.  If my opponent has a transparency illusion he will probably bluff less than he should out of fear that his bluffing is too easy to detect.  So if I know about the transparency illusion I should expect my opponent on average to bluff less often.

But, if he is also aware of the transparency illusion and he has learned to correct for it, then this changes his behavior too.  Because he knows that I am not sure whether he suffers from the illusion or not, and so by the previous paragraph he expects me to fold in the face of bluff.  So he will bluff more often.

Now, knowing this, how often should I call his bets?  What is the equilibrium when there is incomplete information about the degree of transparency illusion?

In a long game of course reputation effects come in.  I want you to believe that I have a transparency illusion so I might bluff less early on.

Basic Research

July 14, 2010 in Uncategorized | Tags: | by | 3 comments

Academics appreciate the pure search for knowledge, whether or not it can ever be put to use.  This is the pinnacle:

In what appears to be an attempt on Amruthavalli’s part to understand suicide by hanging, the housewife hanged herself from the ceiling of her family home in Madivala on July 7.

What the suicide note says:

‘No one is responsible for my death. For many days I have harboured a wish and have had doubts about how people hang themselves. So just I am trying to get to the bottom of the matter by hanging myself. No one should be held responsible for my death. I love you Bava, I love you dad, mom and my sisters. I love you Saran. Thanks for everything Athama.’

-Amruthavalli

Hood hello: nimbupani.

Language and Bias

July 13, 2010 in Uncategorized | Tags: , , | by | 4 comments

Are prejudices magnified depending on the language being spoken?  An experiment based on a standard Implicit Association Test suggests yes.

In an Implicit Association Test pairs of words appear in sequence on a screen.  Subjects are asked to classify the relationship between the words and then the time taken to determine the association is recorded.  In this experiment the word pairs consisted of one name, either Jewish or Arab, and one adjective, either complimentary or negative.  The task was to identify these categories, i.e. (Jewish, good); (Jewish, bad); (Arab, good); (Arab, bad).

The subjects were Israeli Arabs who were fluent in both Hebrew and Arabic.

For this study, the bilingual Arab Israelis took the implicit association test in both languages  Hebrew and Arabic  to see if the language they were using affected their biases about the names. The Arab Israeli volunteers found it easier to associate Arab names with “good” trait words and Jewish names with “bad” trait words than Arab names with “bad” trait words and Jewish names with “good” trait words. But this effect was much stronger when the test was given in Arabic; in the Hebrew session, they showed less of a positive bias toward Arab names over Jewish names. “The language we speak can change the way we think about other people,” says Ward. The results are published in Psychological Science, a journal of the Association for Psychological Science.

Nice.  But this leaves open the possibility that, since Hebrew is the second language, all response times in the Hebrew treatment were increased simply making it harder to see the bias.  I would still prefer a design like this one.

Balaclava bluster: Johnson.

AKA: Allegedly Known As

July 13, 2010 in Uncategorized | Tags: , , , | by | 2 comments

Yesterday on the NPR hourly newscast the lead-in to the barefoot bandit story was this “A man allegedly known as the barefoot bandit…”  Perhaps I had too much time on my hands (I had a doctor’s appointment and they always go like this:  Step 1) you are 30 minutes too early Step 2) please wait for an additional hour in a room with no AT&T reception Step 3) Stop wasting our time, your blood pressure is 120 over 70, go away and never come back) but this struck me as a strange way to phrase it.

Journalists apparently have a self-imposed rule that suspects should be “alleged” to have done whatever they are suspected of, at least until they are convicted.  Presumably this is to avoid prejudging guilt.  Now, since this guy was just picked up, the rule applies and he is “allegedly” something.  But allegedly what?  “Allegedly known as the barefoot bandit.”  Is it a crime to be known as the barefoot bandit?  And is that what he is accused of?

OK, there were some crimes committed and all of these crimes are thought to have been committed by the same person and that, so far unidentified, person has been given a proxy identity “the barefoot bandit.” Now we are trying to find the barefoot bandit.  The linguistic complication is that since “the barefoot bandit” is not a real identity you cannot say that someone “is” the barefoot bandit.  Whoever this criminal is, he is “AKA (*also* known as) the barefoot bandit.”  We are not literally looking for someone who is called the barefoot bandit, as if that by itself is a crime.  We are looking for the person who committed the crimes which have been grouped together by that heading.

