Games

Theresa May has indicated that Brexit could be delayed as she said she will not trigger the formal process for leaving the EU until there is an agreed “UK approach” backed by Scotland.

The Prime Minister on Friday travelled to Scotland to meet Nicola Sturgeon, the First Minister, and discuss plans for Britain’s Brexit negotiation.

In a sign that the new Prime Minister is committed to keeping the Union intact, she said she will not trigger Article 50 – the formal process for withdrawing from the EU – until all the devolved nations in the country agree.

That is from The Daily Telegraph.  Here is my previous post on whether Article 50 ever will be invoked.

Here is Erik Hurst, from an excellent piece profiling Erik Hurst:

Right now, I’m gathering facts about the possible mechanisms at play, beginning with a hard look at time-use by young men with less than a four-year degree. In the 2000s, employment rates for this group dropped sharply – more than in any other group. We have determined that, in general, they are not going back to school or switching careers, so what are they doing with their time? The hours that they are not working have been replaced almost one for one with leisure time. Seventy-five percent of this new leisure time falls into one category: video games. The average low-skilled, unemployed man in this group plays video games an average of 12, and sometimes upwards of 30 hours per week. This change marks a relatively major shift that makes me question its effect on their attachment to the labor market.

To answer that question, I researched what fraction of these unemployed gamers from 2000 were also idle the previous year. A staggering 22% – almost one quarter – of unemployed young men did not work the previous year either. These individuals are living with parents or relatives, and happiness surveys actually indicate that they quite content compared to their peers, making it hard to argue that some sort of constraint, like they are miserable because they can’t find a job, is causing them to play video games.

This problem, if that is the right word for it, will not be easily solved.

Or will it at all?

With the resignations of Cameron, Boris Johnson, and now Farage, it seems few leading politicians are keen to “own” Brexit and its consequences.  If those individuals wish to step back from accepting the consequences of Brexit, might that tendency spread more generally?

If your thoughts run along the lines of “they have to do this, otherwise there will be violence in the streets,” or “they have to proceed with Article 50, otherwise British government will have no legitimacy,” I say Beware The They!

They, they, they.  Try he and she.  Word on the street these days is that Article 50 won’t even be seriously considered before the French and German elections, which means Fall 2017 at the earliest.  OK, so let’s say it is October 2017, and Brexit is more unpopular because the intervening uncertainty has created a recession.  Do you, as an individual British legislator, wish to claim an ownership of the process at that point?  If Farage didn’t want to own it, and so quickly realized that, why should you pick up the bag?  Yes I know most individual constituencies, evaluated as constituencies, were pro-Brexit.  But they were also anti-recession and anti-chaos, and so you must choose between giving them the means they want and giving them the ends they want.

It’s already being debated whether Article 50 invocation requires an Act of Parliament or not.  I can’t judge the constitutional issue (can anyone?), but practically speaking it seems to me that if Parliament says it requires their explicit consent than it does.  Similarly, if Parliament washes its hands of the matter, who or what can overrule them and make them vote if they don’t want to?  So I see a few scenarios in this multi-stage game:

1. Parliament wants no vote in the matter, and claims it doesn’t have to vote.  In this scenario, the new PM may not act on it either.  Note that Theresa May was originally pro-Remain, she will believe that Article 50 will worsen the recession and thus her electoral prospects, and she wouldn’t have parliamentary approval as cover for pushing the nuclear button.  If I were in Parliament, with a moderately pro-Leave constituency, I would be rooting for this scenario.  No one acts, but everyone can blame other parties for not acting.

2. Parliament cannot run away from its voting rights, or even positively seeks to assert them.  Under this scenario, commentators may suggest that Parliament as a whole has to desire Brexit, if only to keep its legitimacy.  But recall that before the referendum, Parliament as a whole was about 3-1 pro-Remain.  Why chase after a voting right you don’t wish to have?  If Farage didn’t want to stick around for such an outcome, why should you?  So vote Remain, claim you had initially campaigned along with pro-Remain forces, claim you are sticking to your original electoral mandate, and see what happens to your political future.  Say it is “the others” who are detaching Parliament from the will of the people.

