Tyler Cowen, quoting Ezra Klein on “penalties” for failing to purchase private insurance:
If you don’t have employer-based coverage, Medicare, Medicaid, or anything else, and premiums won’t cost more than 8 percent of your monthly income, and you refuse to purchase insurance, at that point, you will be assessed a penalty of up to 2 percent of your annual income. In return for that, you get guaranteed treatment at hospitals and an insurance system that allows you to purchase full coverage the moment you decide you actually need it. In the current system, if you don’t buy insurance, and then find you need it, you’ll likely never be able to buy insurance again. There’s a very good case to be made, in fact, that paying the 2 percent penalty is the best deal in the bill.
The Huffington Post has an interesting article about Long Beach Mortgage. In interviews:
[F]ormer employees say the company encouraged the sales force to churn out as many loans as possible with lavish commissions and bonuses. And it didn’t matter if the loans went bad because Long Beach Mortgage bundled them and sold most of them quickly to investors.
There are two preliminary moral hazard problems. First, obviously the sales force does not have the incentive to screen out “bad loans” given the incentive contract offered. Second, as mortgages can be bundled and traded, the managers do not have the incentive to give the sales force the incentive to screen our bad loans. They want to maximize raw volume rather than quality-adjusted sales.
This leaves “the market” as the potential monitor. A large group of owners of securities faces a free-rider problem in monitoring so no-one monitors. The price of the bundled security reflects the mix of good and bad loans in the market. An individual issuer of mortgages has the incentive to screen out bad loans if this is reflected in the price of the security they sell. But if no-one is monitoring, no-one will notice the extra benefits from screening, the price will not improve and there is no incentive to invest in making just good loans.
Finally when everything does tank, if banks sell mortgages and the banks are too big to fail, they get bailed out by taxpayers. One final bit of moral hazard to make sure there is no incentive to monitor the monitor to monitor the mortgage sale.
If the grand coalition of lenders, borrowers and taxpayers can form, they can design a better mechanism. In fact, a system with less liquidity gives better incentives to monitor – if the owners of Long Beach Mortgage cannot sell mortgages they have better incentives to design good incentives for their salesmen. It doesn’t seem impossible to make things a bit better. But without the taxpayers in the coalition, there is no reason for the remaining sub-coalition to design the socially optimal mechanism. If a bunch of people are playing poker but they can dump their losses on an innocent bystander, why will they ever stop playing?
So, what do Olympia Snowe and Ben Nelson think about financial reform? The median Senator responds to the median voter in their state. Wise people of Maine and Nebraska over to you, again. And people of Connecticut, if you can get Joe Lieberman to be a bit more predictable, that would be great.
Loosely based on a meal we had at Rendezvous in Central Square, Cambridge. Everyone loved it and I’ll definitely make it again.
Brocoletti are less bitter than Broccoli Rabe and I bought them on whim at Whole Foods because they were on sale. Stir fry them with a little garlic. Stir in cannellini beans when the broccoletti are crisp and green. Make a garlic broth by boiling up bruised garlic in salted water. I made too little – next time I’ll make four cups.
Cook the orecchiete till they are al dente – take a minute off the cooking time. Meanwhile, toast panko breadcrumbs in a frying pan (no oil needed). Put the breadcrumbs aside and lightly grease the same pan. Stir fry the drained orecchiete in the pan. They should get crispy at the edges. I didn’t grease the pan enough and we ended up with a thin layer of toasted pasta that stuck to the bottom – it was delicious! Mix up everything, grate on the parmesan and you’re done. Chewy pasta, coated with breadcrumbs in a garlicky broth with crisp broccoletti and beans. Yummy.
Needs around four pans but it’s actually pretty easy and can be done in 30 minutes. Guilt someone else into doing the washing up because you did all the cooking.
Luca Malbec 2007. It’s Argentina in a bottle. The wine is huge, almost black, and over the top in terms of fruit extraction, oak, and alcohol (14.5%). The bottle itself weighs twice as much as wimpy French wine bottles.
Its perfectly agreeable wine but it has no complexity. It smells like you just walked into a tool shed and found a blueberry pie cooling on the shelf. And it is clearly built to stand up to those fat steaks Argies are so fond of. So as a vegetarian I have almost no use for this wine except for one thing. I am usually the only wine drinker in the house, so I drink a bottle over the course of a few days. This wine is so huge that it tastes exactly the same three days later as it did when I opened the bottle.
Now I have discovered a second thing. It makes a perfect pairing with dark Belgian chocolate. The chocolate masks some of the oak and dark fruit flavors and allows the slight acidity and strawberry flavors to come out and those perfectly complement the chocolate. These aspects are typical Argentinian Malbec so I would bet this pairing would work with any you can get your hands on.
