“The coinflipper’s dilemma”

That is the title of this little paper by economist Steve Landsburg. In his blog post with the same title, Professor Landsburg introduces the coin-flipper’s dilemma with this story:

When I was in high school, my English teacher must have had a free period at the time when my math class met, because every day he would march into the math class and empty his pockets on the table, whereupon my math teacher did the same. Then whoever had put down the most money scooped up everything on the table. I am ashamed to admit that it took me until this summer to think about computing the equilibrium strategy is in that game …

If you were the English teacher (or in the alternative, if you were the math teacher), how would you play this game?

Let’s start with some small questions, shall we?

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Who is an American?

Anyone who lives in the Americas, including but not limited to citizens of the United States. People in the U.S., however, like this culturally-insensitive law professor, often use the term “American” to refer exclusively to themselves. But this is wrong and blatantly offensive … An American — or un americano in Spanish — is anyone who calls North, South, or Central America home. Or, as David Post writes in this beautiful blog post:

Brazilians and Colombians and Argentines are “Americans,” because they are from the Americas. There are many circumstances … where the meaning of the term “American” is not clear from the context at all, and it would be extremely helpful to distinguish between features that are common to all “Americans” (including those who live in places other than the US) and those belonging specifically to one of the American nations (i.e., the US) …

Thank you Professor Post.

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Where in the universe is our home galaxy?


If this video is worth four minutes and 11 seconds of your time, then you pass our “intellectual curiosity” test.

Posted in Science | Tagged , , | 2 Comments

Forget 9/11?

We are re-blogging our 9/11 post from last year, which in turn re-blogged Robin Hanson’s eloquent anti-9/11 post. Aren’t public commemorations of 9/11 defeatist and counter-productive, sending the wrong signal to our enemies? Isn’t it time to move on? If not, when?

F. E. Guerra-Pujol's avatarprior probability

This week marks the 12th anniversary of the terrible events that took place on the morning of 11 Sept. 2001 in the United States … and the 40th anniversary of the terrible events of 11 Sept. 1973 in Chile (see the image below, depicting the moment when Chile’s Presidential Palace was bombed). The Republic of Chile has since become a prosperous constitutional democracy. What has the US government accomplished in the 12 years since 9/11?

prior probability is also reblogging this thought-provoking post by Robin Hanson at Overcoming Bias:

<< In the decade since 9/11 over half a billion people have died worldwide. A great many choices could have delayed such deaths, including personal choices to smoke less or exercise more, and collective choices like allowing more immigration * * * Yet, to show solidarity with these three thousand victims, we have pissed away three trillion dollars ($1 billion per victim), and trashed long-standing…

View original post 75 more words

Posted in Bayesian Reasoning, Current Affairs | 1 Comment

The Airplane Seat Dilemma

Times writer Josh Barro and cultural economist Tyler Cowen have recently used the so-called Coase Theorem to analyze the economics of cheap airplane seats — the ones with little leg room, so that reclining your seat imposes a non-trivial cost on the person behind you. Recall that, as Mr Barro deftly explains in his essay Don’t want me to recline my airline seat?, the Coase Theorem is an economic theory holding that it doesn’t matter who is given a property right at first (such as the right to recline your seat, or in the alternative, the right not have the seat in front of you recline), for so long as the right in dispute is clearly defined and negotiation costs are low, people will generally trade the right so that it ends up with the person who values it most.

In his Coasean analysis of airplane seats, Mr Barro thus writes: “When you buy an airline ticket, one of the things you’re buying is the right to use your seat’s reclining function. If this passenger so badly wanted the passenger in front of him not to recline, he should have paid her to give up that right.” The problem with this analysis, however, is that property rights are, in fact, not “clearly defined” in this situation. Although we understand Mr Barro’s argument, one could also argue that when you recline your seat, you, the seat recliner, are trespassing the property rights (i.e. leg room) of the person behind you.

For his part, Tyler Cower commits a common error by downplaying or ignoring (take your pick) the reciprocal nature of the airline seat problem when he writes in his post The economics of reclining your airplane seat: “Relative to current norms, who does more to make the whole question ‘an issue’ — the seat recliner or the purchaser of the recliner-blocker? Clearly it is the purchaser of the blocker and thus Josh Barro is broadly in the right, the norm should continue to allow people to recline their seats as that minimizes fuss, which is more important than getting the right outcome with the seat itself.” Contrary to Professor Cowen’s analysis, this is a reciprocal problem — i.e. a problem jointly caused by both parties — because, yes, although the person who purchases a “recliner-blocker” is imposing a cost on the person in front of him (by preventing that person from reclining his seat), at the same time the person in front (by reclining his seat) is also imposing a cost on the person behind him.

