One case in which dropping copy protection improved sales.
It’s been 18 months since O’Reilly, the world’s largest publisher of tech books, stopped using DRM on its ebooks. In the intervening time, O’Reilly’s ebook sales have increased by 104 percent. Now, when you talk about ebooks and DRM, there’s always someone who’ll say, “But what about [textbooks|technical books|RPG manuals]? Their target audience is so wired and online, why wouldn’t they just copy the books without paying? They’ve all got the technical know-how.”So much for that theory.
More here.
Addendum: see the comments below for good reason to dismiss this particular datum.
Here are some tips.
Computer Scoring – … Tax returns are “scored” using two systems – Discriminant Function System (DIF) and Unreported Income DIF (UIDIF). The Discriminant Information Function System (DIF) score gives the IRS an indication of the potential for change in tax due, based on past IRS experience. The Unreported Income DIF (UIDIF), as you can imagine, scores the return on the potential for unreported income. The higher the score, for either, the more likely the return will be reviewed.
Apparently these tips come from the IRS itself! When would it make sense for the IRS to teach us how to avoid an audit? It would make sense if the ways of cheating on your taxes were known and easy to describe. Then the IRS just announces it will audit anyone who does something that looks like that. But if there are always innovative ways to cheat on your taxes then an announcement like this, if truthful, probably only helps cheaters avoid audits.
On the other hand the IRS’s objective might be to maximize prosecutions. Then they want to lie about their audit policy and hope you believe them.
A former vice president at Microsoft writes how destructive competition within the company is destroying innovation:
“For example, early in my tenure, our group of very clever graphics experts invented a way to display text on screen called ClearType. It worked by using the color dots of liquid crystal displays to make type much more readable on the screen. Although we built it to help sell e-books, it gave Microsoft a huge potential advantage for every device with a screen. But it also annoyed other Microsoft groups that felt threatened by our success.
Engineers in the Windows group falsely claimed it made the display go haywire when certain colors were used. The head of Office products said it was fuzzy and gave him headaches. The vice president for pocket devices was blunter: he’d support ClearType and use it, but only if I transferred the program and the programmers to his control. As a result, even though it received much public praise, internal promotion and patents, a decade passed before a fully operational version of ClearType finally made it into Windows.”
He adds:
“Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence.”
This is a classic problem sometimes known as the “not invented here” syndrome: if you did not invent it, you denigrate it.
Tomas Sjöström and I have a published paper on this topic. There’s lots of stuff going on in it but here is one key idea: Suppose two players are competing for promotion and one is more senior than the other. Then, the senior guy has the incentive to denigrate the work of the junior guy because the only way the junior guy can leapfrog him in the career race is if he has a successful project. So, the senior guy tries to squash the junior guys ideas. But the junior guy has the reverse incentives, to exaggerate the quality of his own work. It turns out that this incentive is easier to deal with than the denigration incentive. This is because exaggeration carries a risk: if your idea is tried out and is a huge failure, your career is in ruins. This reduces your incentive to exaggerate bad ideas. But denigration kills ideas so you never find out if the denigrator was lying. So our conclusion is that well designed self-assessment is better than peer review.
If only Microsoft listened to us, they’d be more profitable. Call me Bill, Steve Ballmer, anybody….
There is still one question: Does Apple have a better system in place to manage innovation? If so, what is it?
Toyota is undertaking a massive recall of vehicles to fix accelerator pedals. Obviously, Toyota’s reputation has taken a huge hit. How are their incentives aligned with consumers in terms of fixing the problem?
At a fundamental level, Toyota has a huge incentive to make sure that they solve any problems in cars on the road and in dealerships and that there are no problems in cars they make in the future. If they put in a claimed fix to the problem and it’s not a real fix and there is an accident, their reputation takes another huge hit. The people who worked at AIG and caused the problems can find other jobs because they are still nameless to consumers. But Toyota’ brand name is its reputation and if that goes, suddenly G.M. has a future after all.
There are some conflicts of interest though between consumers and Toyota. Toyota have two fixes to the pedal problem. One is to just put in a new pedal. The second is to add a steel bar to the bottom of the pedal to stop it sticking to the spring.
To the average consumer, a new pedal sounds better than the patched up old one. And it also sounds more expensive suggesting that Toyota is following a quick and dirty path to a recall with the steel bar. In an NPR interview, the Toyota CEO said both fixes cost roughly the same amount. But this does not convince non-experts, especially when Toyota has been so slow to react to the problems. So, it seems Toyota should go with the new pedal solution for everyone. Why aren’t they doing that?