I found this out because my daughters came home from a birthday party bringing a box of Belgian dark chocolate. The birthday girl’s father is a friend of ours who is Belgian, so that explains the chocolate. Now, his wife is from Argentina, and her father is a winemaker and yes, his best wine is a Malbec. So the pairing works on many levels.
The health plan being considered in the Senate includes an individual mandate: everyone has to get health insurance. There is a good reason to include this if the insurance market is competitive. Otherwise, low risk types opt out and go to the emergency room if they get sick and impose a negative externality on the rest of the population who end up paying for them in their health insurance premiums, taxes etc. An individual mandate eliminates this cross subsidy and allows prices to fall for the people getting health insurance at the current status quo.
But if the health insurance market is not competitive, the insurers will make yet more profits by charging the low risk types a high price. Moreover, they will not cut prices for the high risk types and there will be no benefits to health reform except to insurance companies. This is the nightmare scenario. And in fact my Kellogg colleague Leemore Dafny has a nice paper (Are Health Insurance Markets Competitive?) showing that in concentrated markets with a few health insurers, a firm that enjoys a positive income shock sees a greater increase in health premiums for its employees. So, there is evidence of market power and hence some basis for the nightmare scenario that Howard Dean etc. are concerned about.
To prevent this from arising, there has to be more competition. Then, an insurer that keeps prices high is undercut by another who is going for profitable volume. The public option was meant to provide competition. It was going to be run as a non-profit so it might have had lower costs by avoiding the costs of marketing and advertising and creidbly played the role of the undercutting competition.
What’s left now that the public option is no longer an option? The best answer I have found is in a blog by Ezra Klein at the Washington Post. His answer is:
Under health-care reform, there are at least three bulwarks against the monopoly-profits scenario: Inter-insurer competition, regulators, and the tax on excessive premiums. Two of these mechanisms don’t exist in the current market. One — the market itself — is much weaker and more opaque, and individuals have a far harder time navigating it.
Even if the insurance market is competitive, it’s not clear what’s happening to the costs of inputs, drugs, doctors’ fees, hospitals, administration etc.
Secret deals with Pharma, the AMA, death panels and tea partiers, the random movements of Lieberman, Ben Nelson’s signaling to the voters in Nebraska….not as exciting as the primaries and the general election but pretty close. That rollercoaster had to end November 4. Will this one end December 24?
That’s the title of David Mitchell’s forthcoming novel. It’s been a few years since Black Swan Green, his last. Here’s the blurb on Amazon:
The author of Cloud Atlas‘s most ambitious novel yet, for the readers of Ishiguro, Murakami, and, of course, David Mitchell.
The year is 1799, the place Dejima, the “high-walled, fan-shaped artificial island” that is the Japanese Empire’s single port and sole window to the world. It is also the farthest-flung outpost of the powerful Dutch East Indies Company. To this place of superstition and swamp fever, crocodiles and courtesans, earthquakes and typhoons, comes Jacob de Zoet. The young, devout and ambitious clerk must spend five years in the East to earn enough money to deserve the hand of his wealthy fiancée. But Jacob’s intentions are shifted, his character shaken and his soul stirred when he meets Orito Aibagawa, the beautiful and scarred daughter of a Samurai, midwife to the island’s powerful magistrate. In this world where East and West are linked by one bridge, Jacob sees the gaps shrink between pleasure and piety, propriety and profit. Magnificently written, a superb mix of historical research and heedless imagination, The Thousand Autumns of Jacob de Zoet is a big and unforgettable book that will be read for years to come.
Here’s a review from someone who got a pre-release copy. It’ll be released June 29, 2010 and I’ve pre-ordered already. (If you are looking for something to read and haven’t read these already, I recommend Number9Dream and Cloud Atlas.)
Harvey and Paula Darden, from Hogansville, Georgia, had mistakenly arrived a day early for a White House tour arranged through their Republican Congresswoman.
They presented themselves at a White House security booth on the south side of Lafayette Square on the morning of November 11 and were asked to wait while their names were checked by Secret Service staff.
After a few minutes the Dardens were told: “You are cleared to come in.” They were then escorted to the East Room where 200 veterans and their families were helping themselves to a breakfast buffet. Minutes later they were having breakfast with the President.
