Tag Archive

Arthur Robson is going to be sitting in with us this week.  I have written a lot about Arthur and his work, if you just enter his name into the Cheap Talk search bar you will find a lot of interesting stuff to read.  Arthur is an economist who has written on various areas in economic theory and who today is the main driving force behind an emerging field of biology and economics.

Here is a link to a recent conference he organized with a bunch of interesting papers.  At that conference, Balazs Szentes thanked the organizers, Arthur and Gary Becker, with a speech like this (paraphrasing from memory):  “Everyone thinks Becker is such a great pioneer but really he is so risk-averse.  He invented like 20 fields just hoping that one or two of them would take off.  Arthur on the other hand is the real hero to economics.  He was doing perfectly fine writing about normal theory and then he completely and permanently screwed up his career to pursue this biology and economics stuff.  So thank you.”  (Both Becker and Robson were present and both took it as the compliment it was intended to be.  We are still hoping to get video of that.)

So thank you Arthur.

Yesterday I made a prediction but I want to keep the prediction a secret until the uncertainty is resolved so I encrypted it as an SHA1 hash:

7c6d61820d512c87789bf13a5fd16876da6d7004

I will reveal it sometime before the Summer Solstice.  For background see here.

It gives me a forum to tell the world that when you see me texting during your talk, I am not actually texting but rather I am emailing myself a thought that was inspired by your talk that I might write about on my blog later on.

Daniel, Diermeier, our Kellogg colleague has a new blog called Reputation Rules.  Daniel is a noted researcher and a star teacher at Kellogg.  Should be an interesting blog.

A great guest blogger.  We should do more of these.

Last week Sandeep and I were at the Cowles Summer Microeconomic Theory Conference at Yale, a fantastic conference with many great papers and an All-Star roster of pure attendees.  Tomasz Strzalecki presented a provocative new paper on limited attention and asset price volatility (joint with Faruk Gul and Wolfgang Pesendorfer), Olivier Gossner showed us how Fudenberg and Levine’s famous reputation papers should have been written, and Lones Smith presented his paper with Elena Quercioli on The Economics of Counterfeit Money.  When pressed with a technical question from the audience he deployed a line that I will certainly be using myself in the future under similar circumstances:

It sounds like you are talking about some subtle math, but I’m just trying to pretend I’m in the 5th grade.

We liked his paper so much we thought about blogging it but then decided to do it one better and ask Lones himself to write about it in a guest post. And he agreed.

Of course, while he is at it we might as well hear what else he has on his mind so we’re going to have him sit in here at Cheap Talk for the week.  And if you know Lones, then you know that anything can happen, so it’s going to be fun.

I mostly read blogs through Google Reader but lately I have been thinking that my selection is becoming a little stale.  I want to mix it up a little bit, what blogs should I be reading?  I like economics blogs but I like/get ideas from all kinds of blogs.  What I am aiming for is a minimal spanning set.

Epilogue:  Thanks for all the great suggestions!  Keep them coming.

I am a postalite, and not a blitzer. I am not good at coming up with ideas on demand and in the moment.  Pretty much all of my work is based on waiting around passively for an idea to pop into my head.  It happens in the shower, in the car, at 4:00 in the morning when I am awakened by the snow plow, etc. Whenever that happens I immediately send it to myself in an email.

Then a complicated system of tubes that I have set up routes that email to my Google Buzz feed, then my other blog, and finally to a mail folder where I keep all of these ideas archived.  A typical auto-email looks like this:

—– Original Message ——–

Subject:	Album of the summer
Date:	Wed, 18 Aug 2010 10:02:56 -0700
From:	jeffrey ely <jeffely@northwestern.edu>
To:	post@cheepthoughts.posterous.com

Tmbg flood

Grownup now sounds like kids

Snorkeling

You're such a great Parker daddy

Guy teaching daughter to surf

The day it all came together

Old man learning new tricks

Which has the bare outline of a post I never wrote about my experiences surfing this past summer, and being an old man learning new things at the same time my kids are learning new things.