This is where some conflict of interest appears: the steel bars can be produced more quickly than the new pedals. Toyota would like to get the cars on the road fixed as soon as possible to avoid another crash. So, it has decided to go for a fix which is fast but looks suspicious. This is the problem.
It has to try to make the solution as “above-the-board” as possible. Perhaps announce that anyone who got the steel bar can get the new pedal later in the year if they are not happy. If Toyota really believes the steel bar fix is as good as a new pedal, it should give away something free and valuable to make the solution credible and to say “we are sorry”. People wanting the new pedal should not get the freebie.
Not sure what the freebie should be..how about a discount on your next Toyota purchase? It should explicitly say that it can be added to any other discounts offered in the future so people know they are definitely getting a good deal
Its obvious right? Ok but before you read on, say the answer to yourself.
Is it because he is the most able to make up any lost time by the earlier teammates? Because in the anchor leg you know exactly what needs to be done? Now what about this argument: The total time is just the sum of the individual times. So it doesn’t matter what order they swim in.
That would be true if everyone was swimming (running, potato-sacking, etc.) as fast as they could. But it is universally accepted strategy to put the fastest last. If you advocate this strategy you are assuming that not everyone is swimming as fast as they can.
For example, take the argument that in the anchor leg you know exactly what needs to be done. Inherent in this argument is the view that swimmers swim just fast enough to get the job done.
(That tends to sound wrong because we don’t think of competitive athletes as shirkers. But don’t get drawn in by the framing. If you like, say it this way: when the competition demands it, they “rise to the occasion.” Whichever way you say it, they put in more or less effort depending on the competition. And one does not have to interpret this as a cold calculation trading off performance versus effort. Call it race psychology, competitive spirit, whatever. It amounts to the same thing: you swim faster when you need to and therefore slower when you don’t.)
But even so its not obvious why this by itself is an argument for putting the fastest last. So let’s think it through. Suppose the relay has two legs. The guy who goes first knows how much of an advantage the opposing team has in the anchor leg and therefore doesn’t he know the amount by which he has to beat the opponent in the opening leg?
No, for two reasons. First, at best he can know the average gap he needs to finish with. But the anchor leg opponent might have an unusually good swim (or the anchor teammate might have a bad one.) Without knowing how that will turn out, the opening leg swimmer trades off additional effort in return for winning against better and better (correspondingly less and less likely) possible performance by the anchor opponent. He correctly discounts the unlikely event that the anchor opponent has a very good race, but if he knew that was going to happen he would swim faster.
The anchor swimmer gets to see when that happens. So the anchor swimmer knows when to swim faster. (Again this would be irrelevant if they were always swimming at top speed.)
The other reason is similar. You can’t see behind you (or at least your rear-ward view is severely limited.) The opening leg swimmer can only know that he is ahead of his opponent, but not by how much. If his goal is to beat the opening leg opponent by a certain distance, he can only hope to do this on average. He would like to swim faster when the opening leg opponent is behind but doing better than average. The anchor swimmer sees the gap when he takes over. Again he has more information.
There is still one step missing in the argument. Why is it the fastest swimmer who makes best use of the information? Because he can swim faster right? It’s not that simple and indeed we need an assumption about what is implied by being “the fastest.” Consider a couple more examples.
Suppose the team consists of one swimmer who has only one speed and it is very fast and another swimmer who has two speeds, both slower than his teammate. In this case you want the slower swimmer to swim with more information. Because in this case the faster swimmer can make no use of it.
For another example, suppose that the two teammates have the same two speeds but the first teammate finds it takes less effort to jump into the higher gear. Then here again you want the second swimmer to anchor. But this time it is because he gets the greater incentive boost. You just tell the first swimmer to swim at top speed and you rely on the “spirit of competition” to kick the second swimmer into high gear when he’s behind.
More generally, in order for it to be optimal to put the fastest swimmer in the anchor leg it must be that faster also means a greater range of speeds and correspondingly more effort to reach the upper end of that range. The anchor swimmer should be the team’s top under-achiever.
Exercises:
- What happens in a running-backwards relay race? Or a backstroke relay (which I don’t think exists.)
- In a swimming relay with 4 teammates why is it conventional strategy to put the slowest swimmer third?
Since I was never really sure myself, whenever I thought of a good reason to keep blogging I wrote it down. I have a pretty large collection now. Here’s a few.
- writing is exercise just like jogging is and yoga is
- i have a hard time coming up with topics of conversation. i am a total loser at parties. now i can slip away, break out my iPhone, go to the blog and remember what i blogged about last week. instant conversation topic. now i am even more of a loser at parties.