Here’s a useful historical guide:
How to gatecrash
Look the part In her glittering sari, Michaele Salahi looked like a glamorous guest at a state event for the visiting Indian Prime Minister. At the other end of the scale, in 1987 Christian K. Hughes drove straight in because an officer assumed that he was a deliveryman
Play the religious card George C. Weaver, a Californian clergyman, met six presidents. He gatecrashed a prayer breakfast in 1991 attended by George Bush Sr, and Bill Clinton’s inaugural luncheon in 1997
Bring the family In 1982 James Douglas Imes, his wife and two sons drove to the White House in a minivan, hooted their horn and were let through. They got as far as the Oval Office entrance
Tag on to an unsuspecting group In 1994, Stephan O. Winick, a celebrity-chaser, joined the entourage of the actor Harrison Ford in a lift as the group was escorted to meet Clinton at a hotel in Los Angeles
Do your research and don’t give up One third of presidential gatecrashers had checked the lie of the land. Four in ten were known to the authorities
Circa 1986, Jeremy Stone (then-President of the Federation of American Scientists) asked Owen Chamberlain to forward to him any ideas he may have which would ‘make useful arms control initiatives’. Chamberlain – a highly intelligent, hugely influential Nobel laureate in physics who discovered the antiproton – responded with the fantastic letter seen below, the contents of which I won’t mention for fear of spoiling your experience. Unfortunately, although I can’t imagine the letter to be anything but satirical, I’m uninformed when it comes to Chamberlain’s sense of humour and have no way of verifying my belief. Even the Bancroft Library labels it as ‘possibly tongue-in-cheek’.
In this video, Steve Levitt and Stephen Dubner talk about their finding that you are 8 times more likely to die walking drunk than driving drunk.
Levitt says this
“anybody could have done it, it took us about 5 minutes on the internet trying to figure out what some of the statistics were… and yet no one has every talked or thought about it and I think that’s the power of ideas… ways of thinking about the world differently that we are trying to cultivate with our approach to economics.”
Dubner cites the various ways a person could die walking drunk
step off the curb into traffic.
mad dash across the highway.
lie down and take a nap in the road.
Which leads him to see how obvious it is ex post that drunk walking is so much more dangerous than drunk driving.
I thought a little about this and it struck me that riding a bike while drunk should be even more dangerous than walking drunk. I could
roll or ride off a curb into traffic.
try to make a mad dash across an intersection.
get off my bike so that i can lie down in the road to take a nap.
plus so many other dangerous things that i can do on my bike but could not do on foot. And what the hell, I have 5 minutes of time and the internet so I thought I would do a little homegrown freakonomics to test this out. Here is an excerpt from their book explaining how they calculated the risk of death by drunk walking.
Let’s look at some numbers, Each year, more than 1,000 drunk pedestrians die in traffic accidents. They step off sidewalks into city streets; they lie down to rest on country roads; they make mad dashes across busy highways. Compared with the total number of people killed in alcohol-related traffic accidents each year–about 13,000–the number of drunk pedestrians is relatively small. But when you’re choosing whether to walk or drive, the overall number isn’t what counts. Here’s the relevant question: on a per-mile basis, is it more dangerous to drive drunk or walk drunk?
The average American walks about a half-mile per day outside the home or workplace. There are some 237 million Americans sixteen and older; all told, that’s 43 billion miles walked each year by people of driving age. If we assume that 1 of every 140 of those miles are walked drunk–the same proportion of miles that are driven drunk–then 307 million miles are walked drunk each year.
Doing the math, you find that on a per-mile basis, a drunk walker is eight times more likely to get killed than a drunk driver.
I found the relevant statistics for cycling here, on the internet. I calculate as follows. Estimates range between 6 and 21 billion miles traveled by bike in a year. Lets call it 13 billion. If we assume that 1 out of every 140 of these miles are cycled drunk, then that gives about 92 million drunk-cycling miles. There are about 688 cycling related deaths per year (average for the years 200-2004.) Nearly 1/5 of these involve a drunk cyclist (this is for the year 1996, the only year the data mentions.) So that’s about 137 dead drunk cyclists per year.
When you do the math you find that there are about 1.5 deaths per every million miles cycled drunk. By contrast, Levitt and Dubner calculate about 3.3 deaths per every million miles walked drunk.
Is walking drunk more dangerous than biking drunk?
Here is another piece of data. Overall (drunk or not) the fatality rate (on a per-mile basis) is estimated to be between 3.4 and 11 times higher for cyclists than motorists. From Levitt and Dubner’s conclusion that drunk walking is 8 times more dangerous than drunk driving we can infer that there are about .4 deaths per million miles driven drunk. That means that the fatality rate for drunk cyclists is only about 3.8 times higher than for drunk motorists.
That is, the relative riskiness of biking versus driving is unaffected (or possibly attenuated) by being drunk. But while walking is much safer than driving overall, according to Levitt and Dubner’s method, being drunk reverses that and makes walking much more dangerous than both biking and driving.
There are a few other ways to interpret these data which do not require you to believe the implication in the previous paragraph.
There was no good reason to extrapolate the drunk rate of 1 out of every 140 miles traveled from driving (where its documented) to walking and biking (where we are just making things up.)