3. The 2017 PM and Cabinet take to the British people an alternative, non-EU vision of what Leave would look like, but they don’t lie too much to make it look so great.  They hold a second referendum, not on Leave vs. Remain per se, but on whether that is a satisfactory target option for a Leave scenario.  In fact they can design the plan to fail simply by being somewhat realistic.  The option fails, and the politicians claim everyone has to go back to the drawing board.  I get sick of my Twitter feed being full of so much Brexit talk for so many years, and I stop following so many British people.

4. The trickling, tortuous uncertainty through Fall 2017 is so economically costly that everyone realizes a decision must be made and soon.  “Leave” is the only decision which is focal, because of the referendum, and so Leave is set in motion and Article 50 is invoked.  You will note that this scenario, while it sounds plausible, is a bit at odds with waiting until Fall 2017 to begin with.  So the reality of waiting today has to lower the probability of this one somewhat.

5. The trickling, tortuous uncertainty through Fall 2017 is so economically costly that everyone realizes a decision must be made and soon.  “Leave” is a more focal decision, but it still takes years to negotiate and consummate, thereby ensuring the uncertainty continues to kill the British economy.  “Leave” therefore is discarded through political shenanigans and Remain rules the day because only the status quo ex ante can be brought about so quickly.

6. In the meantime, the EU does something really stupid, which includes the steady insulting of the British people and government, and almost everyone in the UK wants to leave by Fall 2017.

6b. In the meantime, Putin does something really stupid, and English opinion shifts strongly to Remain and Remain comes about through emergency national security channels.

7. In the meantime, the French and German elections require those governments to reassert at least partial control over their borders vis-a-vis immigration.  This right is then offered to the UK, if only verbally, and the support for Leave more or less collapses.  There is the beginnings of negotiation for a new EU treaty, in the meantime a bunch of EU nations including the UK break the rules of the old treaty, yet without being punished.  This strikes me as one of the more plausible scenarios.

I get how #4 and #6 pretty clearly lead to actual Brexit, as does one branch of #2, but when you look at these scenarios as a whole, I don’t think the chances for an actual Brexit are so overwhelmingly high.  The key obstacle is getting so many pro-Remain legislators to attach their names and reputations to a scenario which Johnson and Farage already are running away from.  That is just not so easy.

Didn’t the Sex Pistols sing about “…now I got a reason to be waiting”?

Yes, British legislators do have a reason to be waiting.  They are waiting.  Should that reason become stronger or weaker over time?  Why think that “weaker” is so obviously the correct predictive answer?  There is no clear deadline forcing their hand.

In the 1960s and 70s, America and the UK had riots all the time.  I’m not saying this is good!  (Though it did lead to an excellent Clash song.)  But once underway, in fact it is politically acceptable in many situations, or sometimes even politically desirable.

Addendum: Here are a few more points to consider:

a. Parliamentary systems behave very differently when off their steady-state stability path.  There is now a power vacuum, no courts to produce definitive rulings, and the executive and legislative branches of government end up as bankrupt at the same time and in the same ways.  Things are stuck and the traditional local comparative statics simply do not work.  So our usual intuitions for what is supposed to happen in British politics may not be so reliable, and indeed few people had predicted the outcomes the country has received so far, including all the resignations.

b. The status of the Queen will either go up a lot or down a lot.  Many people still believe, if only in inchoate form, that she is there for moments of constitutional crisis.  But a moment of truth is coming where she will have to cough up her creative ambiguity, or not!  If she does nothing, which I consider the more likely scenario, the monarchy will become all the more irrelevant.  If she issues a pronouncement of some kind, she will either be a grand heroine or look pretty bad.

c. In some ways the EU had taken on the “backstop” role formerly held by the British monarchy.  This is not widely understood.  And indeed without the EU, it seems British politics is quite chaotic.  This is a huge embarrassment for the Leave forces, and few if any of them foresaw this or are willing to admit this now.  But that is in fact how British politics has been evolving over decades.  To a keen reader of Bagehot, however, this does not come as a surprise, and it is another reason why the Leave vote was a huge mistake.

Optical Illusion of the Year

by on July 3, 2016 at 4:55 pm in Games, Science | Permalink

Fifty Japanese graduates opted to gamble with their job prospects at a mahjong tournament set up by recruiters looking for a different way to find the next high flyer.