- people live at different tempos. mine is slow.
- its good practice at being imperfect.
- it sharpens my thinking all day long because i am always on the alert for interesting things to blog about
- procrastinating writing my novel (so far I have a title: Banana Seeds)
- To get gigs
There are lots more. I will post more later.
Happy Birthday to us! Here’s how it got started. About a year and a half ago I wrote an email to Sandeep saying we should start a blog. He ignored me and I forgot about it. Then a few months later he wrote back something like
Hey: I’m into the idea of starting a blog as long as I can blog about topics other than economics (and occasionally mention economics!). Interested? They’re hard to sustain on your own unless you have verbal diahorrea and are vain enough to think every stupid thought is worth writing down.
which to me read like a reply to an email I never sent (I forgot I ever sent the first one) so I thought he must have meant to send it to someone else and had sent it to me by mistake. But in fact I had already started “blogging” to myself as a sort of trial run for starting a real blog. I would write a few sentences in an email to myself every day to see if I had enough ideas and the stamina to keep it going. So I thought I would take advantage of Sandeep’s mistake and I wrote back
totally, i was going to ask you. in fact i ahve been planning for a while. i have been writing mini blog posts and saving them so as to have a stockpile before actually starting. i have a few thoughts about format too.
definitely not an economics blog (except when we feel like it.)
most of my stupid thoughts i think are worth writing down.i have even decided on a name for my blog but if you dont like it we could come up with one together.
And so we started thinking of a name. Sandeep had a lot of bad ideas for names
- hodgepodge hedgehog
- platypus
- bacon is a vegetable
- release the gecko
- coordination failure
- reaction function
and he is too much of a philistine to appreciate my ideas for names:
- banana seeds
- vapor mill
- el emenopi’
so we were at an impasse. Somehow we hit upon the name Cheap Talk. Sandeep ran it by some folks at a party and it seemed like a hit. (That name was taken by a then-defunct blog and wordpress does not recycle url’s so we had to morph it into cheeptalk.wordpress.com.)
The first post was February 2, 2009. We didnt publicize the blog widely at first because we wanted to make sure we could keep it up before making a big commitment. It seemed to have some momentum so we went public about a month later. It has been a ton of fun and I am really glad we took the plunge.
- 736 posts
- 2,090 comments
- Most popular post: The Economics of Pinball (47,000+ views)
- Least popular post: 1 view.
- We have 1,382 RSS subscribers via google reader.
You are late with a report and its not ready. Do you wrap it up and submit it or keep working until its ready? The longer it takes you the higher standard it will be judged by. Because if you needed the extra time it must be because its going to be extra good.
For some people the speed at which they come up with good ideas outpaces these rising expectations. Others are too slow. But its the fast ones who tend to be late. Because although expectations will be raised they will exceed those. The slow ones have to be early otherwise the wedge between expectations and their performance will explode and they will never find a good time to stop.
Compare Apple and Sony. Sony comes out with a new product every day. And they are never expected to be a big deal. Every single Apple release is a big deal. And highly anticipated. We knew Apple was working on a phone more than a year before the iPhone. It was known that tablet designs had been considered for years before the iPad. With every leak and every rumor that Steve Jobs was not yet happy, expectations were raised for whatever would eventually make it through that filter.
Dear TE referees. Nobody is paying attention to how late you are.
We got this cookbook for our eight year old for Christmas. Till today, we had only used the pizza recipe and we mainly took the lazy route and bought pre-made pizza dough. That did not test the quality of the book too much. Today, we embarked on a two-hour extravaganza and made gnocchi with tomato sauce and an orange cake. We used canned tomatoes but, apart from that shortcut, we made everything else from scratch. It was a huge success.
The gnocchi tasted totally authentic. It was really fun to make them, much easier than fresh egg pasta. The potato and flour combination has the same consistency as play dough. You roll it into a thin sausage and chop it into gnocchi. It’s perfect for all age groups. I think we had a first all family cooking epiphany with the four-year old to the four+ year olds working together like a fairly well-oiled machine. Gnocchi cook really quickly and you have to scoop them out as soon as they float to the top. We made enough to freeze half of them for a future dinner.
I don’t really bake so the orange cake was a total revelation. It’s quite sophisticated. In fact, there is nothing “childish” about the gnocchi or the cake. That’s the genius of this cookbook. It’s not at all patronizing. The gnocchi aren’t cut into dinosaur shapes to make them go down more easily! They have chosen some of the easier recipes with less sophisticated knife skills. They have thought of ways to explain the cutting and chopping so it can be done safely – the eight year old did all the peeling and chopping. The food is excellent and you get to hang out with your kids and actually cook. What could be better? This cookbook is a keeper. We’ve marked all the recipes we’re going to try. I’m looking forward to the hazelnut cake.