Someone who is drunk and chooses to walk is systematically different than someone who is drunk and chooses to drive. They are probably not going to and from the same places. They probably have different incomes and different occupations. Their level of intoxication is probably not the same. This means in particular that the fatality rate of drunk walkers is not the rate that would be faced by you and me if we were drunk and decided to walk instead of drive. To put it yet another way, it is not drunk walking that is dangerous. What is dangerous is having the characteristics that lead you to choose to walk drunk.
These ideas, especially the one behind #2 were the hallmark of Levitt’s academic work and even the work documented in Freakonomics. His reputation was built on carefully applying ideas like these to uncover exciting and surprising truths in data. But he didn’t apply these ideas to his study of drunk walking. Of course, my analysis is no better. I just copied some numbers off a page I found on the internet and applied the Levitt Dubner calculation. It only took me 5 minutes. (And I would appreciate if someone can check my math.) But then again, I am not trying to support a highly dubious and dangerous claim:
So as you leave your friend’s party, the decision should be clear: driving is safer than walking. (It would be even safer, obviously , to drink less, or to call a cab.) The next time you put away four glasses of wine at a party, maybe you’ll think through your decision a bit differently. Or, if you’re too far gone, maybe your friend will help sort things out. Because friends don’t let friends walk drunk.
OK, so far I managed to resist writing a post about Tiger but I can’t help leaping into an analysis of the future strategy of Joe Lieberman. Let me begin by collecting some quotes and thoughts. My favorite post is “Toward a Unified Theory of Lieberman” (the title alone takes this into home run territory) by Jonathan Chait at TNR. It begins with this pithy paragraph:
It has been a banner day for the field of Lieberman Psychology. My own contribution is that Lieberman is not as smart as people think he is, and certainly not detail-oriented or well-versed in public policy.
Chait has an even more prescient analysis in an earlier post:
Lieberman thinks about politics in terms of broad ideological labels. He’s the heroic centrist voice pushing legislation to the center. No, Lieberman doesn’t have any particular sense of what the Medicare buy-in option would do to the national debt. If the liberals like it, then he figures it’s big government and he should oppose it. I think it’s basically that simple.
Chait’s theory now has huge support as Lieberman says he changed his mind on the Medicare buy-in policy because:
he was particularly troubled by the overly enthusiastic reaction to the proposal by some liberals, including Representative Anthony Weiner, Democrat of New York, who champions a fully government-run health care system.
“Congressman Weiner made a comment that Medicare-buy in is better than a public option, it’s the beginning of a road to single-payer,” Mr. Lieberman said. “Jacob Hacker, who’s a Yale professor who is actually the man who created the public option, said, ‘This is a dream. This is better than a public option. This is a giant step.’”
So, if liberals want it, it must be wrong.
Whatever the heroic narrative he is repeating to himself, Lieberman will eventually realize his position. He is an anathema to Democrats, having supported McCain in the general election and now randomly wandering between positions to counteract the left. He cannot run as a Democrat in 2012 as he will not make it through the primary. If he runs as an independent, he will face a three way race splitting the vote with the Republican. So, he will run as a Republican.
Lieberman will move further and further right of center as he realizes he has tp woo Republicans in his home state. He has his finger in many legislative pies in Congress (same sex marriage, climate change). He will take the Republican perspective on these and screw them up deliberately.
Obama should get the Senators from Maine into every conversation he can. They are more secure than Lieberman and their own heroic narrative is more patrician: rich people must look after the common man. They are to the left of Lieberman and have the most potential for Obama to achieve his agenda.
Or, of course, maybe Joe just wants to become an insurance company lobbyist. That would explain everything.
Via The Volokh Conspiracy, I enjoyed this discussion of the NFL instant replay system. A call made on the field can only be overturned if the replay reveals conclusive evidence that the call was in error. Legal scholarship has debated the merits of such a system of appeals relative to the alternative of de novo review: the appelate body considers the case anew and is not bound by the decision below.
If standards of review are essentially a way of allocating decisionmaking authority between trial and appellate courts based on their relative strengths, then it probably makes sense that the former get primary control over factfinding and trial management (i.e., their decisions on those matters are subject only to clear error or abuse of discretion review), while the latter get a fresh crack at purely “legal” issues (i.e., such issues are reviewed de novo). Heightened standards of review apply in areas where trial courts are in the best place to make correct decisions.
These arguments don’t seem to apply to instant replay review. The replay presumably is a better document of the facts than the realtime view of the referee. But not always. Perhaps the argument against in favor of deference to the field judge is that it allows the final verdict to depend on the additional evidence from the replay only when the replay angle is better than that of the referee.