Held in a crammed mahjong outlet in downtown Tokyo, prospects competed against each other on Friday (June 24) to gain the chance to face recruiters from six companies in the fitness, education, technology and real estate sectors.

“Mahjong is a very strategic game, so I think people who are good at it would be good at marketing. This is a new approach and I find it really interesting,” candidate Tomoko Hasegawa, who is aspiring to become a designer, told Reuters.

Here is more, via Edward Craig.

Here is from MIT Technology Review, surveying research on chess blunders and cognition by Ashton Anderson at Microsoft Research in New York City, Jon Kleinberg of Cornell, and Sendhil Mullainathan:

…Anderson and co have found evidence of an entirely counterintuitive phenomenon in which skill levels play the opposite role, so that skillful players are more likely to make an error than their lower-ranked counterparts. The team call these “skill anomalous positions.”

That’s an extraordinary discovery which will need some teasing apart in future work. “The existence of skill-anomalous positions is surprising, since there is a no a priori reason to believe that chess as a domain should contain common situations in which stronger players make more errors than weaker players,” say Anderson and co. Just why this happens isn’t clear.

I don’t, by the way, find the concept of skill anomalous positions to be so surprising.  Better chess players have more “chunking” and more intuitions.  Usually that knowledge adds value, but in a variety of counterintuitive positions it can lead players down the wrong paths.  For instance a beginner probably does not know that on average a Queen and Knight working together are more effective than a Queen and Bishop, yet this is not always true and the less tutored intuition will sometimes prove correct.  Similarly, the better player may think that an endgame of Bishops of opposite color is more likely to be drawn, and often that is true.  Yet in other situations those ill-matched Bishops can yield an attacking advantage to the player with the better command of space, and so on.

I believe there are analogous concepts for economics and also philosophy, probably for other disciplines too.  For instance in economics I wonder if a person with less knowledge of open economy macroeconomics might sometimes end up making better forecasts.  Many anti-elitist theories of politics imply these phenomena can be true in a broad range of situations, Brexit for instance according to some.

Cornwall has issued an urgent plea for reassurance that it will not be worse off following the Brexit vote.

The county has received a “significant amounts” of funding from the EU for the past 15 years due to its “relatively weak economy”.

But, after 56.5% of voters in the county chose to leave the Union, the council says it is now seeking urgent reassurance that money allocated to it will still be received.

Prior to the vote the Council said they were told by the Leave campaign that funding would still be available.

They also said they had been told Cornwall “would not be worse off” in terms of investment they received.

Here is the link.  Overall the regions most dependent on the EU economically were most likely to vote for Brexit.

It seems we search more for jokes in better, cheerier times:

…Monday is actually the day we are least likely to search for jokes. Searches for jokes climb through the week and are highest on Friday through Sunday. This isn’t because people are too busy with work or school on Mondays. Searches for “depression,” “anxiety” and “doctor” are all highest on Mondays.

Second, I compared searches for jokes to the weather. I did this for all searches in the New York City area over the past five years. Rain was a wash, but there were 6 percent fewer searches for jokes when it was below freezing. There were also 3 percent fewer searches for jokes on foggy days.

Finally, I looked at searches for jokes during traumatic events. Consider, for example, the Boston Marathon bombing. Shortly after the bombing, searches for “jokes” dropped nearly 20 percent. They remained almost as low in the days after the attack, including the Friday when Boston was in lockdown while the authorities searched for the bomber who was still on the loose. They didn’t return to normal until two weeks later.

Sure, some other entertainment searches, like “music” and “shopping,” also dropped after the bombing. Declines in these searches, however, were smaller than declines in searches for jokes, and some entertainment searches, like “games,” actually rose during the manhunt.

That is from Seth Stephens-Davidowitz (NYT).  I am mostly convinced, in part because of the Boston data, still I wonder how much searching for jokes is in fact correlated with better moods.  I would think of myself as being in a rather sad state if I had to find humor from impersonal sources on-line, rather than from people I know.

