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Cheap Talk has turned 4 years old. In honor of that, I could tell you about how many of you read us, how many of you subscribe to us, which were the greatest among all the great articles we wrote last year, etc. but instead I’ll take this opportunity to do something I have been wanting to do for a while.
A very interesting side benefit of having a blog is seeing the search terms that lead people to us. Its a fun game trying to figure out which post Google sent them to when they searched for terms like “students can lie to teachers very easily” but more than that, as the range of topics we have covered gets wider and wider just reading down the list of search terms each day starts to look like pure poetry.
So I decided to compose a poem entirely out of search phrases and as my fourth birthday present to myself I am going to make you read it. It is a testament to the power of the Internet that for each and every line below there was someone who, in a quest for knowledge, typed it into Google and Google dutifully led them to our blog.
For the best effect I recommend reading this poem in your best mental Christopher Walken voice.
Feral Dogs in Tampa
I like bareback sex with hookers
Explaining infinity to children,
The god in heaven
Statistically birthdays increase your age
What is there to do?
Remember abstract things
Courtney Conklin Knapp
Low hanging balls
Kink on demand,
Pile driver sex
I am tired of cohabitation
You are nothing
Empty plate with crumbs,
Playing with yourself in public
When will the Devil talk to you?
Novel figure skates,
Who invented sarcasm,
Try to arrange a meeting
Wile E. Coyote runs off a cliff but gravity doesn’t seem to work on him. He just keeps on running, suspended in air, a supernatural feat. But here’s the tragedy: he is capable of this feat only because he doesn’t know he’s doing it. And it’s exactly the moment he realizes there is no ground beneath his feet that he comes crashing down into the canyon below. There is never an instant where he is both flying and aware that he is flying.
It’s the fearless who succeed. But take two people who are equally talented and ask which one is more likely to be fearless. It’s the one who is less worried about failure. But if we turn that around then what it says is that the guy for whom failure hurts the most is the one that’s going to fail.
Everyone has gone through something like this: you take on some new challenge like playing chess or the piano. You work hard at it because initially two things are true: a) when you see other people who do it well you sense the feeling of pride and satisfaction you would have if you could do it well too, and b) at the beginning you cannot yet do it well. Then after lots of hard work finally you can do it too. But somewhere along the way something changed. Mastering it meant discovering that it’s not such an impressive feat after all. Now that you can do it you see that there is a method to it, it’s not magic like you thought.
Could it be that the causality actually works in the opposite direction: those skills that you eventually do master, you master them because you stop thinking of them as magic as start to think of them as routine methodical tricks.
Is it even possible for someone to be great at something and be in as much awe of himself as the rest of us failures are of him?
This is a personal note for a friend. Read it when you get turned down for tenure.
I was an Assistant Professor at Northwestern, came up for tenure according to schedule and was denied. Fired. Canned. Sent packing. It sucked.
But actually it wasn’t so bad. First of all even if you never get tenure anywhere you have like the greatest job ever. I live in a neighborhood full of people who earn 10 times what I do and they are all 10 times less happy than me. I once asked an investment banker whose daughter is in my daughter’s class how much of his salary he would sacrifice for the non-pecuniary benefits of an academic (doing whatever interests you, freedom to set your own schedule, university culture) and the best estimate we could come up with is that being an investment banker sucks big time.
But you will get tenure somewhere. Some places will want to put you on a fresh, probably shortened clock, you could go for that. But the other option is to ride out your lame-duck year. Universities are civilized enough to give you over one year notice before you are out on your ass. All the papers that have been in journal review purgatory will finally get published in that year and in the next year you will probably have a tenured offer.
It does kinda suck though to be dead man walking for a whole year surrounded by your executioners.
But the joke is going to be on them once you get tenured because here’s a little secret that only you, I, and our chairmen know: when you are finally tenured you will be making more money than most of them. Here’s a simple model. Professor A is employed by Department B and Departments C and D are considering making A an offer. Whatever they offer, Department B is going to match it, and you with your lexicographic preference of money first, avoid-the-hassle-of-moving second, will stay at department B. Since it’s costly to recruit you and make you an offer and that won’t be accepted in equilibrium anyway, Departments C and D don’t bother, B has no offer to match, and A, despite his new higher rank continues to live in Assistant Professor poverty. On the other hand when A is exogenously separated from B, he has a credible commitment to take the highest offer from C or D.
(I must caution you however. As with any rejection, at first you will not be able to shake the hope that your current department will eventually see the error of its ways and hire you back after one year with tenure, Full Professor even. Don’t get your hopes up. That never happens.)
Hotels provide you with two different media with which to cleanse your corpus after a long day of giving talks and going for coffees: plain old soap and then a substance packaged under various labels whose modal variant is something like bath and body gel.
The soap is delivered in the form of a solid bar and the bath and body gel is poured out of a plastic vessel like the shampoo that it’s usually paired with. Now I generally prefer to shower with a liquid detergent, (Lever 2000 is my go-to solvent, it’s hard to resist the industrial counterpoint to the traditional fay branding and the pitch on the squeeze bottle is “for all your 2000 parts.” My lifelong project is to count my 2000 parts one shower at a time) but I never reach for the shower gel in a hotel.
The reason ultimately stems from the fact that there are two choices available to begin with, but lets work backward to that. The proximate reason is that shower gel makes me smell like a geisha at a tropical fruit stand. Not that I have any objection to that smell, indeed it’s exactly how I would like a geisha to smell, especially when I am in the mood for a refreshing snack. It’s just not a smell that I personally wear very well. On the other hand, you can usually count on hotel soap to smell like soap or at least something more manly than the bath gel.