I send myself about 4 of these per day on average, although most of them are just links to stuff on the web I might write about.  People also send me links and I just forward them right away.

Every morning I go through my archive to find something I want to write about (If people have liked it on Google Buzz then I know its a go for the blog.)  I try to keep it in mind all day and work on what I can say about it and how to write it.  This allows me to take advantage of idle moments throughout the day to do most of the writing.  Ideally, by the time I sit down to write (usually just before going to bed at night) I have a good outline and the only thing left to do is find the right words.

(Ron Siegel took this photo of the car cemetery on Chicago’s Lake Shore Drive in last week’s blizzard.)

We have been blogging for two years now.  When we turned 1 I started writing a sequence of posts on Why I Blog.  Here’s a few of them.  As a final why-thought I would like to say that while blogging often feels like shirking, in fact the number one reason that keeps me going when I start to worry I am running out of ideas is that this blog has proved to be a huge boon to my research.

Sandeep and I started writing Torture on this blog.  Simply put, that paper would not exist if Cheap Talk did not exist.  This post I wrote recently about overbooking set me thinking for a day or two and now, with ideas from Daniel Garrett and Toomas Hinnosaar, the three of us are writing a paper on it. These are the concrete products but there are many more benefits that are harder to measure but easily as important.

First, if you look at the tag vapor mill, you will find a trail of ideas that I have written down, each of which has the potential to be a real research project.  A number of them I intend to work on when I have the time.  Second, its a true cliche that writing about “the real world” makes you a better theorist. Sometimes you learn that crucial assumptions are too restrictive to explain a story. Sometimes you find a new appreciation of just how far they go.  And not even the most prolific “applied theorists” get the opportunity to write as frequently and about the kind of wide-interest topics as a blogger gets.

Done with the why, onto the how.  Blogging is a big commitment and you learn only very slowly how to do it efficiently.  Given the amount of time I spend staring at a blank text editor I still have a lot to learn myself.  But I’ll write a few things I picked up.  For starters let me tell you how Sandeep and I started this blog because I think we did something smart that I would recommend to anybody who was thinking about jumping in.

We blogged to ourselves for about a month.  It was a a real dress rehearsal: we used the WordPress blog that we are using now, we wrote posts about once a day, but nobody read them because nobody knew the blog existed. This was mainly to see what it would be like to try to write on a daily basis.  If it looked like we wouldn’t be able to keep it going we would just call it off and nobody would know we were failures.

But when we finally decided that it was a go, it had a second benefit.  Before going public, we archived all of the posts we had written already and scheduled them to be published a day at a time over the next several weeks.  Here’s why this is such a great idea.  Blogging requires momentum.  Unless you are a highly unusual person, it is impossible to conjure up something to write about on a daily basis.  Instead, what you do is collect ideas, allow them to percolate around in your head for awhile and then write them down when they are ripe. It takes months before there’s enough in the pipeline to keep you actively writing. Having a headstart gives you the lead time you need to reach that cruising speed.

(Drawing: Riding The Wave from www.f1me.net)

I am making a prediction.  For reasons discussed in this previous post, its important that I announce the prediction but keep it a secret until the uncertainty is resolved. Following the suggestion of a commenter, I wrote my prediction in a text file and ran it through the SHA1 secure hash algorithm (using the web tool here.)  Here is the hash:

a35fc654c7a68404bcb94b3b6a1d162223ff69e5

Briefly, this is a digital signature that is (for practical purposes) uniquely associated with the text.  But the algorithm is “one-way:” unless you have a powerful computer you will not be able to invert the mapping and discover my prediction from the hash.

When the uncertainty is resolved (it will happen in the not-too-distant future) I will post the prediction here.  You can then take it and generate the SHA1 hash and verify that it is the one above.  That will prove that the prediction I show you is in fact the one that I have made today.

While we are waiting to find out, you can try to predict what my prediction is. (No, my prediction is not about what you will predict I predicted.)