The final and deciding chess games are today, 8 a.m. EST, with Caruana and Karjakin in the lead and fortuitously playing each other in the final round.  The winner has the right to play Magnus Carlsen for the world championship in New York this November, or Karjakin wins on tiebreak if there is a draw (unless on another board Anand wins, then a draw elevates Caruana; don’t tell Ken Arrow!).  We have been learning a few things:

1. The English and Giuoco Piano are not bad openings if you are playing for a win; only first prize in this tournament counts for much, due to the embedded challenge option.

2. Risk-aversion does indeed vary with the prize environment — the Berlin defense has not been popular and every game has been hard fought.  That said, Anish Giri probably holds a lot of T-Bills in his portfolio.

3. Vishny Anand at age 46 (!) was in strong contention until the final round, which is remarkable for a contest so heavily biased toward youth.

4. I don’t think a disproportionate number of Americans are rooting for Fabiano Caruana, an American-born but Italian-raised dual citizen who was induced by financial support to play under the American flag.  The brilliant but emotionally immature Hikaru Nakamura, from White Plains N.Y., did poorly.  Nonetheless America has two of the top eight spots.

5. Today we’ll get to see whether individuals really do make better decisions when the stakes are high.  At least they have not been playing the King’s Indian.

6. Given how complicated are the rules for tie break, and the lack of clarity for handling a three-way tie, there is a chance the eventual winner will not be considered a fully meritocratic victor.  (Plus neither Caruana nor Karjakin could handle a rook and bishop vs. rook endgame correctly in the penultimate round.)  Send a DVD of Apocalypse Now, and ask for a sudden death playoff in lieu of tie-breaking rules.  Someone needs to go down in dramatic fashion, rather than having it look like the three stooges stumbling exhausted toward the finish line.

You can follow along at www.chessbomb.com, with computer commentary, www.chessbase.com for background context.

Zack Beauchamp reports:

On Friday morning, a US air strike killed Abu Alaa al-Afri, a senior leader in ISIS, whom the US says it considers the organization’s second-ranked leader.

This isn’t the first time that al-Afri has been reported dead — though the US government has allegedly verified his death.

But if (as seems likely) al-Afri is dead, this will be yet another instance in which ISIS’s number two official has been killed. In August of last year, for example, a US airstrike killed Fadhil Ahmad al-Hayali, then identified as the group’s number two.

This continues a trend that news consumers may recognize from counterterrorism efforts against al-Qaeda, in which the group seemed to lose one third-in-command (after Osama bin Laden and Ayman al-Zawahiri) after another.

As some Twitter wags noted, this all hearkens back to a 2006 Onion article, “Eighty Percent Of Al-Qaeda No. 2s Now Dead.”

As Zack mentions, there may be reasons why the #1 is harder to find and kill, but I would suggest a complementary hypothesis.  At many points in time there is more than one #2, just as corporations may have a variety of Executive Vice Presidents.

If you a leader of a terror group, do you really want a well-defined #2 who is a focal alternative and who can move to overthrow you?  Or do you prefer seven competing #2s, with somewhat unclear status, whom you can play off against each other, or make compete against each other, and offer various sticks and carrots and promotions of influence against each other?

And let’s say that one of these #2’s is killed.  How will the United States report this?  “One of seven #2’s has been killed”?  Or perhaps the easier to communicate and more important sounding “We have taken out number two.”

On Wikipedia, the (a?) previous #2 of ISIS is described as “Deputy leader of ISIL?“, question mark in the original.

Here is one look at the command structure of ISIS (or try this alternative).  I cannot vouch for its accuracy, but it is one quick way to see that “#2” is perhaps not always so well-defined:

One concrete implication is this: the more number twos there are, the more likely you can kill one of them.  And those are exactly the same circumstances when killing a number two has a low marginal return.  Keep in mind that the kill is endogenous, and it could be indicating that one of the stronger #2s has strengthened his hand by betraying one of the weakies and getting the West to do the dirty work.  And that kind of competition across subordinates may be precisely what strengthens the hand of the leader.

Russia Bans Queue

by on March 24, 2016 at 7:30 am in Current Affairs, Economics, Games | Permalink

Kolejka (queue) is a Polish board game based on life under communism.