Liquid/gelatinous soap doesn’t have to smell girly, viz. Lever 2000, but in hotels it always does. What gives? As usual when pondering the deepest puzzles of lavatory accoutrements, the answer can be found in the theory of labor market discrimination. The little bottle of shower gel is like a job market applicant. It is sitting there asking you to try it out on your body. And indeed you will only really discover its cleansing qualities when you are fully awash in its lather. Whether you want to take that risk depends on how you expect it to smell, not on how it actually smells. This is just the theory of statistical discrimination where the true quality of a worker matters less at the hiring stage than what the potential employer expects based on her demographic characteristics.
Once we arrive at an equilibrium in which everyone knows that the shower gel is for her and the soap is for him, everyone who opts for the gel is expecting a girly fragrance. Just as in the theory of statistical discrimination this feeds back to the initial investment decision of the applicant, in this case the decision of how to scent the product. There’s no choice now but to make it as attractive as possible for the sub-market appearances have restricted it to. Thus the girly scent, and thus the expectations are confirmed.
Consider a Man and a Woman. Time flows continuously and the horizon is infinite. At time they are locked in an embrace, and every instant of time their lips draw closer. Let be the distance at time , it declines monotonically over time. At each , the two simultaneously choose actions which jointly determine the speed at which they close the space that separates them, governed by the rule
where is strictly increasing in both arguments. In addition, both the Man and the Woman can pull away at any moment by choosing action , thereby spurning the kiss and ending the game.
The closer they get the clearer they can see into one another’s eyes, revealing to each of them the true depth of their love, captured by the state of the world which they receive private, and increasingly precise signals about as the game unfolds.
In this game, the lovers have common interests. Each wants to kiss if and only if their love is true, i.e. . However, they know the risks of opening their heart to another: neither wants to be the one left unrequited. When , each prefers kissing to breaking the embrace, but each prefers to pull away first if they expect the other to pull away.
Along the equilibrium path their lips move fleetingly close. At close proximity every tiny fluctuation in the speed of approach communicates to the other changes in the private estimates each lover is updating continuously over time, i.e. varies monotonically with the estimate .
But then: does he see doubt in her eyes? Did she blink? He cannot be sure. A bad signal, a discrete drop in his estimate and this causes him to hesitate. And since is a common state of the world, his hesitation is informative for her and so she pauses too. Not just because his hesitation raises doubts that their love is everlasting, but worse: he may be preparing to turn away. She must prepare herself too.
But she doesn’t. She sees deeper than that and instead she lurches ahead ever so slightly. He is looking into her eyes: he can see that she believes with all her heart that is positive. And now he knows that these are her true beliefs because if in truth her estimate of was close to the negative region, his hesitation would have pushed her over and she would have turned away pre-emptively. Instead her persistence implores him to have faith in their love and to stay there in her arms with his lips so tantalizingly close to hers.
His doubts are vanquished. He loves her. She knows that he knows that she loves him too. And at last it is common knowledge that their love is true and they will kiss and in their moment of deepest passion they discover something about their payoff functions they haven’t before. This moment is the first moment in the rest of their lives together. They will not rush. Time is standing still now. Together, as if coordinated by the eternal spirit of amor, they allow to fall gradually to zero, just slow enough that their lips finally meet, but just fast enough that, when they do,
so that their convergence occurs smoothly but still in finite time.
Happy Anniversary Jennie
Chris Ziegler, retweeted by Tyler Cowen
imagine sitting down at a desk while 250 people line up and tell you, one by one, that kim jong-il has died. that’s twitter.
To which I reply: imagine logging into Twitter and 250 people line up to tell you that Kim Jon-Il has died, and they can do it using as many characters as they want, and believe me these guys can use a lot of characters, and not only that but after they are done telling you, they are standing there in front of you and you have to have conversation with them and then find some polite way to say get out of here, i need to get some work done. That’s working in an office.
It’s for those days when you are supposed to be flying to Milan to give a talk, and you are connecting and when you are checking in to your connecting flight and you pull out your passport thinking wistfully about how much you love your wife for thoughtfully packing your passport for you and just generally breathing in the beautiful life you have to be able to take a little time away to fly to Milan, meet people, give a talk, do a little work on your laptop which is tucked away in your suitcase because you are getting on a redeye and you plan to sleep on the plane, you’ll get that work done while you are in your hotel in Milan, or maybe you won’t because you might just stroll the city and enjoy a little solitude, putting out of your mind the hundreds of job market letters of recommendation that you have to submit online to hundreds of distinct websites each with their own password amounting to about 3 hours of work just logging in, figuring out what to click, copying and pasting passwords, etc and also taking the opportunity to just let your mind wander and think abiut whatever, sorry hordes of coauthors whom I have left in the lurch I know I am already a maddeningly irresponsible partner but please permit me a couple more days after all I am in Europe and for all you know I don’t have Internet access or I am scheduled to be meeting with people all day long and wouldn’t have time to correct thirty pages of typos or rewrite the introduction for the third time because after being rejected at journals 1 and 2 we better write it in the way that journal 3’s referees are going to like; and anyway I need a little escape to get over the sting of those rejections and this time to myself in a faraway European city is just what the doctor ordered and that brings an extra smile to my face as I open up my passport to show to the friendly TSA agent and that smile and it’s associated feeling of intoxication explains why it’s the TSA agent who is the first to notice that the picture on the passport is of my lovely wife and not me.