That argument works only if we hold constant the judgment of the referee on the field. The problem is that the deferential system alters his incentives due to the general principle that it is impossible to prove a negative. For example consider the (reviewable) call of whether a player’s knee was down due to contact from an opposing player. Instant replay can prove that the knee was down but it cannot prove the negative that the knee was not down. (There will be some moments when the view is obscured, we cannot be sure that the angle was right, etc.)
Suppose the referee on the field is not sure and thinks that with 50% probability the knee was down. Consider what happens if he calls the runner down by contact. Because it is impossible to prove the negative, the call will almost surely not be overturned and so with 100% probability the verdict will be that he was down (even though that is true with only 50% probability.)
Consider instead what happens if the referee does not blow the whistle and allows the play to proceed. If the call is challenged and the knee was in fact down, then the replay will very likely reveal that. If not, not. The final verdict will be highly correlated with the truth.
So the deferential system means that a field referee who wants the right decision made will strictly prefer a non-call when he is unsure. More generally this means that his threshold for making a definitive call is higher than what it would be in the absence of replay. This probably could be verified with data.
On the other hand, de novo review means that, conditional on review, the call made on the field has no bearing. This means that the referee will always make his decision under the assumption that his decision will be the one enforced. That would ensure he has exactly the right incentives.
Saddam promoted incompetents in his army deliberately, believing they would be less likely to sponsor a coup. There is a similar process that can operate within firms, the Peter Principle: If firms automatically promote the best performer at level k of the hierarchy to the level k+1, people will be promoted till they find their level of incompetence. Saddam’s promotion policy can be justified on rational choice grounds and similarly we might ask how firms can counteract the logic underlying the Peter Principle.
The New York Times magazine has a section on interesting ideas of the year. One of them concerns the Peter Principle. A group of Italian physicists did a computer simulation with various promotion policies. Random promotion outperformed a “promote the best” policy. It increases the chance that someone who is actually good at the job makes it to the next level. This seems pretty straightforward and eminently amenable to a simple analytical model. But peer review is even better than random promotion: ask the co-workers who might be good at the higher level job. If they have big incentives to lie, at worst you can ignore them and get random promotion as the optimal policy. Or better, share some of the rents from promoting the right person with the reviewers and get some useful information out of them.
These are old ideas from contract theory but we are clearly not doing a good job at getting our insights to the New York Times. On that note, let me congratulate Dan Ariely and his co-authors who have at least three of the best ideas of 2009. The experiment involving the drunks playing the ultimatum game was the most fun – won’t give the point away so you can enjoy it yourself! But it makes me think Jeff and I should do some experiments in our wine club. I wonder if we can get the NSF to support it so I can finally taste a Petrus.
Each Christmas my wife attends a party where a bunch of suburban erstwhile party-girls get together and A) drink and B) exchange ornaments. Looking for any excuse to get invited to hang out with a bunch of drunk soccer-moms, every year I express sincere scientific interest in their peculiar mechanism of matching porcelain trinket to plastered Patricia. Alas I am denied access to their data.
So theory will have to do. Here is the game they play. Each dame brings with her an ornament wrapped in a box. The ornaments are placed on a table and the ladies are randomly ordered. The first mover steps to the table, selects an ornament and unboxes it. The next in line has a choice. She can steal the ornament held by her predecessor or she can select a new box and open it. If she steals, then #1 opens another box from the table. This concludes round 2.
Lady #N has a similar choice. She can steal any of the ornaments currently held by Ladies 1 through N-1 or open a new box. Anyone whose ornament is stolen can steal another ornament (she cannot take back the one just taken from her) or return to the table. Round N ends when someone chooses to take a new box rather than steal.
The game continues until all of the boxes have been taken from the table. There is one special rule: if someone steals the same ornament on 3 different occasions (because it has been stolen from her in the interim) then she keeps that ornament and leaves the market (to devote her full attention to the eggnogg.)
Theoretical questions:
Does this mechanism produce a Pareto efficient allocation?
Since this is a perfect-information game (with chance moves) it can be solved by backward induction. What is the optimal strategy?
I happened to pick up Samuelson’s Foundations a couple of years ago in the Northwestern University Library. We do not read it anymore and get our PhD training from Mas-Colell, Whinston and Green. So, I’d never picked it up and I was shocked by how much of modern microeconomics was already in Foundations. Everything from the revealed preference paradigm to consumer theory, producer theory etc etc….and he continued to make huge contributions throughout his life.
On top of all that, I’m visiting MIT Economics this year. Paul Samuelson built the department and its culture:
“Despite his celebrated accomplishments, Mr. Samuelson preached and practiced humility. The M.I.T. economics department became famous for collegiality, in no small part because no one else could play prima donna if Mr. Samuelson refused the role, and, of course, he did. Economists, he told his students, as Churchill said of political colleagues, “have much to be humble about.” “
It is all true. Just looking around the lunchroom on Wednesdays you are awed by the company. And then you are charmed by the friendliness and collegiality. Also, there is a laser-like focus on training the next generation of great economists and this shared mission creates the atmosphere of collegiality. Paul Samuelson studied the free-rider problem in public good production but he knew how to solve it. His work will live not only in his papers but also in the institution that he built.