Responding to the message “Salinger is dead. Happy now?” His debut novel, King Dork is about a kid who, in an unavoidably Holden kinda way, hates everything about the cult of The Catcher in the Rye.
That said, unlike Tom, I didn’t hate “The Catcher in the Rye” when it was first thrust upon me by numerous parents, teachers, priests, counselors, and other authority figures. I knew I was supposed to revere it, to identify with Holden, and to keep it close to my bosom and all that. “Finally,” I would say, obediently following the script provided by helpful, smiling, over-eager adult facilitators, “someone who understands…” Maybe I even kind of meant it. And they would pat me on the head, or on the back, depending on how tall they were in relation to me. Eventually, though, I began to wonder. What does it mean when you’re in a room full of people who all have the same, exact opinion on something with little or no divergence? It’s kind of creepy, whatever it means.
Best restaurant I’ve been to so far in Boston. High quality, elegant, unfussy food. I had a “salad” with roasted potatoes and mushroom, a poached egg and truffle sauce. Totally delicious. For an entree I had a “epoisses capellacci”: a kind of tortellini shaped like a bishop’s hat stuffed with a stinky cheese. They floated in a simple melted butter sauces with chopped chives, celery and apple. Very generous portion and perfect on a cold, Boston night. For dessert, we split a cookie plate with a salty, saffron gelato (bit like an Indian kulfi). With the Boston Children’s Museum close by, we’ll be here again!
Senator Ben Nelson was the 60th vote in the Senate on healthcare reform. He held out for what is now called the “Nebraska purchase,” a side-payment from the federal government to Nebraska to extend Medicaid. He also got rid of the public option. He compromised a bit on abortion so he did not get all his cake. In an interview, he says:
NELSON: Well, I gave a little – a half-way in between and then you ask for it all.
So, compromise was short-term stance and he was going ask for the whole cake later on. How? Nelson planned to bargain hard for more in conference in the (now-hypothetical) scenario where the Senate and House bills were merged (my emphasis) as he preferred the House bill to his own language in the Senate bill:
NELSON: To get it there. Right. I know – with my language which was better than the language in the bill. But, once it went to conference, as part of the conference, there was still another 60 vote threshold, and that is when I would have insisted and that is what Christy was talking about when I mentioned this on the phone – how we would approach this in conference to say, for my last 60th vote, it has to have Nelson/Hatch/Casey.
LSN: Why didn’t you stop it right then and there and say, “No Nelson/Hatch – nothing.”
NELSON: Because, at that point and time, the leverage wasn’t as strong – you have to play it…
LSN: You were the 60th vote, though.
NELSON: Yes, but there were some on the other side who probably wouldn’t have gone along with it at that point – they would have had no choice. A whole bunch of people didn’t the Nelson/Hatch/Casey – you saw that. There were a whole bunch of people who didn’t like the Nelson language – they only went along with because I could be the 60th vote. Leverage increases, exponentially, like the difference between a number 2 earthquake, 3 earthquake, 4 earthquake – goes up exponentially like that – your leverage goes like that at the very end…..if you are going to match Stupak, you match him at the end when you have the most leverage.
If the plan failed, he was willing to accept his own (!) language:
NELSON: If everything failed, Nelson is better than the language that is in the bill…..I could live with Nelson, but it is not my preference.
The Nelson strategy contradicts simple backward induction in complete information games in two ways. First, if a player has significant leverage at the end of the game, he should have the same leverage right now. There is no sense in which leverage increases at the end. Second, if it is common knowledge that Nelson will accept Nelson language in the end, then he has no leverage at the end in conference anyway.
Perhaps both issues can be rationalized with incomplete information? I do not know of models that do this but perhaps others are. There is an Abreu-Gul paper where players concede slowly over time in a war of attrition but there is a deadline effect here that is not in their paper.
Paul Krugman asks whyPad? Apple has thought through this problem in pricing the iPad. It’s main competition is Kindle, your cell(I?)phone and your laptop.