And my passport is back home in chicago, and I am not getting on this plane and I am not going to Milan today and the only time I am going to be having by myself is stuck in this airport trying to figure out how I am going to get that passport to me from Chicago and all the while fighting back the relentless thoughts of what a ridiculous life I am living, flying to Europe for two days just to give a pointless talk wasting all this time while my students still don’t have their application letters uploaded and all those papers need to be revised and I am sure my coauthors think I am a useless primadonna, and after these recent rejections I know I will never have a top 5 publication again and I won’t even be getting any work done because my laptop is soon going to fly without me to Milan,
It’s for those days, you know those days, it’s for those days that you are so thankful that your connection was through Newark airport and Manhattan Penn Station is a 30 minute train ride away, and you have that favorite little hotel on midtown which has a room for $129 and so what you don’t have any clothes and you will have to buy a toothbrush for what like $30 at a pharmacy in the middle of manhattan but to make up for all of that when you wake up in the morning you will get your stroll and ok it’s smelly New York but look Milan was going to be smelly too you were just fantasizing that stroll anyway and 1 block into that stroll you stumble onto Cafe M, a tiny cafe’/bakery on 32nd and 5th avenue where the coffee is lovingly made one at a time the croissants are the best you have ever had, certainly in the US and arguably rivaling even Paris, beautiful oneofakind people come in and out as you sit each with their own unique beautiful lives and you can sit and enjoy that coffee and croissant and listen in on their lives as they pass through 5 minutes at a time and what better life can one person have than to sample the uncanny diversity of life and where else can you get such a sample as in New York City.
(blogged from my phone)
Creative output seems to come in bursts. You have periods of high productivity spaced by periods where you get relatively few good ideas. During the flurries everything seems to come easy and you have more ideas than you can work on at once. During the lulls you wonder if you are still the same person.
What if the pattern can be explained without assuming that your creative energy fluctuates at all? Suppose that ideas of various qualities arrive according to some distribution that is constant over time, but what changes about you is simply the standard you hold them to. Sometimes you are very self-critical and the marginal ideas that come to you don’t seem worth pursuing, so you don’t pursue them. You go through a lull.
Other times you are confident that you can develop your ideas and you do.
- You can’t tickle yourself but someone can hold your hand and tickle you with it. (Try it)
- Syncopated rhythms trigger an automatic response where you bob your head or tap your feet because your brain demands that the missing beats be counted. In a strong sense, the music causes you to dance to it.
- Even though it would take you several minutes to list all 50 States, you know right away that there is no state that begins with E.
- If you are eloping, it is easier to back out at the last minute because there aren’t hordes of guests coming from all over expecting a wedding. Therefore marriages that begin with elopement will tend to last longer.
January of 1996 I was on the junior job market and I had just finished giving a recruiting seminar at the University of Chicago. This was everything a job market seminar at Chicago was supposed to be. I barely made it through the first slide, I spent the rest of the 90 minutes moderating a debate among the people in the audience, and this particular debate was punctuated by Bob Lucas shouting “Will you shut up Derek? Contract theory has not produced a single useful insight.”
Suffice it to say that my job market paper had nothing in common with either contract theory, Bob Lucas, or the Derek in question. But it was the most fun I have ever had in a seminar.
So I was going out to dinner with Tom Sargent and Peyton Young. Peyton was visiting the Harris school for the quarter and we would be going in his car to the restaurant. Actually it was his mother’s car because his mother lived in the area and he was borrowing it while he was visiting. It was one of those Plymouth Satellite or Dodge Dart kinda cars: a long steel plinth on wheels. Peyton warned us that it hadn’t been driven much in recent years and it had just gotten really cold in Chicago so there was some uncertainty whether it would actually start.
We got in with me on the passenger side and Sargent in the back seat and sure enough the car wasn’t going to start. It was making a good effort, the battery was strong and the starter was cranking away but the engine just wouldn’t turn over. After a while Tom says let him have a crack at it. I am sitting there freezing my never-been-out-of-California butt off thinking that this is the comical extension of the surreal seminar experience I just went through. First I had to play guest emcee while they hashed out their unfinished lunchtime arguments, and now I am going to have to get out and push the car through the snow.
But when Sargent got into the front seat there was this look on his face. I know these American cars, he says, you gotta work with them. He leans forward to put his ear close to the dashboard, he’s got the ignition in his right hand and his left hand looped around the steering column holding the gear shift. And then he goes to work. He turns the key and starts wiggling the gear shift while he is pumping the gas pedal. This makes the car emit some strange sounds but apart from that it doesn’t accomplish much and he starts over. He’s mumbling something under his breath about engine flooding, his head is bobbing manically and his eyes are folding down giving the effect of a cross between Doc Brown and Yoda. In the back seat Peyton appears to have total faith in this guy’s command of the machine, meanwhile I am about to start laughing out loud.
After three or four more cycles, he starts ramping up the body English. He is bouncing off the seat to get extra leverage on the gear shift. His ear is right up against the steering wheel, his eyes are shut and from the look on his face you would assume he was straining to heed the car’s wheezing, last dying wish. But then there is a different sound. The dry electric sound of the starter motor starts to give way to the deep hum of internal combustion. The car begins to bounce along with Professor Tom Sargent. Bounce, bounce, bounce, vrum –ayngayngayng– vrum ayng vrum -vrum -vrum, BANG. That backfire knocks me out of my seat, but it just gently opens Sargent’s eyes and Peyton’s look is pretending that he saw all of this coming.
Sargent turns back the ignition, pauses and draws his face back away from the wheel. His head turns toward me and a grin comes over his face. He’s saying here it goes, watch this. He turns the key one last time and the engine rolls over like a cat, stretching out its neck for one more scratch.
“You don’t mind if I drive do you Peyton?”
- Sit on a spade fuyuh.
- Fall on a flaming can of Raid fuyuh.
- Reach into the garbage disposal to save a hastily discarded tapenade fuyuh.
This article in The New Yorker about Federer’s loss to Djokovic in the US Open Semi-final is absolutely worth a read. You don’t have to care about tennis as long as you have a personal stake in the deep question of what style of perfection really wins.
But I have a slightly different take.