2. I loved Trio Atelier in Evanston, the restaurant started in the former Trio space when Grant Achatz left to start Alinea. The chef at Atelier was Dale Lewitsky and he turned up later on Top Chef. He came in second but then what happened to Dale Lewitsky? Seems he had some up and downs but now he has a new restaurant, Sprout. Looking forward to going there.
When you learn to snowboard you make a commitment before you begin whether you will ride regular or “goofy.” Goofy means you place your right foot in front. As the name suggests, goofy footers are the minority. Since snowboard bindings must be fixed in place for regular or goofy foot, somebody who doesn’t know whether they are goofy will more likely start out regular (because its the best guess and because most rental boards will be setup for regular foot.) Even if they are naturally goofy, once they invested a day learning, they are unlikely to switch and try it out and so may never know.
A surfboard is foot-neutral. Anybody can ride any given surfboard whether they are regular or goofy. And jumping up on a surfboard for the first time happens so fast that you have no time to even think which foot is going forward. So a surfer is very likely to find his natural footing early on, unless he learned to snowboard already in which case he will naturally jump to the footing he is used to.
We should be able to see the effect of this by comparing a regular-foot snowboarder who first learned to surf with a regular-foot surfer who first learned to snowboard. The first guy is going to be better at snowboarding than the second guy is at surfing.
The GOP is stipulating that candidates sign a statement of beliefs in certain key principles (eg “no gun control”) to prove they are really committed to the cause. Of course, there is nothing to stop moderates from signing it and them reneging. Candidates must therefore credibly reveal their true beliefs through a real choice – the principle of revealed preference. Stephen Colbert has designed just the right way to do this.
Paul Bley is the most influential jazz pianist you have never heard of. And its not because he is an abstract, inaccessible, musician’s musician. His playing is as lyrical and straightforward as Keith Jarrett. Go to Pandora and create a Paul Bley station. Here, I did it for you.
Ethan Iverson wrote an essay on Paul Bley, focusing especially on an album entitled Footloose! (which I have never heard. I have stuck mostly to his solo stuff.)
Not just Jarrett and Corea but a whole generation of mostly caucasian post-1970 NYC jazz pianists checked out Footloose!: Richie Beirach, Joanne Brackeen, Jim McNeely, Marc Copland, Kenny Werner, Fred Hersch, etc., all seem to have made room for Paul Bley to hang at the same table that Bill Evans presides over. Bley’s peers Steve Kuhn and Denny Zeitlin seem to have paid attention, too. I suspect that not all these comparatively straight-ahead musicians paid the same kind of attention to more hardcore classic Bley albums like the ferocious Barrageor the minimalist Ballads. But since Footloose! is so swinging, it has always been interesting to just about everybody. Indeed, I believe that Bley’s influence crossed the color line with Geri Allenin the 80s and that now he is considered a resource for any curious musician regardless of background.
The article is typically brilliant Iverson writing, but this bit was just precious:
When I finally met Paul Bley a couple of years ago, I was about to go onstage with his old associate Charlie Haden. Bley was rather chilly at first handshake. These days he’s a famous contrarian, and I sensed I needed to not grovel but respond in kind. I leaned into him and told him, viciously, “I had all your records at one point. But you know what? I can’t play like you, and why would I want to? I gave all your records away when I was 24. I turned my back.”
Bley looked astonished, but then he grinned. “I’m glad you got rid of all my records, that’s what I tell all pianists to do.”
I responded, “Yeah…good. Well, recently I got some of your records, and I decided to love you again.”
Bley said, “That was a mistake. Get rid of my records.”
Auction sites are popping up all over the place with new ideas about how to attract bidders with the appearance of huge bargains. The latest format I have discovered is the “lowest unique bid” auction. It works like this. A car is on the auction block. Bidders can submit as many bids as they wish ranging from one penny possibly to some upper bound, in penny increments. The bids are sealed until the auction is over. The winning bid is the lowest among all unique bids. That is, if you bid 2 cents and nobody else bids 2 cents, but more than one person bid 1 cent, then you win the car for 2 cents.
In some cases you pay for each bid but in some cases bids are free and you pay only if you win. Here is a site with free bidding. An iPod shuffle sold for $0.04. Here is a site where you pay to bid. The top item up for sale is a new house. In that auction you pay ~$7 per bid and you are not allowed to bid more than $2,000. A house for no more than $2,000, what a deal!