Update on Jan 10 (one day later:) Having forgotten one important detail, I have updated the prediction and the new hash is:

f502acfb48395d6ab223ca30803f98b9bd6fd6ce

When I reveal the prediction, sometime before the Summer Solstice, I will reveal both text files and you will see the (innocuous) reason for the update.

As suggested in the comments, since I am able to modify the text of this blogpost, I should post the hash somewhere that it cannot be modified.  Since Twitter puts a timestamp on every tweet and tweets cannot be edited ex post, I tweeted the two hashes.  Here and here.

I want to make a prediction.  But I want to do it like this:

1. Keep the prediction secret, indeed even keeping secret what the prediction is about.
2. Have the prediction revealed at some pre-specified future date.
3. Have it certified that the prediction was recorded on a certain date and not changed after that.

Is there a web service that facilitates predictions like this?  It would be a useful service.  There are probably lots of reasons someone would want to keep their predictions secret prior to the resolution:  you don’t want your prediction to be self-fulfilling (or self-defeating), you don’t want others to know what you are predicting about (maybe it arises out of some proprietary research), or you want to trade anonymously on your prediction.

If anyone has any ideas, please let me know in the comments below.

Addendum: Mallesh correctly points out in the comments that the system would have to publicize that you made a prediction.  This I want to do.

And why you should too.

There is a painful non-convexity in academic research.  Only really good ideas are worth pursuing but it takes a lot of investment to find out whether any given idea is going to be really good.  Usually you spend a lot of time doing some preliminary thinking just to prove to yourself that this idea is not good enough to turn into a full-fledged paper.  Knowing that most ideas are unlikely to pan out there is an incentive not to experiment on new projects.

Blogging bridges that gap in a way I didn’t expect when I started.    Blogging means that half-baked ideas have scrap value:  if they are not publishable you can at least write about them on the blog.  This means that you are more likely to recoup some of those costs of experimentation and you undertake more projects ex ante.

So, readers, don’t thank me for blogging (not that I thought you had any good reason too.)  I thank you for wading through the scraps.

Eli Dourado writes

The commenting dynamic is very different on small blogs than it is on popular blogs. On small blogs, people typically comment when they have something to contribute or ask that is relevant to the post. These are frequently of high quality (relatively speaking; recall Sturgeon’s Law: 90 percent of everything is crap). On more popular blogs, this positive commenting dynamic is confounded by the presence of eyeballs. Every post is read by many thousands of people. For the self-involved who could never attract such a large audience on their own, this is an irresistible forum for expounding pet hypotheses, axe-grinding, and generally shouting at or expressing meaningless agreement with the celebrity post-authors.

which sounds plausible but it assumes a sorting condition that is debatable.  Presumably everyone, the high-quality and low-quality commenters alike, want a bigger audience.  The question is one of relative elasticities:  does a percentage increase in audience lead to a larger percentage increase in low-quality comments relative to high-quality?  I am not sure.

There is a perception cloud because most of us think that our own comments are the highest-quality ones and so the overall pool of comments appears distorted downward in quality.  But there is one force for Gresham’s law that may swamp any having to do with commenters’ motives.  There are simply more ways to be wrong, off-topic, and crazy than there are to be right, on-topic, and smart.  So even if the sample scales proportionally with audience size, the space of good quality comments will be exhausted quickly leaving the long tail for the riffraff.

Bottom line:  the way to maximize the proportion of good-quality comments is for the bloggers themselves to use up all the crazy ideas at the start.  I like to think Sandeep and I are getting better and better at this.

1. I am trying to sell Elie Tamer on one of my ideas so we can write a paper that would be cited Ely-Tamer.  (ps. I have got some great ideas for anybody whose last name is Jeff.  I will give you first billing.)
2. Couldn’t get a job as a theater critic.

1. I am still trying to convince Sandeep to follow me on Twitter.
2. It’s all part of an experiment which I shall be writing about in a forthcoming paper.
3. Hoping for venture financing for levitating balls.