All Fed-Heads knew right away when he won the second set to go up 2-0 that nevertheless was going to lose the match. The tragedy of that match, and of Roger Federer in general is not that perfection failed. He was never perfect or anything close to it. The irony is that, by comparison to Nadal and Djokovic, especially Nadal, Roger Federer is so much more like the rest of us mortals.
Nadal has pure animal fighting spirit branded onto his DNA. Yes, his tennis is wrong, but that doesn’t matter because he is the one who has the aura of invincibility, not Federer. You can count on Roger to make impeccable shots. To play like an artist. But you can count on Nadal to win.
Federer is not like a superhero who just effortlessly deploys his superpower and watches the results roll in. When you watch him long enough you start to see how tightly wound he is at every moment, mustering every ounce of concentration to keep himself in that groove. If he is a master of anything he is a master of trying.
What you learn from watching his matches the last year is just how unstable that groove is. And what makes his decline so depressing is how it reminds us that if you have to try you are not a master. He carried the banner for all of us who have nothing going for us except the will to try, and even he The Master Tryer, the man who tried so hard that he was Perfect, can’t beat those guys whose strokes are hacker strokes next to his, but who were born winners.
And that is why this particular match was really his most tragic. Match point against Djokovic. After tanking sets 3 and 4 and then pulling himself together to go up a break and serve for the match in the fifth set, we still knew he was going to lose. It was just a matter of how.
Djokovic is not Nadal. He does not win by sheer will. A lot of trying went in to his streak this year. And to Federer fans, Djokovic is something of an interloper. You look at his game and there is no real reason he should be pushing Roger out of the top 2. He is super solid. But we want our iconic battle between Mr. Made-Perfect against Mr. Passion. Djokovic doesn’t belong.
But when Federer had Djokovic match point down, Djokovic did something that made a total mockery of everything about Federer’s game. He took a blind swing on a service return and hit it for a stinging winner. He became Nadal for a single shot. You are not supposed to be able to become Nadal. That is not something you can try to do. And indeed there was no trying involved whatsoever. He just did it.
Federer could never, ever do that.
Have you heard that saying “Writing about music is like dancing about architecture” ? It always stuck in my mind because for one thing I like the poetry of it, but mainly because it confused me. I think I got the point it was trying to make but I wasn’t sure that it really made that point. Then I figured out my confusion. The best way to explain my confusion is with the following reply.
Dancing about architecture is like fencing around landscaping.
We never had them when I was a kid. There was “Adult Swim” but that was like a 3 hour block of time on a week night, legitimately so that adults could swim without being terrorized by cannonballs, marco polos, jacknifes, watermelons, palm geysers and the dreaded depth charge.
(There’s another recent development in swimming pool administration. At my community pool whenever anything is even slightly amiss the lifeguard is supposed to give three sharp whistles which in turn alerts the entire crew of 20 or so lifeguards each stationed at her own corner of the pool [yes the pool does have 20 or so corners] to also emit three sharp whistles, repeatedly, while pointing in the direction of the other lifeguard whose whistle it was that alerted them.
That way, in the midst of the cacophony of whistles you can look at any random lifeguard, see where they are pointing, follow the trail of shrieking, pointing lifeguards until you find the root of the tree and then you know where all the trouble is. At least that’s the theory. Meanwhile over the loudpseaker the lifeguard who appears to have been selected for this job on account of having the most panic-stricken-yet-somehow-deeply-caring voice is sooth-screaming “Attention swimmers. Three whistles have been blown, please leave the pool. 7 year old Dennis is missing. He is wearing a red swim suit, a blue mask and snorkel. He is not wearing his plastic pants.”
This is followed every 30 seconds or so by further announcements of additional information that might be useful to us in our search for Dennis, “Attention swimmers [she hasn’t seemed to have noticed that we stopped swimming 5 minutes ago and in fact we are now more appropriately addressed like “Attention patrons who were previously swimming and who are now digging through your beach bags for earplugs”] we are looking for Dennis. Dennis has a My Little Pony beach towel and he was last seen by his 5 year old sister when she was holding him down so his friends could give him a plastic pants wedgie.” Then “Attention swimmers, we are looking for Dennis. Dennis is going through a bed-wetting phase at home.”
Finally Dennis, who of course had just been undergoing repeated Whirlys in the bathroom emerges and the whistles fall silent but the cackling doesn’t.)
But the “Adult Safety Break” has very little to do with adults and nothing at all to do with their safety. Every 90 minutes all children under the age of 16 are required to leave the pool for 15 minutes. In the meantime, adults can swim but since nobody goes to this pool to swim in the literal sense of prostrating and propelling yourself through water with a well-defined origin and destination, what happens instead is that all of the adults leave the pool too and the lifeguards are the ones that get a break.
And that is precisely the rationale. Not the break for the lifeguards, but the temporary evacuation of the pool. Now note that this is a community pool, run by the community association so we have a situation in which the community is voluntarily destroying 15 minutes of pool value. So there must be a good reason.
And the good reason is that admission to the pool is by flat fee with no marginal time-use pricing. This means that the admission fee can be adjusted only to meter the number of people entering the pool but it provides no means to stop them from staying all day long. And indeed while their marginal value declines over time it appears to stay bounded away from zero until either nightfall or lightning strikes, whichever comes first.
The safety break makes us decide whether its worth it to sit through 15 idle minutes before climbing back onto the marginal utility slide. A large number of families by now already on the very flat end of that slide, its no wonder that the safety break culls a significant segment of the pool’s patronage in one fell swoop. It helps that the safety break consolidates all the kids in one place making the exit that much easier.
Bad for them but good for the community at large. Their tiny residual marginal utility is dwarfed by the externality of their presence multiplied by the number of other swimmers in the pool. Absent any way to expose them to their externality through prices, a community-imposed waste of time is the second-best solution.