Kindle: The Kindle DX has a large screen and is the iPad’s main competitor in the e-Reader category. It is selling for $489. The cheapest iPad is $499 and has 16GB storage while Kindle DX has 4GB. Apple has signed deals with publishers and it seems books are going to be more expensive on iBooks than Amazon. Amazon seems to paying publishers to discount books. Still, given the greater capabilities (websurfing etc.) and sheer cool factor of the iPad, I would guess new consumers are going to go for the iPad given the price point. Existing customer like Krugman, it’s not so clear..you’d have to switch to the iPad and give up your Kindle. The sunk cost fallacy might help to dissuade you. But it seems a Kindle app allows your Kindle books to be read on the iPad so your books transfer.*
Cell(I?)phone: Your phone may already give you websurfing and email capability and have 3G. Apple has signed some deal with ATT where you can sign on one month at a time for either $15 or $30 and get data service. No yearly contract. So now if you thinking about buying the iPad Wi-Fi vs iPad Wifi+3G which costs $130 more you might buy the more expensive one for the option value of using 3G occasionally when you’re traveling. The price difference is actually quite hefty but since it involves no one or more year data contract with ATT, you are willing to suffer the hit on your wallet. Presumably, there was some clever use of Verizon as a threat point to get ATT to give such a good deal.
Laptop: This is where there is the least information. The demonstration showed that iWork functioned on the iPad but it was not clear that Powerpoint would work, even the Mac OS version. I Use VMWare to run Windows on my Macbook. Can that run on the iPad? Then, I’m sold!
*Updated: Commenter below cld pointed out Kindle app to me and I updated the post as a result.
The Econometric Society which publishes Econometrica, one of the top 4 academic journals in Economics has taken under its wing the fledgling journal Theoretical Economics and the first issue under the ES umbrella has just been published. TE has rapidly become among the top specialized journals for economic theory and it stands out in one very important respect. All of its content is and always will be freely available and publicly licensed.
Bootstrapping a reputation for a new journal in a crowded field is by itself almost impossible. TE has managed to do this without charging for access, on a minimal budget supported essentially by donations plus modest submission fees, and with the help of a top-notch board of editors who embraced our mission. There is no doubt that the community rallied around our goal of changing the world of academic publishing and it worked.
This is just a start. Already the ES is launching a new open-access field journal with an empirical orientation, Quantitative Economics. Open Access is here to stay.
From Robin Goldstein:
I’ve previously discussed the thorny issue of the overzealous advocacy of a traditional recipe to the exclusion of all others. In response to Florence Fabricant’s claim, for instance, that “for any pasta all’amatriciana to be authentic, it must be made with guanciale (pork jowl),” not bacon or pancetta, I responded that “too many food writers construct a counterfactual Italy of culinary dogmatism, a population of finger-wagging guanciale zealots, a nation…harrumphing around about how the world is going to shit now that people are making amatriciana with pancetta…People and recipes aren’t anthropological tokens. They’re living things, the products of neural assemblies and proteins and chemicals bouncing across the ages. Narrow your gaze and squint your eyes too tightly in the search for authenticity, and you might miss that whole, beautiful landscape.”
Perhaps I should revise this statement: clearly, there are some finger-wagging guanciale zealots in Italy. They tend to gravitate, it seems, toward the Ministry of Agriculture. The question of whether “zero tolerance,” when it comes to food, is fascist, patronizing, noble—or all three—is certainly one for further contemplation.
Wine produced around Montalcino can be called Brunello di Montalcino only if it is 100% Sangiovese. If imposters put Cabernet into their Brunello, and people like it, should the rules of the appelation be vigorously enforced? You are inclined to say no because people should have what they like. But if it were that simple there would be no reason for the appelation at all.
It could be that people want to know for sure which wine is 100% Sangiovese (and meets other benchmarks) and which is/does not. The appelation system allows them to know that without preventing them from having their SuperTuscan Cab/Sanjo blends if they prefer that.
The hypothetical “ticking time-bomb” scenario represents a unique argument in favor of torture. There will be a terrorist attack on Christmas day and a captive may know where and by whom. Torture seems more reasonable in this scenario for a few reasons.
- It’s a clearly defined one-off thing. We can use torture to defuse the ticking time-bomb and still claim to have a general policy against torture except in these special cases.
- The information especially valuable and verifiably so.
- There is limited time.
If we look at torture simply as a mechanism for extracting information, in fact reasons #1 and #2 by themselves deliver at best ambiguous implications for the effectiveness of torture. A one-off case means there is no reputation at stake and this weakens the resolve of the torturer. The fact that the information is valuable means that the victim also has a stronger incentive to resist. The net effect can go either way.
(Keep in mind these are comparative statements. You may think that torture is a good idea or a bad idea in general, that is a separate question. The question here is whether aspects #1 and #2 of the ticking time-bomb scenario make it better.)