I suppose the principle here is that people are attracted by these extreme bargains and ignore the rest of the distribution. So you want to find a format which has a high frequency of low winning bids. On this dimesion the lowest unique bid seems even better than penny auctions.
There are now going to be ten nominees for the best picture category. This poses a danger with choosing the film that gets the most votes as the “best picture”: what if it is the worst film according to people who put other movies at the top? Maybe they all agree on the second-best movie and if you take this into account, you’d have a quite different “best picture” winner. To take this kind of thing into account, the Academy of Motion Pictures has come up with a new scheme:
Voters will be asked to rank the 10 best picture nominees in order of preference, one through 10. Davis says that the category will be listed on a special section of the Oscar ballot, detachable from the rest so that a separate team of PricewaterhouseCoopers staffers can undertake the more complicated tabulation process.
Initially, PwC will separate the ballots into 10 stacks, based on the top choice on each voter’s ballot. If one nominee has more than 50 percent of the vote (unlikely, but conceivable some years), we have a winner.
But if no film has a majority, then the film ranked first on the fewest number of ballots will be eliminated. Its ballots will then be redistributed into the remaining piles, based on whichever film is ranked second on those ballots.
If those second-place votes are enough to push one of the other nominees over the 50 percent threshold, the count ends. If not, the smallest of the nine remaining piles is likewise redistributed. Then the smallest of the eight piles, then the smallest of the seven…
Eventually, one film will wind up with more than 50 percent.
Which is the voting system that is more manipulable via strategic voting, the original one or the new one? How is it manipulable? Harvey Weinstein will be willing to pay for advice.
Update: As Mallesh says below and David Austen-Smith pointed out to me in an email, this voting system is the Single Transferable Vote system. It violates Arrow’s independence of irrelevant alternatives and is manipulable as the Gibbard-Satterthwaite Theorem applies when IIA fails. I guess manipulability per se is not the right criterion. One should study the (Bayesian?) Nash equilibria of the voting system in question and compare them via some notion of welfare to the equilibria of the original system. The original system (as far as I can tell – I am not an Oscar voter), was simply one man-one vote with the movie getting the most votes picked as the winner. The new system is much more complicated as you have to report a whole ranking.
After a day of conference talks, but before drinks arrive, game theorists have been known to debate whether what is known as Zermelo’s theorem was actually proved by Zermelo. Eran Shmaya (who is always fun to talk to with or without drinks) decided to go and look at the paper (recently translated) and all but strips Zermelo of his theorem.
So, Zermelo clearly did not set out to prove his eponymous theorem. But was he aware of it ? I guess the answer depends on what you mean by being aware of a mathematical statement (were you aware of the fact that any even number greater than 2 can be written as a sum of a prime number and an even number before you read this sentence ?). But I do believe that some of the logical implications in Zermelo’s paper only make sense if you already assume his theorem.
Suppose two crossword puzzle compilers start with the same key word.
1. The word has to be divided and embedded into phrases.
2. Puzzle designers share the same sense of “taste”: It is considered elegant to divide the key word into as many separate words as possible.
3. Puzzles have to have a certain shape (“180 degree rotational symmetry”).
So, if two or three puzzle designers start off with the same keyword they are highly likely to come up with very similar crosswords as there are only so many solutions given the constraints.
Interestingly, while same problem can occur in economics research, I believe it is less likely than in design of crossword puzzles. For example, I attended at NBER conference on relational contracting. This area of contract theory studies how incentives between a firm and its supplier might be aligned as they interact repeatedly (eg early “cheating” might be punished by a worsening of the relationship later on).
Many researchers at the conference had the same motivation: Why does Toyota deal with a core group of suppliers while GM acquires parts via competitive bidding? So, there are two constraints: same motivation and same theoretical approach (ie relational contracting). And yet the papers were quite different.
The universe of potential models is infinite, unlike natural language, and hence accidental and near identical replication is less likely. To enjoy the infinite, the human brain must know no bounds. Some say this is the case though their claims are controversial.
Via kottke, Clusterflock gives five simple rules for effective bidding on eBay:
Step One:Find the product you want.
Step Two:
Save the product to your watch list.
Step Three:
Wait.
Step Four:
Just before the item ends, enter the maximum amount you are willing to pay for the item.
Step Five:
Click submit.
This is called sniping. That’s a pejorative label for what is actually a sensible and perfectly straightforward way to bid. eBay is essentially an open second-price auction and sniping is a way to submit a “sealed” bid. It’s a popular strategy and advocated by many eBay “experts.” But does it really pay off?
Tanjim Hossain and I did an experiment (ungated version.) We compared sniping to another straightforward strategy we call squatting. As the name suggests, squatting means bidding your value on an object at the very first opportunity, essentially staking a claim on that object. We bid on DVDs and randomly divided auctions into two groups, sniping on the auctions in the first group and squatting on the other.