Unfortunately for Dennis though, giving Whirlys only gets better and better.
Two aspects of our taste for good weather are in force in the Spring. First, we enjoy the warmer weather but we have diminishing marginal utility for higher and higher temperatures. Second, we have reference-depenendence: a 40F day feels balmy in March when its been below freezing for the past three months but the same 40F day gives you the chills in May on that day when Winter sends you its final parting gift from the grave.
Given those preferences, here’s how a benevolent Mother Nature would maximize the joy of Spring. Each day raise the temperature by just a little bit. Gobble up the steep part of our utility for warmth but stop before marginal utility declines too much. Then, tomorrow when our reference point adjusts upward pushing the steep part back into play, gobble up those marginal utils again. Repeat. This steady but gradual transition from Winter to Summer would be the hallmark of a benevelont Mother Nature.
But woe is us, here in Chicago our Mother Nature is of a different sort than that. She seems well-acquainted with another aspect of our reference-dependent weather preferences: loss aversion. Drops in temperature hurt more than equal-sized jumps upward. Our Mother has figured out how to exploit this to full effect and minimize the joy of Spring. It all starts in late February when she lays on us a miraculous 60F day right out of nowhere. Our reference points soar. But then we take the plunge back down on the steep side of the loss-aversion curve and the round trip is worse than if we just had another two days of plain old Winter.
And that pattern pretty much repeats until about June 1. Instead of that gradual steady incline our Spring in Chicago is the classic sawtooth pattern, a series of tragicomic episodes in which our reference points are coaxed upward and then smashed back into place like some kind of meteorologic Moe-Curly routine. Thoughts of summer give us the hope to soldier on, but only if in the past year we were lucky enough to have forgotten whom she hands the baton to once the temperature finally settles down: the mosquitos.
Do you know the name of the first bank in the United States? The First Bank of The United States of course. How about the second bank? The Second Bank of the United States. And after that it seems like every time a bank opens in a new place for the first time that bank calls itself First Bank of The New Place. (Try your favorite place. Here’s mine.)
Why? Because only the first can be The First. If people trust banks more the longer they have been around, then in equilibrium the first bank will call itself the First Bank and everyone will know who was first.
Titles of papers have something in common with names of banks. A paper titled Law and Finance is guaranteed to be the seminal paper in the field because if it were not then that title would have already been taken. You can go ahead and cite it without actually reading it. By contrast, you can safely ignore a paper with a title like Valuation and Dynamic Replication of Contingent Claims in a General Market Enviornmnet Based on the Beliefs-Preferences Guage Symmetry even if you don’t know what any of those words mean. The title is essentially telling you “Don’t read me. Instead go and read a paper whose title is simply Valuation of Contingent Claims. If you have any questions after reading that, you might look into dynamic replication and then beliefs, preferences, and if after all that you still haven’t found what you’re looking for, check here for the lowdown on guage symmetry.”
Two pieces of advice follow from these observations. First, find the simplest title not yet taken for your papers. One word titles are the best. Second, before you get started on a paper, think about the title. If you can’t come up with a short title for it then its probably not worth writing.
The absolute worst thing you can do with your title is to insert a colon into it. (quiet down beavis!) As in, Torture: A Model of Dynamic Commitment Problems. Or Kludged: Asymptotically Inefficient Evolution. In the first case you have just ruined a seminal-signaling one-word title by adding spurious specificity. In the second, you just took an intriguing one-world title and turned it into a yawner.
The second worst kind of title is the question mark title. “Is the Folk Theorem Robust?” This says to the reader: “You picked this up because you want to know if the folk theorem is robust. Well, if I knew the answer to that I would have told you right away in the title. But look, all I could do is repeat the question, so you can safely assume that you won’t find the answer in this paper.”
I was sitting in a seminar and the guy was talking about unraveling in the labor market. Someone asked a question whether it could happen in reverse. The speaker said “Do you mean raveling up? Yes it is possible that there is raveling up.”
And I thought “Wait a minute, you don’t need the ‘up’ in ‘raveling up’ because surely the opposite of unraveling is just ‘raveling.’ ” But then I realized that I have never heard that word used. Unraveling, all the time. Raveling, never. So I went for the dictionary. Three dictionaries in a row gave me a definition of raveling something like this.
Ravel. verb. To disentangle. Unravel.
What? To ravel means to unravel?? But then what does unravel mean?
Unravel. verb. To untangle.
So two very strange things now. First, unravel has an independent definition (in terms of other words) but ravel, the un-prefixed word, is defined in terms of the prefixed unravel. Second, ravel is defined to mean unravel!
My colleague Rakesh Vohra thought the good old Oxford English Dictionary would save us from being swallowed up into the lexicographic Weezer-vortex, but alas (login with username trynewoed, password trynewoed. works until Feb 5), not even the Queen can help:
1. To entangle or disentangle
(!) The word means A and also the opposite of A. Doesn’t it now follow that disentangle means the same as entangle? And isn’t there a theorem that once you allow a contradiction into a formal system you can make anything into a contradiction. So if we flip through enough pages of the OED eventually we can prove that True means False?
2. To become unwound, to fray; to unravel.
3. To disentangle, make plain or clear.
Groovy Action At A Distance
Isaac Washington was so cool
That when he left his stateroom
He would set the door in motion
With the precise velocity
That in the time it would take
For the deceleration
To bring the locking mechanism
To a halt
An infinitessimal measure short
Of fully shut
He has walked
Just far enough across the deck
At which distance
The radiant force of his
Was just enough to induce
The final click.
I mean, I wrote back to some of the people – some of them in holy orders or running religious organizations. I said, when you say you’ll pray for me, do you mind if I ask, what for? And a number of them said, quite honestly, not really for your recovery, but that you see the error of your ways.