For our part, we would not apply the Coase Theorem to cheap airplane seats, except to note that the problem is indeed a reciprocal one. Instead, we would apply a different model, the Prisoner’s Dilemma. In brief, airline passengers in cheap seats are locked into a Hobbesian Prisoner’s Dilemma (Hobbesian because there is no central authority with the power to enforce law mid-flight) because, when you recline your seat, you are “defecting” instead of “cooperating” (to use the terminology of game theory). The first passenger to recline his or her seat, in effect, defects from the implied social contract in economy class (aka “steerage”) to respect other people’s leg room rights. Moreover, this perceived affront to one’s rights (“perceived” because the problem is ultimately a reciprocal one) creates an obstacle to Coasean bargaining … The lesson here, to us at least, is to not be the first to defect.

Dude, don’t be the first to defect!

Posted in Current Affairs, Game Theory | Tagged , , | 5 Comments

In defense of Ray Rice’s legal rights

We offer the following three-part commentary in response to the Ray Rice witch-hunt:

1. Self-righteous TV news anchors and the news media generally have now milked the unfortunate Ray Rice affair for all it’s worth by airing the infamous elevator surveillance video countless times. (We refuse to link to it.) Hasn’t the media — and by extension all of us who have watched the video out of morbid curiosity — invaded Janay Palmer’s privacy and human dignity, who everyone professes so much hypocritical concern for?

2. NFL Commissioner Roger Goodell has now suspended Mr Rice from the field “indefinitely” (see Tweet below).  In addition to being retroactive and unfair, doesn’t this unilateral suspension lack any pretense of due process and violate the Commissioner’s own “new” (and knee-jerk) domestic-violence policy (consisting of a six-game suspension for a first offense)?

3. The owner of the Ravens has now unilaterally terminated his team’s contract with Mr Rice for his off-the-field conduct. Isn’t this a flagrant breach of contract for which Ray Rice is entitled monetary damages?

We conclude with some rhetorical questions: Whatever happened to “due process” and “rule of law”? Are those empty terms to be applied selectively? Apparently, the answer to this second question is now “yes” if you are caught doing something bad on video or on audio tape.

https://twitter.com/jbarro/status/509366033090875393

Posted in Current Affairs, Law, Sports | Tagged , | 4 Comments

Jadeveon Clowney and the future of forecasting

Sportswriter David Levin identified three reasons why defensive end Jadeveon Clowney might turn out to be a “bust” or bad draft pick for the Houston Texans. Although it remains to be seen at this early stage how Clowney’s pro-football career will turn out, the Clowney draft pick poses an important theoretical and practical question: how can teams forecast the future of their players?

Bayesian Update (4 July 2019): Although Jadeveon Clowney got off to a rough start, he has since more than lived up to expectations. More importantly, could we apply the Bayesian forecasting methods developed by Philip Tetlock (see here for a summary) to the world of sports?

 

 

Posted in Bayesian Reasoning, Sports | Tagged | 2 Comments

Scottish non-independence prediction markets

The Scottish Independence Referendum is scheduled to take place on 18 September 2014. Some survey polls put the “Yes” vote (in favor of Scottish Independence) at 51%. Prediction markets, by contrast, are less sanguine (see tweet above) about a pro-independence victory. What gives? On another note, shouldn’t tradition and the 1707 Acts of Union count for something? Shouldn’t the “Yes” vote require at least a two-thirds super-majority, not a simple majority? (Hat tip, again, to the amazing Tyler Cowen.)

Posted in Bayesian Reasoning, Current Affairs, Politics, Voting | Tagged | Leave a comment

Does Amazon make a profit?

According to this economic analysis of Amazon’s business model by Benedict Evans, the answer is “not yet” … because Jeff Bezos has adopted a “closed-loop” strategy of re-investing all of Amazon’s revenues back into his company in order “to capture a larger and larger share of the future of commerce.” Here is one revealing excerpt from Ben Evans’s essay (with thanks to Tyler Cowen for the pointer and Jeff Bezos for the diagram):

So, we have dozens of separate businesses within Amazon, and over two million third party seller accounts, all sitting on top of the Amazon fulfillment and commerce platform. Some of them are mature and profitable, and some are not. And someone at Amazon has the job of making sure that each quarter, this nets out to as close to zero as possible, at least as far as net income goes. That is, the problem with net income is that all it tells us is that every quarter, Amazon spends whatever’s left over to get the number to zero or thereabouts … If you listen closely, Amazon itself tells us this. The image below comes straight from Amazon — originally it was a napkin sketch by Jeff Bezos. Note that there’s no arrow pointing outwards labeled  ‘take profits.’ This is a closed loop.

(Source: Amazon)
Where’s the profit arrow?
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Trolley problems

Here is the 34-word abstract of our latest paper, a work-in-progress with the title “Trolley Problems“:

This paper proposes a novel and probabilistic solution to the famous “trolley problem” in moral philosophy. In short, we would solve the trolley problem by conducting an auction from behind a veil of ignorance.

We have been thinking about trolley problems (there are at least two standard versions of the problem), off and on, since the summer of 2005. Our thinking has evolved during this time, and our paper will finally be published in the Drake Law Review Discourse this fall.

           What trolley?

Posted in Bayesian Reasoning, Economics, Philosophy | Tagged , | Leave a comment