We would argue that a version of #3 is the strongest case for torture, and it only applies to the ticking time-bomb. Indeed the ticking time-bomb is unique because it alters the strategic considerations. A big problem with torture in general is that its effectiveness is inherently limited by commitment problems. If torture leads to quick concessions then it will cease quickly in the absence of a concession (but of course continue once a concession has revealed that the victim is informed ). But then there would be no concession. And as we wrote last week, raising the intensity of the torture only worsens this problem.
But the ticking time-bomb changes that. If the bomb is set to detonate at midnight then torture is going end whether he confesses or not. Now the victim faces a simple decision: resist torture until midnight or give up some information. The amount of information you can get from him is limited only by how much pain you are threatening. More pain, more gain.
I went to a job talk by Josh Schwartzstein of Harvard. He is working of Selective Attention and Learning. Here is a leading example: Suppose you go to the doctor because you are sick. He says you have a food allergy and asks you what you have eaten. If you put low probability on the theory that your sickness is caused by food allergies, you may not be able to answer him as you did not collect data on what you ate given your beliefs. That is, selective attention leads to selective data collection. Josh uses this point to study the long run properties of learning but I want to take up something else he said.
He gave an interesting interpretation of Moneyball (2003) by Michael Lewis. The book (which I have not read but will now buy!) claims that the Oakland A’s found batters who were undervalued. They might not get runs but might be good at getting walks and this can translate into runs too. The Oakland A’s got such prospects for cheap because other teams did not realize the potential of such batters. They were focusing on the runs and not on the walks but the Oakland A’s worked out the value of walks. Once Moneyball gets published though, everyone should recognize this possibility and the players should get valued correctly by the market and arbitrage opportunities should disappear. And a paper by Hakes and Sauer confirms this: by 2004 wages reflect ability to get on base while they did not before! Other theories might also lead to similar conclusions but it’s an interesting interpretation and story nevertheless.
The Sports Economist picks up on the economic impact of Tiger’s expected absence from professional golf tournaments this year.
But it may be a boon to academia. I previously blogged about Jen Brown’s research on “the Tiger Woods effect” as evidence of strategic effort in contests. In tournaments with Tiger Woods present, the rest of the field performs noticably worse than in tournaments in which he was absent. While that study was careful to note and account for the possibility that Tiger’s absence (by choice) from a tournament might be correlated with some unobservable factor that could bias the conclusion, these concerns are always present.
Fortunately, over the next year we will have a nice natural experiment due to the fact that Tiger’s absence will represent truly independent variation. Looking forward to seeing an update on the Tiger Woods effect. (Trilby toss: Matt Notowidigdo.)
I once tried setting my watch ahead a few minutes to help me make it to appointments on time. At first it worked, but not because I was fooled. I would glance at the watch, get worried that I was late, then remember that the watch is fast. But that brief flash acted as a sort of preview of how it feels to be late. And the feeling is a better motivator than the thought in the abstract.
But that didn’t last very long. The surprise wore off. I wonder if there are ways to maintain the surprise. For example, instead of setting the watch a fixed time ahead, I could set it to run too fast so that it gained an extra minute every week or month. Then if I have adaptive expectations I could consistently fool myself.
I think I might adjust to that eventually though. How about a randomizing watch? I don’t think you want a watch that just shows you a completely random time, but maybe one that randomly perturbs the time a little bit. Would a mean-preserving spread make sense? That way you have the right time on average but if you are risk-averse you will move a little faster.
You could try to exploit “rational inattention.” You could set the watch to show the true time 95% of the time and the remaining 5% of the time add 5 minutes. Your mind thinks that it’s so likely that the watch is correct that it doesn’t waste resources on trying to research the small probability event that it’s not. Then you get the full effect 5% of the time.
Maybe its simpler to just set all of your friends’ watches to run too slow.
T-Cow disagrees that Paul Krugman should be Fed Chairman:
Elsewhere I have to strongly differ with the Johnson-Kwak proposal that Paul Krugman be selected. I don’t intend this as a negative comment on Krugman, if anything I am suggesting he is too dedicated to reading and writing and speaking his mind. The Fed Chair has to be an expert on building consensus and at maintaining more credibility than Congress; even when the Fed screws up you can’t just dump this equilibrium in favor of Fed-bashing. What lies on the other side of that curtain isn’t pretty. Would Krugman gladly suffer the fools in Congress? Johnson and Kwak are overrating the technocratic aspects of the job (which largely fall upon the Fed staff anyway) and underrating the public relations and balance of power aspects. It’s unusual that an academic will be the best person for the job.