BLOCK: That you find God.
Mr. HITCHENS: Yeah. Now, I find that not as easy to be graceful about, because though it’s put in a nice way, it’s part of a phenomenon that I’ve always thought of as very disgusting, which is the belief of the religious – which they keep expressing and have done for centuries – that surely now you’re dying, your fears will overcome your reason.
I hope I don’t have to underline what’s horrible about that. There’s an element of blackmail to it. And an element also of tremendous insecurity, I think, on their part. I mean, they don’t seem to feel they’d win the argument so easily with someone who is mentally and physically strong. By the way, I think they’re right.
Chrisopher Hitchens is probably dying from cancer. And if he is, the day will come soon when the people with whom he frames this conflict will never matter again and the only ones left will be Hitchens and God.
When that moment comes why should Christopher Hitchens not try to make it to Heaven? At that moment what does he have to lose? Maybe there is still a little bit of life left to live and doing whatever it takes, praying, reconciling, fretting, may not be the way he wanted to spend it. Or he might feel like a death-bed entreaty only makes a mockery of his life as an outspoken atheist. But now this starts to sound like reason overcome by fear.
Doesn’t reason dictate that unless Hitchens is absolutely convinced there is no God he should, at the very least, say to whoever might be listening “Hey, please let me into Heaven.” ? And doesn’t reason dictate that you cannot be absolutely certain of anything?
But what if God can tell whether you really mean it? He sees through some bogus last-minute self-serving plea. He wants Hitchens to say “Dear God, I believe in you.” And Hitchens, who rationally accepts that God might exist, nevertheless considers it unlikely and therefore cannot honestly say that. At best he could say “Dear God, I p-believe in you, but I admit that p is on the low side.” But shouldn’t he at least say that? After all Hitchens, being a man of reason, cannot be sure exactly what p God demands.
A reasonable Hitchens should understand that God, if he exists, understands Hitchens. “Dear God, conditional on you existing, you deserve all the faith and honesty that you demand of me. However, I am not sure that you exist. In all honesty I think it is unlikely. Here’s the problem. I have used reason to find evidence of your existence but so far I have not found enough to be convinced. If you do exist then evidently I have failed. It could be that I relied too much on reason, but reason told me that there was nothing else to use. I am imperfect, as you of course would know if you exist. In that case I am sorry and I ask your forgiveness.”
As to which God Hitchens is supposed to address this to, that is not a problem. He can make a separate speech to each of the Gods that might be threatening him with damnation in the afterlife. Even if there is an uncountable number of such hypothetical Gods, he can single out the finite number who have Books about them and then say a final catch-all speech addressed at all the others.
There is only one way I can see a reasonable Hitchens deciding against this strategy. He says “Jeff, you are right that since I accept that God might exist and if there is any chance at all that God will allow me into Heaven I should do whatever it takes, within reason, to try and get there. However, among all of the hypothetical Gods that might exist, there is one in particular I am especially nervous about. He’s the God who allows everyone into Heaven except those that ask to go there. And, call me cynical, but reason tells me that in the highly unlikely event that there is a God, out of all the highly unlikely Gods that mankind has imagined, He’s no less likely than the others.”
I once had a dream where I met Paul Krugman at a party. It went like this:
This happened in a dream I had. We were at a large round table having dinner. I was talking about pizza and saying something typically smart-ass about how to make good crust. Krugman was at the other end of the table and overheard. He jumped in just long enough to reduce my pizza thesis to mere crumbs. The rest of the guests looked on in pity.
When the party was over, I bumped into him again on the way out. We had this little conversation:
Fiction can only be so strange because, as fiction, it quickly loses credibility if it gets too strange. The audience loses the willingness to suspend disbelief. When truth is strange it is truly strange.
Of course truth is strange only by accident. So truth will be less strange on average than fiction because fiction is intentionally strange. But measured by their peaks, truth will be stranger than fiction.
You can probably think of people who would buy this service thinking it will bolster their self-esteem. You might even imagine that you yourself would get a little boost from having someone call you personally and tell you that you rock. But you probably think that this is leveraging some kind of behavioral, kludgy, semi-rational wiring in your personality and that you would quickly get de-sensitized to it.
But I disagree. I think that it would be a valuable motivator even for the most hyper-rational among us. Because it’s not a trick at all but really just a way to preserve mindsets over time. Suppose I tell you about something great I did. Then later on, when I am about to take on some challenge, like let’s say I am about to give a big lecture to an intimidating audience, you call me and remind me of the great thing I did. And you add your own interpretation of why it was great and how it shows that I am awesome. I don’t need to believe anything about your motivations, your reminder restores my brain to the state it was in when I myself was thinking about how great I am and why. And if your added color convinces me that you honestly agree with me then all the better.
Simply “writing it down” or memorizing the state of mind is not a perfect substitute. At a very minimum this is simply based on cost-minimization. Someone else is doing the remembering for me and that is worth something. But it’s even more than that.
If you have been following me it will come as no surprise that I have no trouble at all remembering what an stupendous guy I am and all the super-amazing feats of astounding splendifery I have accomplished in my life. Yet even with that overflowing supply of memories of greatness, I still get nervous in the face of a challenge. When that happens I have my daughter repeat something she once said to me at a minor moment of greatness: “you’re so smart daddy.” The memory of that moment is imprinted on the sound of her voice. That sound hooks into the vivid edges of my direct experience of the event. Immediately it’s “oh yeah, that’s how it’s done” and my perspective on the situation is totally new. And yet on the surface all she is doing is duplicating a memory that I had in there already.
Daughters are great, and not just for fueling your ego, but they cost more than $40 a month. By comparison, Awesomeness Reminders look like a pretty good deal.