So we are looking for the person who (not by his own choice has come to be) “known as the barefoot bandit.”  And now we have to somehow fit the “allegedly” in there in order to comply with the journalistic moral code.  That’s the problem and the NPR copyeditor seems to have just stuck them together without trying to parse the final product.

Probably he didn’t have the spare time afforded by a futile doctor’s appointment.  Or if he did, he had no iPhone reception to make the necessary changes before the newscast went live.

How Does A Bad C.E.O. Score Another Great Gig?

July 13, 2010 in art of office politics | Tags: | by | 5 comments

An executive rises through the ranks at a large organization and becomes C.E.O.  He makes terrible decisions or is a passive leader, letting the firm slide into obscurity.  The firm is publicly traded and poor performance is observable.  But the C.E.O. manages to get another great job, leading a “turnaround” at another large organization.  He uses the same strategy that performed so badly in the first firm.  His second firm also goes down the tube.  This story is loosely based on an example I use in one of my M.B.A. classes.  And I have another new example.  How can it happen?

The first theory is pretty simple.  If a project fails, it is hard to know where to lay the blame – the economic climate, the C.E.O., bad luck etc. etc.  The the C.E.O. can come up with a story that helps him look like a leader not a loser.  Even worse, the people he works with want to get rid of him.  Perhaps they say nice things and sell a lemon to someone else.  The potential recipients of the lemon should know the perverse incentives in play and avoid the winner’s curse.  Perhaps the consult insiders they trust and with whom they will likely have a long future relationship.

But this theory does not accommodate cases where the C.E.O. publicly proposed and pushed a failed strategy at the first firm.  Or very obviously did not do his job.  Even these characters can pull off a successful exit.  The rationale for this phenomenon has two parts: (a) the pool of viable potential leaders is small and (b) very few people have the experience of running a large organization.  So, even if they performed poorly, perhaps they can learn from their mistakes and do better the second time around.

This presumes that a known bad performer carries less risk than an unknown performer because the former has experience.  I find it hard to believe.  A rational choice interpretation would be nice for the conscious purchase of a known experienced lemon who might change over a potential inexperienced mango.

Pictures of Empty Cups

July 12, 2010 in Uncategorized | Tags: | by | 1 comment

What is Cognitive Dissonance?

July 12, 2010 in Uncategorized | Tags: , | by | 3 comments

You firmly believe that the sun will rise every morning.  Then one day you awake and the sun does not rise. What are you to believe now?  You have basically two alternatives.  One is to go on believing that the sun will rise every morning by rationalizing today’s exception.  There could have been a total eclipse this morning.  Perhaps you are dreaming.  The other choice is to conclude that you were wrong and the sun does not rise every morning.

The “rational” (i.e. Bayesian) reaction is to weigh your prior belief in the alternatives.  Yes, to believe that you are dreaming despite many pinches, or to believe that a solar eclipse lasted all day would be to believe something near to absurdity, but given your almost-certainty that the sun would always rise we are already squarely in the exceptional territory of events with very low subjective probability.  What matters is the relative proportion of that low total probability made up of the competing hypotheses:  some crazy exception happened, or the sun in fact doesn’t always rise.  It would be perfectly understandable, indeed rational if you find the first much more likely than the second.  That is, even in the face of this contradictory evidence you hold firm to your belief that the sun rises and infer that something else truly unexpected happened.

Cognitive dissonance is a family of theories in psychology explaining how we grapple with contradictory thoughts.  It has many branches, but a prominent one and perhaps the earliest, suggests that we irrationally discard information that is in conflict with our preconceived ideas.  It began with a study by Leon Festinger.  He was observing a cult who believed that the Earth was going to be destroyed on a certain date.  When that date passed and the Earth was not destroyed, some members of the cult interpreted this as proof they were right because it was their faith that saved humanity.  This was the leading example of cognitive dissonance.

My preamble about Bayesian inference shows that when we see people who are rigid in their beliefs and we conclude that they are irrationally ignoring information, it is in fact we who are jumping to a conclusion.  All we can really say is that we disagree with their prior beliefs and in particular the strength of those beliefs.  Somehow though it is much less satisfying to just disagree with someone than to say that they are acting irrationally in the face of clear evidence.