Even if you think that Krugman would be the best person for the job that doesn’t imply that we should give him the job. The decision is between Krugman doing what he is doing now and Bernanke as Fed chairman versus Krugman being Fed chairman, nobody doing what Krugman is doing now and Bernanke going back to teaching Princeton undergrads. To prefer the latter it is not enough that Krugman is a better Fed chair than Bernanke. His advantage there must compensate for the other changes in the bundle.
In the top tennis tournaments there is a limited instant-replay system. When a player disagrees with a call (or non-call) made by a linesman, he can request an instant-replay review. The system is limited because the players begin with a fixed number of challenges and every incorrect challenge deducts one from that number. As a result there is a lot of strategy involved in deciding when to make a challenge.
Alongside the challenge system is a vestige of the old review system where the chair umpire can unilaterally over-rule a call made by the linesman. These over-rules must come immediately and so they always precede the players’ decision whether to challenge, and this adds to the strategic element.
Suppose that A’s shot lands close to B’s baseline, the ball is called in by the linesman but this call is over-ruled by the chair umpire. In these scenarios, in practice, it is almost automatic that A will challenge the over-ruled call. That is, A asks for an instant-replay hoping it will show that the ball was indeed in.
This seems logical. It looked in to the linesman and that is good information that it was actually in. For example, compare this scenario to the one in which the ball was called out by the linesman and that call was not over-ruled. In that alternative scenario, one party sees the the ball out and no party is claiming to see the ball in. In the scenario with the over-rule, there are two opposing views. This would seem to make it more likely that the ball was indeed in.
But this is a mistake. The chair umpire knows when he makes the over-rule that the linesman saw it in. He factors that information in when deciding whether to over-rule. His willingness to over-rule shows that his information is especially strong: strong enough to over-ride an opposing view. And this is further reinforced by the challenge system because the umpire looks very bad if he over-rules and a challenge shows he is wrong.
I am willing to bet that the data would show challenges of over-ruled calls are far less likely to be successful than the average challenge.
A separate observation. The challenge system is only in place on the show courts. Most matches are played on courts that are not equipped for it. I would bet that we could see statistically how the challenge system distorts calls by the linesmen and over-rules by the chair umpire by comparing calls on and off the show courts.
The Republicans fought like dogs to win the Florida recount in 2000. Norm Coleman dragged out the election in Minnesota. George W Bush passed two tax cuts via reconciliation in his first term. These policies play to Republican partisans but alienate moderates and independents. Wary of losing the votes of independents, one loss in Massachusetts has left the Democratic Party reeling and ready to step back from healthcare reform. Why are there differences between the parties in their focus on partisans vs independents?
Politicians are motivated both by ideology and reelection. They must take both into account when taking a policy stance. As party activists can influence the chances of reelection, they can affect the policy stance of the politician. This logic holds true for both Democrats and Republicans but what differs is the risks extremists in the two parties are willing to take to influence policy. Right wing activists are willing to decrease the probability of the Republican Party winning the election to increase the probability of having a policy closer to their ideal implemented should the party win. They are willing to run their own candidate in the Republican primary and risk them losing the general election against the Democrats. The recent congressional election in New York is an example of this. So, even moderate Republican politicians must take this threat into account and adopt more right wing policies to counteract it.
But left wing activists are not willing to take a similar gamble except in extreme circumstances (e.g. Ned Lamont vs. Lieberman in CT). So, Democratic lawmakers can afford to woo moderates without losing the support of partisans.
This is part of the story but not all of it. Most importantly, it relies on an asymmetry between the preferences of right wing vs left wing partisans. A deeper theory would also explain the asymmetry.
Here’s a case where English has it relatively easy. There’s been plenty of fuss over whether to retain actress or to use actor for females as well as males, whether to adopt new gender-neutral terms like chair and craft in place of chairman and craftsman, and so on. But most English words for social roles and titles are already linguistically gender-neutral: president, senator, minister, dean, secretary, teacher, boss, judge, lawyer, …
In languages like Italian and Spanish, in contrast, nearly all such words are specified for grammatical gender, and their grammatical gender is usually interpreted sexually.
From an interesting post at the great blog Language Log. Lots of great comments too.