The two strategies were almost indistinguishable in terms of their payoff. But for an interesting reason. A lot of eBay bidders use a strategy of incremental bidding. That’s where you act as if you are involved in an ascending auction (like an English auction) and you bid the minimum amount needed to become the high biddder. Once you are the high bidder you stop there and wait to see if you are outbid, then you raise your bid again. You do this until either you win or the price goes above the maximum amount you are willing to pay.
Against incremental bidders, sniping has a benefit and a cost (relative to squatting.) You benefit when incremental bidders stop at a price below their value. You swoop in at the end, the incremental bidders have no time to respond, and you win at the low price.
The cost has to do with competition across auctions for similar objects. If I squat on auction A and you are sniping in auction B, our opponents think there is one fewer competitor in auction B and more opponents enter auction B than A. This tends to raise the price in your auction relative to mine. In other words, squatting scares opponents away, sniping does not.
We found that these two effects almost exactly canceled each other out for auctions of DVDs. We expect that this would be true for similar objects that are homogeneous and sold in many simultaneous auctions. So the next time you are bidding in such an auction, don’t think too hard and just bid your value.
Now, I am still trying to figure out what I am going to do with all these copies of 50 First Dates we won in the experiment.
Steven Landsburg set 10 questions for honors graduates at Oberlin College. #8 is a great undergraduate game theory exercise:
Question 8. The five Dukes of Earl are scheduled to arrive at the royal palace on each of the first five days of May. Duke One is scheduled to arrive on the first day of May, Duke Two on the second, etc. Each Duke, upon arrival, can either kill the king or support the king. If he kills the king, he takes the king’s place, becomes the new king, and awaits the next Duke’s arrival. If he supports the king, all subsequent Dukes cancel their visits. A Duke’s first priority is to remain alive, and his second priority is to become king. Who is king on May 6?
Strategy part 3: Figure out the national bargaining fraction. Anchor too low and some cabbies will simply stop talking to you. Unfortunately, that fraction is hard to predict. In Ethiopia, it seems to be about 70%. He’ll counter with 130% the target, and you get to the price you want in about two rounds. Very civilized. This, of course, is based on a sample of four. But my standard error is very low.
I especially love discovering the bargaining fraction and number of rounds in a country. Within a city it is surprisingly consistent, from taxis to markets. Cross-country variation is huge.
Based on travel this year, here is my guesstimation of starting fraction and rounds:
Ethiopia: 0.7 with 2 rounds
Argentina: no less than 0.9 and 1 round.
Canada: 1 and 0
Uganda: 0.5 and 4 rounds
Liberia: 0.1 and 8 rounds
Morocco: 0.001 and upwards of 754 rounds (including mint tea).
I don’t do that much exotic international travel, but I do recall in Singapore that there was no negotiation at all but still it was impossible to know what the fare was because the meter was programmed with all kinds of fixed charges, surcharges and variable mileage rates depending on time of day. Plus major roads have tolls that are adjusted every second depending on traffic and the risk was born by the passengers. So I would call Singapore a 1, -1. (It was always dirt cheap in the end anyway.)
I am a lousy mathematician. I can’t do algebra. My eyes glaze over when asked to follow calculations on the board. And I have a really bad memory. These are just a few of my keys to success.
Because I have minimal facility with technical arguments I had to learn early on how to translate them into natural language so that I could understand them. It takes a long time. And quite often its just impossible to do. In those cases I have to give up.
But when it works, I come away with a unique way of explaining things that are otherwise “left to the appendix.” It makes for good seminars. And it makes teaching time consuming but fun.
Best of all is that enough practice with this and it begins to pay off in research. I can’t “figure things out” with a pen and pad in front of me. Instead I start with an intuition, explain it to myself in a natural language, and see where that goes. Progress usually means formalizing the intuition, seeing some implications on paper, and then retranslating those back, etc. (It helps when I have the talented co-authors I work with.)
I count this liability as a virtue because a) I have to find something to say I am good at, b) being able to explain things in plain language is a valuable skill which I am forced to acquire and c) I’d like to think that it acts as a mild fiddle-filter. If I try hard and I can’t explain it convincingly it words, I am content to say that it must not be a compelling idea. (Not to say that silly ideas don’t nevertheless sometimes slip through the filter.)
Its perfectly agreeable wine but it has no complexity. It smells like you just walked into a tool shed and found a blueberry pie cooling on the shelf. And it is clearly built to stand up to those fat steaks Argies are so fond of. So as a vegetarian I have almost no use for this wine except for one thing. I am usually the only wine drinker in the house, so I drink a bottle over the course of a few days. This wine is so huge that it tastes exactly the same three days later as it did when I opened the bottle.
Cheap Talk 