Now, watch this video, especially the part that starts at the 3:00 mark.  When this guy experiences his moment of cognitive dissonance, what is the rational resolution?

Foundations of Macroeconomics Shaken

July 10, 2010 in economics | by | 2 comments

I am giving my paper with Jeff at the annual conference of the Society of Economic Dynamics in Montreal.   And I just found 5 dollars Canadian on the floor in a conference room.  At first, I thought it was a practical joke but no-one popped out of  a room and snapped a photo.  So, I guess it was not a setup.  In present company, my experience is consistent with the following joke:

An economics professor and a grad student are walking along the sidewalk, and the grad student spots a twenty dollar bill on the sidewalk. He says, “Hey professor, look, a twenty dollar bill.” The professor says, “Nonsense. If there were a twenty dollar bill on the street, someone would have picked it up already.” They walk past, and a little kid walking behind them pockets the bill.

Patiently Sordid Links

July 9, 2010 in Uncategorized | by | 1 comment

  1. Beverage assortment must include thoughtful assortment of meads and bendy straws.
  2. Sad Keanu.
  3. Very early Talking Heads playing Psycho Killer.
  4. 70’s rock stars photographed with their parents. (via Marbury.)
  5. Marvin Gaye sings The Star Spangled Banner. (This by itself justifies the whole revolutionary war.)
  6. I just hope it’s me.
  7. Tired, yeah right, a likely excuse.

Thoughts Left Lying Around

July 8, 2010 in Uncategorized | Tags: , , , | by | 8 comments

  1. Are civil wars more often North vs South than East vs West?  Put differently, based on the boundaries that have survived until today, are countries, on average, wider than they are tall?
  2. Which will arrive first:  the ability to make a digital “mold” of distinctive celebrity voices or the technology allowing celebrities to map the digital signature of their voice in order to claim property rights?
  3. The hard `r` in Spanish and other languages creates a natural syncopation because the r usually occupies the downbeat, as in “sagrada” or “cortado”
  4. Syncopation adds a dimension to music because brain tickles as it tries to make sense of two times at once.
  5. Among European soccer nations, the closer to Africa the fewer black players on the national team.

Incentives for Sommeliers

July 8, 2010 in Uncategorized | Tags: , , | by | Leave a comment

Usually you order a bottle of wine in a restaurant and the waiter/wine guy opens it and pours a little for you to taste.  Conventionally, you are not supposed to be deciding whether you made a good choice, just whether or not the wine is corked, i.e. spoiled due to a bottling mishap or bad handling.  In practice this itself requires a well-trained nose.

But in some restaurants, the sommelier moves first:  he tastes the wine and then tells you whether or not it is good.

Suspicions are not the only reason some people object to this practice. Others feel they are the best judges of whether a wine is flawed or not, and do not appreciate sommeliers appropriating their role.

We should notice though that it goes two ways.  There are two instances where the change of timing will matter.  First there is the case where the diner thinks the wine is bad but the sommelier does not.  Here the change of timing will lead to more people drinking wine that they would have rejected.  But that doesn’t mean they are worse off.  In fact, diners who are sufficiently convinced will still reject the wine and a sommelier whose primary goal is to keep the clientele happy will oblige.  But more often in these cases just knowing that an expert judges the wine to be drinkable will make it drinkable. On top of this psychological effect, the diner is better off because when he is uncertain he is spared the burden of sticking his neck out and suggesting that the wine may be spoiled.

But the reverse instance is by all accounts the more typical:  diners drinking corked bottles because they don’t feel confident enough to call in the wine guy.  I have heard from a master sommelier that about 10% of all bottles are corked!  Here the sommelier-moves-first regime is unambiguoulsy better for the customer because a faithful wine guy will reject the bottle for him.

Unless the incentive problem gets in the way.  Because if the sommelier is believed to be an expert acting in good faith, then he never lets you drink a corked bottle.  You rationally infer that any bottle he pours for you is not spoiled, and you accept it even if you don’t think it tastes so good.  But this leads to the Shady Sommelier Syndrome:  As long as he has the tiniest regard for the bottom line, he will shade his strategy at least a little bit, giving you bottles that he judges to be possibly, or maybe certainly just a little bit, corked.  You of course know this and now you are back to the old regime where, even after he moves first, you are still a little suspicious of the wine and now its your move.  And your bottle is already one sommelier-sip lighter.