What would you believe in the face of the unbelievable? For example, how would you react if you discover suddenly that you can fly. Before today flying was impossible, but now you can do it. Something you were convinced of is wrong and you have to decide whether it’s that you can’t fly or that you are not prone to hallucinations.
In fact you already know how you would react, because it happens in your dreams. Have you ever dreamed you could fly? If so, did you infer that you must be dreaming? Some do, and then wake up. (Poor them.) Others just go on flying.
Are you irrational to believe you can fly?
Maybe you aren’t fooled by flying dreams or maybe you’ve never dreamed of flying. But crazy things happen in everybody’s dreams. What is the craziest thing that happened in your dreams that you nevertheless accepted as the way the world must work since after all it’s happening right before your eyes?
I think all sides should compromise. We should build a very tiny mosque. And it should have wings. The Ground Zero Mosquito. But instead of sucking your blood it would enrich your blood with the dual nectars of Retribution and Tolerance. We will all make pilgrimages to the site and our children will line up to be kissed by it. And one by one they will announce their mosquito-induced blessings like “I want to vanquish all of those who do Evil to our homeland but still I Love them all the same.” Thank you Ground Zero Mosquito!
Sarcasm is a way of being nasty without leaving a paper trail.
If I say “No dear, of course I don’t mind waiting for you, in fact, sitting out here with the engine running is exactly how I planned to spend this whole afternoon” then the literal meaning of my words leaves me completely blameless despite their clearly understood venom.
This convention had to evolve. If it didn’t already exist it would be invented. A world without sarcasm would be out of equilibrium.
Because if sarcasm did not exist then I have the following arbitrage opportunity: I can have a private vindictive chuckle by giving my wife that nasty retort without her knowing I was being nasty. The dramatic irony of that is an added bonus.
That explains the invention of sarcasm. But it evolves from there. Once sarcasm comes into existence then the listener learns to recognize it. This blunts the effect but doesn’t remove it altogether. Because unless its someone who knows you very well, the listener may know that you are being sarcastic but it will not be common knowledge. She feels a little less embarrassment about the insult if there is a chance that you don’t know that she knows that you are insulting her, or if there was some higher-order uncertainty. If instead you had used plain language then the insult would be self-evident.
And even when its your spouse and she is very accustomed to your use of sarcasm, the convention still serves a purpose. Now you start to use the tone of your voice to add color to the sarcasm. You can say it in a way that actually softens the insult. “Dinner was delicious.” A smile helps.
But you can make it even more nasty too. Because once it becomes common knowledge that you are being sarcastic, the effect is like a piledriver. She is lifted for the briefest of moments by the literal words and then it’s an even bigger drop from there when she detects the sarcasm and knows that you know that she knows …. that you intentionally set the piledriver in motion.
Sarcasm could be modeled using the tools of psychological game theory.
At Steppenwolf Theater in Chicago. Bruce Norris is the playwright.
This guy I know is saying that a theater critic is always the bad guy. He’s like “the playwright is so special just because he wrote the play in the first place, but the critic never gets credit for his part. I mean the word ‘critic’ already carries such a negative connotation.”
Maybe its because reviews are so pointless. I mean what can a review actually accomplish? OK maybe you might convince some people to see the play or not to see the play, and maybe you might shed some light on some kind of deep meaning, but really what does that matter in the long run?
Hold on a sec, I don’t like the way that sounds. I don’t think I really believe that and I certainly don’t like the way it feels. Let’s do that again. Back up.
The female lead in the play takes off her shirt once. And the reality show Top Chef is featured in a crucial scene.
Now I am sure to have an impact. You don’t mind spoilers do you? Well, it doesn’t matter. It’s just a play and even if you do know what’s going to happen, there is nothing you can do about it because its already written and its going to unfold just that way no matter who is there watching. Do you smell smoke?
On the other hand, this review is being written right now and it can change at any moment. Did you hear that? She just said that this review is going to suck. You didn’t hear that? There, she said it again. You didn’t hear that?
I’m not going to bother with this review any more. I know you just think I am making stuff up and you’re not going to listen to me anyway so what’s the point? So I’ll tell you about the dinner we had before the play. Even though I know that I will get bored of that by the end of this paragraph (yes, she told me that too.) But that’s kinda sad isn’t it? I mean it was a nice dinner. It made me happy. I had rhubard consomme, I should at least be able to write a nice review of that. But look, I am already bored of telling you about dinner.
OK, you wanna hear about the play again right? That’s why you are still with me through all this. OK good. It ends tragically. Everybody dies. Even I die. You don’t believe me, see I told you you wouldn’t. There I go, messing it up again. You gave me another chance and I blew it. I can’t let it end this way, let’s try again. Back up.
OK, you wanna hear about the play again right? That’s why you are still with me through all this. OK good. It’s beautiful and touching and it ends well and everybody goes home feeling warm and fuzzy.
Hey this is great. This is what a review is all about. Why am I always being such a downer? Nobody wants to read my ponderous reviews. From now on I am going to write nice, normal reviews and everyone is going to love them and everyone is going to love me.
Ick, it already feels wrong. I just can’t pretend like that. But I’ve already written all this stuff and its come out all wrong. I need to start over. Back to the beginning.
This guy I know is always saying that a theater critic is always the bad guy…
Step 1: The 41-year-old should begin by having his first child when he is 32.
Step 2: when the child is 6 she should begin taking piano lessons.
Step 3: the 41-year-old’s mother should consistently beat him at golf.
Step 4: At age 39, notice that you can hit the ball twice as far as your mother and therefore there is no good reason she should always win. Notice that as long as your ball is always closer to the hole than your mother’s you will win.
Step 5: Use this strategy to actually beat your mother at golf for the first time.
