Sumner on Cowen on Silver on Aaron

Scott Sumner just wrote up a thoughtful analysis of Tyler Cowen’s reply to Nate Silver’s counter-factual thought-experiment about baseball. But we here at prior probability are not so much interested in the original question of Nate Silver’s post (“If Hank Aaron had never hit a home run, would he still be a hall of famer?”). Nor do we wish to challenge Tyler Cowen’s point about strategic behavior (we agree with Tyler) or rehash Scott Sumner’s critique that Mr Silver is simply assuming strategic behavior away in his analysis. What we do wish to discuss here is an intriguing question that Scott poses at the end of his post:

Which of the following should cause us to “think less” of a player’s career:

1.  A pitcher throws lots of spitballs, which the umps fail to notice.

2.  A lineman in football is cleverly able to disguise the fact that he holds defensive players, and doesn’t get called.

3.  A player uses a banned performance enhancing drug that some other players also use.

4.  A player is the only person in baseball to use a certain legal performance enhancing drug (because other players are unaware of it.)

In our view, scenarios #1 and #2 are equivalent (in both cases, the players are cheating but are not getting caught), and we would not “think less” of such players since it takes skill not to get caught cheating. By contrast, the player in scenario #3 is stuck in an arms race with his fellow players (i.e. he has no choice but to use banned drugs in order to compete effectively), so we wouldn’t think any less of him either (indeed, we agree with Scott Sumner that Barry Bonds is the best batter in baseball history). This leaves #4 … we would “think less” of the player in scenario #4 because his success on the field is simply the result of luck and timing.

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Do fake prediction markets work?

There’s a new information quasi-market called SciCast based on “crowd sourcing” methods and reputation effects, not on prices–i.e. participants who make the most accurate predictions move up a symbolic scoreboard but are not paid with real money. You could argue that one well-designed quasi-market is better than a thousand partisan pundits, but without real stakes or wagers, are fake prediction markets doomed to fail in the long run?

Another fake prediction market?

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Should politicians be legally liable for making false campaign promises?

To be more precise, should the tort of fraudulent misrepresentation apply to promises made by politicians running for office? (Put another way, why are most claims of fraud or deceit limited to commercial cases?) One reason politicians are generally not liable for fraud when they make false promises is the common law doctrine of “justified reliance.” In other words, to win a common law fraud case, the allegedly fraudulent statement must not only be material and factual; the plaintiff’s reliance on such statement must also be justified (whatever that means). Since representations of opinion, representations about law, and representations about the future are usually not considered material or factual, most politicians are off the legal hook, so to speak.

So which candidate lied the least?

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Is SeaWorld guilty of false imprisonment?

Right now a controversial piece of draft legislation, Assembly Bill 2140, is pending before the Water, Parks, and Wildlife Committee of the California State Assembly. This bill would require SeaWorld San Diego to stop using killer whales in its iconic marine shows and to release them from their tanks. According to Naomi Rose, a marine mammal scientist with the Animal Welfare Institute, orcas “are too large, too intelligent, too socially complex and too far-ranging to be adequately cared for in captivity”. In its current form, however, the proposed law would not compensate SeaWorld for its losses. Would such a law be constitutional?

In any case, do we really need special legislation to liberate Shamu and the other killer whales currently in captivity? If Ms Rose (the marine mammal scientist quoted above) is correct, isn’t SeaWorld guilty of some form of false imprisonment? (But who would have standing to bring a legal action against SeaWorld for false imprisonment? The District Attorney?) In brief, the tort of false imprisonment occurs when A restrains B in a bounded area without justification or consent. Doesn’t this legal definition accurately describe SeaWorld’s cruel captivity of Shamu?

Help me! I’m being held captive against my will …

 

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Acts of love …

Former Florida Governor Jeb Bush got it right … calling for compassion for illegal immigrants and recognizing that most undocumented workers come to the US to provide for their families: “Yes, they broke the law,” Mr Bush told a reporter, “but it’s not a felony. It’s an act of love … It shouldn’t rile people up that people are actually coming to this country to provide for their families.” This doesn’t sound like a man who is running for office. But if he does, and if he wins, would a Jeb Bush presidency produce any real changes in US immigration policy? Probably not. After all, Republicans controlled the White House, both houses of Congress, and the politically-active Supreme Court from 2001 to 2006, yet federal spending went up and not a federal government agency was cut during that bygone era. Nevertheless, prior probability applauds Mr Bush for appreciating the plight of most undocumented workers …

We are all Americans …

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Shouldn’t Smith & Wesson and the maker of Ambien be legally liable for the recent Fort Hood massacre?

