Here is a more interesting question: is your reaction based on moral grounds, emotions, aesthetic considerations, or something else? In addition, we would ask, what is the probability that this provocative cover will increase (or decrease) the sales of Rolling Stone magazine?
Economist Steven Landsburg recently posed the following Bayesian riddle here.
A murder has been committed. The suspects are:
You are quite sure that one (and only one) of these suspects is the culprit. Moreover, after carefully examining the evidence, you’ve concluded that the odds are 2-to-1 that the culprit is a smoker.
Now your crack investigative team, in which you have total confidence, reports that, on the basis of new evidence, they’ve determined that the culprit is definitely female.
Who’s the most likely culprit, and with what probability?
Here is his solution.
If you could go back in time and share one piece of scientific knowledge from today, what time period would you choose, what would you share, and how might that information change the course of history?
I am a big fan of Bayes’ Rule, so here is my response.
http://commons.wikimedia.org/wiki/File:Time_Travel_Method-2.svg
The great legal scholar Richard Posner once famously asked, “What do judges maximize?” Given all the publicity surrounding the “not guilty” verdict in the trial of George Zimmerman for the murder of Trayvon Martin, I would ask a different question, What do juries maximize? Jurors have not studied the law and are not compensated the full market value of their time, and yet, in most cases, they seem to get it right. Put another way, why don’t jurors behave like self-serving bureaucrats or politicians? Could it be that more altruistic and civic-minded persons self-select into juries? What do you think?
David Segal has just published this fascinating feature on patent-troll extraordinaire Erich Spangenberg in the Sunday Times under the title “Has Patent, Will Sue.”
In brief, a “patent troll” is someone who buys patents and then sues firms for infringing its patents. As Mr Segal puts it in his article, “There is debate about the definition of patent trolls, but the term broadly refers to people who sue companies for infringement, often using patents of dubious value or questionable relevance, and then hold on like a terrier until they get license fees.”
This tactic is especially effective when the price of the license fee is less than the cost of defending a patent-infringement lawsuit. So is this type of shake-down tactic by patent trolls a soft form of extortion (“pay me or else”) or a textbook example of “Coasian bargaining” in which legal rights are allocated to their highest-valued use?
Either way, this example illustrates a potential problem with the Coase theorem: what happens to economic efficiency when parties over-invest in the acquisition of legal rights (such as patents), or what I would call “Coasian rent-seeking,” for the sole purpose of selling those rights later? In other words, if rent-seeking is inefficient in the domain of politics (such as subsidies for ethanol), it should also be inefficient in the domain of patent law as well. But at the same time, the fact that many firms are willing to settle with patent trolls to avoid litigation might be the efficient outcome if these shakedowns encourage inventors to invest in research. It’s hard to say in the abstract which effect will win out.
Economist Terry L. Anderson has been lecturing on “Environmental Markets” these last two days at the Law & Economics Institute sponsored by George Mason University. His argument is simple: instead of treating the environment as an open-access commons, we are better off by assigning property rights to natural resources and letting people trade these rights. In essence, he extends the domain of the Coase theorem to environmental resources. In brief, the Coase theorem is the idea in economics that people will negotiate and enjoy gains from trade when there are no legal or economic impediments to trade. Is this wishful thinking or a tautology?
Congress created this court in 1978, so the real question is, does Congress have the power under the Constitution to create such a secret court? Also, what does this secret court say about our commitment to the rule of law, or is this concept just an empty shibboleth with no real content? Is the FISA court even a “court” in the traditional legal sense of the word?
prior probability‘s second-favorite economist, Tyler Cowen, poses this question here, discussing the pros and cons of Bolivia, Nicaragua, and Venezuela. For our part, prior probability wonders whether this much-publicized list of countries is just a strategic ruse to divert attention from another possible escape plan, such as sneaking (via plane or train) into a country like Serbia, which has no extradition treaty with the U.S.
Update (1 August 2013) — NY Times reports “Defiant Russia Grants Snowden Year’s Asylum”
During the last two days I have been attending some lectures on price theory (or “microeconomics”) at the 29th Annual LEC Economics Institute for Law Professors. I teach torts and constitutional law, and my areas of research are the evolution of conflict and cooperation, so I am fascinated by economic theory, especially the idea called the “Coase theorem,” or the principle that voluntary negotiations are a better way of resolving disputes than the legal process is. I will say more about the Coase theorem in future blogs, but for now, I just want to pose a question that popped into my head today after my 7th or 8th lecture on price theory: do economists really “test” their models when they are engaged in the study of economics? Put another way, is it possible, in principle, to “test” the law of demand or the elasticity of supply?
Consider, for example, iTunes. Why would anyone pay $1.00 or $1.50 to download a song from iTunes when you can easily download the exact same song for free off the internet? This behavior refutes the law of demand, since some fraction of consumers are willing to pay for a good that is available for free. Perhaps the reason for this (irrational?) behavior has to do with the legality of both options. Since music piracy is illegal, the true cost of an illegal download must consider the probability of being caught and punished. But if, as I imagine, this probability is really low, then why doesn’t the iTunes example refute the law of demand? Is music a Giffen good? Is there another ad hoc explanation? Are core economic concepts like the law of demand really testable?
Professor Eric Helland of Claremont McKenna College posed an interesting puzzle during today’s Law & Economics Institute: Why do most brides buy expensive wedding dresses while most grooms most rent tuxedos?
What do you think?
Now, let me ask you a second-order question: Is your answer based on economics, gender preferences, or “culture”? That is, is your answer testable or falsifiable?
FYI, for an economic approach to this question, see here.
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