Step 6: Notice that the same strategy applies to playing the piano vis a vis the now 7-year-old daughter.
Step 7: Begin attending daughter’s piano lessons and learning all of her pieces with the plan that you will always be a better pianist than her, even when she is a concert-playing professional.
Step 8: Around age 40 notice that this is going a little slowly and so its time to start learning some serious pieces.
Step 9: At age 41, learn to play Children’s Song #6 by Chick Corea.
It’s not very good. My hands get tired toward the end of the fast sections and you can see that I lose the rhythm a bit. Also I am rushing. (still ahead of my daughter though
I have never taken piano lessons, but I think I might start.
Naming rights raise a lot of money. Think of professional sports stadiums like Chicago’s own US Cellular Field (does US Cellular still exist??) The amazing thing to me is that when Comiskey Park changed names to “The Cell,” local media played right along and gave away free advertising by parroting the name in their daily sports roundups. Somehow the stadium knew that this coordination/holdup problem would be solved in their favor.
We should seize on this. But not by selling positive associations to corporations that want to promote their brand. Instead lets brand badly-behaving corporations with negative associations.
The Exxon Valdez oil spill is a name that stuck. Every single time public media refer to that event they remind us of the association between Exxon and the mess they made. No doubt we will continue to refer to the current disaster as the BP Gulf spill or something like that. That is good.
But why stop there? (Positive) advertisers have learned that you can slip in the name of a brand before, after, and in-between just about any scripted words and call it an ad. The Tostitos Fiesta Bowl. The Bud Lite halftime show. The X brought to you by Y. These are positive associations.
Think of all the negative events and experiences that are just waiting to be put to use as retribution by negative association. “And today I am here to announce that the BP National Debt will soon reach 15 trillon Dollars.” Or “The BP recession is entering its fifth consecutive quarter with no end in sight.”
Why are we wasting hurricane names on poor innocents like Katrina and Andrew? I say for the 2010 hurricane season we ditch the alphabetical order and line em up in order of egregiousness. “Hurricane Blackwater devastates the Florida Coast. Tropical Storm Halliburton kills hundreds in Central America.”
The nice thing about negative naming is that supply is virtually unlimited. Cities don’t go selling the names of every street in town because selling the marginal street requires lowering the price. But you can put the name of every former VP at Enron and Arthur Andersen on their own parking meter and the last one makes you want to spit just as much as the first. Hey, what about parking tickets? This parking ticket is brought to you by Washington Mutual.
Suddenly the inefficiency of city bureaucracy is a valuable social asset. Welcome to the British Petroleum DMV, please take your place in line number 8. And some otherwise low-status professions will now be able to leverage that position to provide an important public service. “There’s some stubborn tartar on that molar, Ms. Clark, I’m going to have to use the Toyota Prius heavy-duty scaler. You might feel some scraping. Rinse please.”
“Good Afternoon, Pleasant Meadow Morturary, will you be interested in Goldman Sachs cremation services today?” Or “Mr. Smith we are calling to confirm your appointment for a British Petroleum colonoscopy on Monday. Please be on time and don’t eat anything 24 hours prior.”
Just as positive name-association is a lucrative business, these ne’er-do-wells would of course pay big money to have their names removed from the negative icons and that’s all for the better. If the courts can place a cap on their legal liability this gives us a simple way to make up the difference.
And I am ready to do my part. As much as I like one-word titles Sandeep and I are going to add a subtitle to our new paper. Its going to be called “Torture: Sponsored by BP.”
Answer: only if it’s good economic theory.
Any theory, not just economics has this structure: I assume A, I conclude C. It’s a good theory only if A logically implies C. And if A implies C then assuming A entails assuming C. Observations:
- If someone is not assuming their conclusion then you should ask them to come up with a better theory.
- Assuming your conclusions is a necessary condition for a good theory. It is not sufficient: it is possible (typical?) to assume your conclusion but have a bad theory.
- Once we have established that C follows from A, we can do the real work of evaluating a theory: assessing whether we believe A.
- That is the beauty of economic theory and other parts of the social sciences where we assume our conclusions: you get to see exactly what to focus on in trying to evaluate the theory. A theorist’s job is to take an argument and decompose it into two parts: the rules of logic and the assumptions. You can save your time not trying to evaluate the first part because you know in advance how logic works. We put in the hard work of separating that out so that you can see what’s left to argue about.
- There is no point in trying to figure out if someone has “predetermined their conclusion and picked assumptions that imply it.” The timing of how the theory came into existence is irrelevant. If it is a good theory and the theorist assumed his conclusion then you get to see exactly what assumptions led him to it. You get to decide whether you agree with C by deciding whether you accept A. And you are given a roadmap for how to convince the theorist he is wrong.
- In fact, given that we all have predetermined conclusions I would rather argue with someone who makes up a set of assumptions that imply his predetermined conclusion than someone who doesn’t. The first is doing the honorable thing of setting out conditions under which he can be proven wrong. There is no way to get started debating with the second person.
I buy these bags of hardwood charcoal from Whole Foods. They are sewn closed at the top and a little thread hangs out at one end. Every so often I grab the thread, offer a prayer to the grilling gods and pull; and the most beautiful thing happens: the thread unravels end to end and the bag is open. And if this has ever happened to you, the sound of it, the feel of it, and the pure joy of being admitted entrance, at a subconscious level all remind you of your other favorite thing to unzip.
But like that other thing it almost never works out that way and it seems to be determined by nothing more than pure randomness. When it fails you can try yanking in either direction or unraveling it by hand for a bit to get it started but to no avail. Eventually you have to get the scissors.
So I am asking you, dear readers. Does anybody know what is the trick to get these threaded seams to unravel? (I already tried plying it with tequila.)