Many reports indicate that the gunman, Ivan Lopez, had been prescribed the drug Ambien when he killed four men (including himself) and injured 16 others on 3 April 2014 with his .45-caliber Smith & Wesson pistol. This senseless massacre of innocent people raises an important legal question. Why can’t the victims and their families sue Smith & Wesson as well as the manufacturer of the drug for their losses? If you think it’s unfair to extend liability so far, isn’t it more unfair to let the loss lie where it falls, to borrow Oliver Wendell Holmes’ famous phrase?

So, sue us!

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What % of basketball and football games are fixed?

The fraction or number of such games has to be greater than zero, but how much greater? By way of example, do you detect any suspicious patterns or red flags in this box score of the Huskies’s 63-53 Final Four upset victory over the Gators yesterday evening?

You can read much more about various mathematical and statistical techniques (such as selective sampling) to detect cheating in sports herehere, and here too. (Image courtesy of Justin Wolfers.)

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Litigation and the game of poker

As we note in our 2012 working paper The Poker-Litigation Game, the process of legal litigation shares many important features in common with the game of poker:

1. Both poker and litigation are strategic games, that is, competitions in which the players/litigants must make their choices and decisions independently of each other.

2. Both activities are zero-sum or non-cooperative games in which the economic interests of the players/litigants are opposed. (Of course, although both parties in a given legal case may have a strong interest in settling rather than going to trial, we submit that this does not change the overall adversarial nature of the legal process.)

3. Both are games of incomplete information–just as a player in a game of poker does not know with certainty when another player is “bluffing,” a litigant in a civil or criminal case may not know with certainty the strength of his adversary’s case during pre-trial negotiations. (As an aside, there is no doubt that pre-trial discovery rules are designed to reduce this level of uncertainty in litigation, but it’s not clear to us by how much this uncertainty is reduced by modern discovery.)

4. Both games involve substantial elements of chance or luck: e.g. random assignment of the cards in poker; random selection of judges in civil and criminal cases. (Even the process of jury selection is somewhat random, based more on guesswork and hunches than anything else.)

Can you think of any other similarities or differences between the game of poker and the process of litigation?

 
 Litigation hold’em?
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Information asymmetry (Kremlin edition)

The West has no idea what Russia is willing to do, but Russia knows exactly what the West will – and, more important, will not – do. This has created a dangerous asymmetry, which could spell disaster for the international order that has existed since the end of the Cold War.

This perceptive quotation is from Ivan Krastev’s insightful critique of the free world’s weak and pusillanimous response to Russia’s illegal annexation of the Crimea. By the way, George Akerlof was the first theorist to model the phenomenon of information asymmetry in his classic 1970 paper The Market for Lemons: Quality Uncertainty and the Market Mechanism. Although Akerlof’s simple game-theoretic model was designed to explain the effect of quality uncertainty in the market for used cars, the problem of uncertainty (as well as the problem of information asymmetry generally) has many applications in many different and unrelated areas of life, such as the decision in law whether to settle or go to trial (*) … Can you think of any other applications?

Don’t f*** with me!

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Why do consumers still purchase GM cars? *

According to this working paper by professors Susan Helper and Rebecca Henderson in the Harvard Business Review, GM’s market share in the US fell from 62.6% to 19.8% between 1980 and 2009 … In other words, a large fraction of US consumers are still buying GM cars. But why? Do GM-loyal consumers refute the “rational choice” model of economics? As Tyler Cowen noted yesterday in this post on his top-notch Marginal Revolution blog, “The market here is working, but oh so slowly. I would like to see behavioral economics papers on why so many people continued to buy General Motors (and here I mean the standard cars) for as long as they did.”

* By the way, the same question can be asked about Internet users who still rely on Yahoo, Hotmail, or AOL for their email instead of switching to Gmail.  In either case (automobiles or email accounts), do such simple explanations as “path dependence”, brand loyalty, or advertising provide satisfactory answers?

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