Jeff and I had a look at the torture memos which attempt to delineate prosecutable offenses from acceptable interrogation techniques. There are many interesting passages. On “interstate stalking” (page 32):
To establish the requisite intent, the prosecution must demonstrate that the defendant undertook the travel with the specific intent to harass, or intimidate another. See Al-Zubaidy, 283 F.3d at 809 (the defendant “must have intended to harass or injure [the victim] at the time he crossed the state line”). Thus, for example, a member of the Armed Forces who traveled to a
base solely pursuant to his orders to be stationed there, and subsequently came to be involved in
the interrogation of operatives, would lack the requisite intent. He would have traveled for the purpose of complying with his orders but not for the purpose of harassment. Nevertheless, because travel within the special maritime and territorial jurisdiction is also covered, the intent to travel within that base for the purpose of intimidating or harassing another person would satisfy the intent element.
The definition of maiming:
Section 114 makes it a crime for an individual (1) ”with the intent to torture (as defined in section 2340), maim, or disfigure” to (2) “cut, bite, or slit the nose, ear, or lip, or cut out or disable the tongue, or put out or destroy an eye, -or cut off or disable a limb or any member of another person.” 18 U.S.C. § -114. It further prohibits individuals from “throw[ing]or pour[ing] upon another person-any scalding water, corrosive acid, or caustic substance” with like intent.
This implies the following is not ruled out:
So long as the interrogation methods under contemplation do not involve the acts enumerated in section 114, the conduct of those interrogations will not fall within the purview of this statute. Because the statute requires specific intent, i.e., the intent to maim, disfigure or torture, the absence of such intent is a complete defense to a charge of maiming.
Pages 23-39 in the first memo are interesting reading of what is or is not allowed in the Bush administration interpretation of various laws. The second memo picks up on international themes. For instance, I believe the British practised the following techniques in Ireland (p 69):
(1) Wall Standing. The prisoner stands spread eagle against.the wall, with fingers high
above his head, and feet back so that he is standing on his toes such that his all of his ) weight falls on his fingers.
(2) Hooding. A black or navy hood is placed over the prisoner’s head and kept there .. except during the interrogation.
(3) Subjection to Noise. Pending interrogation, the prisoner is kept ina room with a loud and continuous hissing noise.
(4) Sleep Deprivation. Prisoners are deprived of sleep pending interrogation.
(5) Deprivation of Food and Drink. Prisoners receive a reduced diet during detention and pending interrogation.
These were judged not to be torture by a European court. Similar techniques were ruled not to be torture by an Israeli court. There are many other interesting passages. It would be an interesting exercise to list every method discussed in the two memos and whether they constitute torture.
Yahoo! has been building a social science group in their research division. In addition to some well-known economists, they have also been attracting ethnographers and cognitive psychologists away from posts at research universities.
The recruitment effort reflects a growing realization at Yahoo, the second most popular U.S. online site and search engine, that computer science alone can’t answer all the questions of the modern Web business. As the novelty of the Internet gives way, Yahoo and other 21st century media businesses are discovering they must understand what motivates humans to click and stick on certain features, ads and applications – and dismiss others out of hand.
However, there are risks when a for-profit company adopts an academic approach, which calls for publishing research regardless of the outcome. Notably, one set of figures from a study conducted by Reiley, the economist from the University of Arizona, raised eyebrows at Yahoo.…it could underscore a growing immunity to display advertising among the Web-savvy younger generation.The latter possibility would do little to bolster Yahoo’s sales pitch to advertisers hoping to influence this coveted age group. But raising such questions may be the cost of recruiting researchers committed to pure science.
In principle a prediction market should generate more accurate predictions than a simple poll. For example, in an election, the outcome of a poll should be known to the traders and incorporated into their trades. But in practice, the advantage of prediction markets is small, or so suggests a new study.
In a new study, Daniel Reeves, Duncan Watts, Dave Pennock and I compare the performance of prediction markets to conventional means of forecasting, namely polls and statistical models. Examining thousands of sporting and movie events, we find that the relative advantage of prediction markets is remarkably small. For example, the Las Vegas market for professional football is only 3% more accurate in predicting final game scores than a simple, three parameter statistical model, and the market is only 1% better than a poll of football enthusiasts.
More here. My view is that there is no theoretical reason for interpreting a market price in a prediction market as a probability. That is, if Coakley is trading at 75 cents there is no reason to interpret that as a 75 percent probability that Coakley will win. At best there is an ordinal relationship: a higher price means a higher probability. Likewise with a poll.
Studies like these should instead be measuring the conditional probability of an event given the price observed in the market. Because, even an “innacurate” prediction can be a very good one. To take an extreme case the market might always underprice the probability of a Coakley win by 25%. But then by dividing the market price by .75 we can infer the right probability with perfect accuracy.
Cheap Talk 