The players line up their pawns in front of the shops without knowing which shop will have a delivery. Tension mounts as the product delivery cards are uncovered and it turns out that there will be enough product cards only for the lucky few standing closest to the door of a store. Since everyone wants to be first, the queue starts to push up against the door. To get ahead, the people in the queue use a range of queuing cards, such as “Mother carrying small child”, “This is not your place, sir”, or “Under-the-counter goods”. But they have to watch out for “Closed for stocktaking”, “Delivery error”, and for the black pawns – the speculators – standing in the queue. Only those players who make the best use of the queuing cards in their hand will come home with full shopping bags.

…In this realistic game you really have to be savvy to get the goods.

The game was initially developed by Poland’s Institute for National Remembrance to teach about life under communism but the game became an unexpected hit and has since been translated into English, French, Japanese and Russian among other languages.

The Russian government, however, is not amused and have banned the game.

IPN reported that Russia’s consumer watchdog Rospotrebnadzor warned that the game is perceived as “anti-Russian” and excessively critical of the Soviet system. Russian authorities asked Trefl, the company who bought the game’s license from IPN, to either remove the direct historical references from it or risk getting the product banned.

“IPN did not agree to the implementation of these changes and that is why Kolejka is no longer in Russian shops,” a statement by IPN reads.

I imagine the Russians wouldn’t like Kremlin either.

Addendum: A lot of Americans could use some reminders about price controls and socialism, fortunately you can download and print Kolejka in English here (scroll down).

That’s Monopoly the board game.  Here is the latest:

We may be used to paying for goods at the touch of a card or phone in shops, but now quick and easy electronic payments are making their way to the Monopoly board too.

The Monopoly Ultimate Edition replaces fake notes with an ATM and every part of the game is ‘swipe-able or scan-able’, to bring the board game into the 21st century.

The battery-operated system is designed to speed up the process of making payments to other ruthless players, as well as cut down on cheating.

By the way, there is no great stagnation:

It is not the first time Hasbro has launched an electronic edition of the iconic board game, with two previous versions on sale.

But reviews criticised the firm for slowing the game down, in part due to players having to manually enter sums of money on a fiddly ATM keypad.

The Ultimate Banking Edition will cost $25 (£29.99) when it goes on sale in the autumn.

The full story is here, via the excellent Mark Thorson.

Tobias J. Moskowitz has a recent paper on this question, the results are illuminating:

I use sports betting markets as a laboratory to test behavioral theories of cross-sectional asset pricing anomalies. Two unique features of these markets provide a distinguishing test of behavioral theories: 1) the bets are completely idiosyncratic and therefore not confounded by rational theories; 2) the contracts have a known and short termination date where uncertainty is resolved that allows any mispricing to be detected. Analyzing more than a hundred thousand contracts spanning two decades across four major professional sports (NBA, NFL, MLB, and NHL), I find momentum and value effects that move betting prices from the open to the close of betting, that are then completely reversed by the game outcome. These findings are consistent with delayed overreaction theories of asset pricing. In addition, a novel implication of overreaction uncovered in sports betting markets is shown to also predict momentum and value returns in financial markets. Finally, momentum and value effects in betting markets appear smaller than in financial markets and are not large enough to overcome trading costs, limiting the ability to arbitrage them away.

SSRN and video versions of the paper are here.  The underlying idea here is neat.  The marginal utility of consumption is unlikely to be correlated with the outcomes of sporting events, so we can test some propositions of finance theory without having to worry much about those risk factors.  Lo and behold, a version of momentum results still holds up.  And if you would like an exposition of that approach, do see my earlier dialogue with Cliff Asness.  And here is Cliff on Fama on momentum.

Although Stockfish and Komodo have differences in their evaluation scales—happily less pronounced than they were 1 and 2 years ago—they agree that the world’s elite made six times more large errors when on the lower side of equality.

We don’t know how general this phenomenon is, but interestingly it seems to hold much more strongly for top players than for weak players.  That is from chess of course.

Here is much more detail from Ken Regan, along with some suggested hypotheses and resolutions.

Go Has Been Broken

by on January 28, 2016 at 7:26 am in Economics, Games, Science | Permalink

Tic-tac-toe fell in 1952, checkers in 1994, chess in 1997 and it now looks like Go, the ancient Chinese game that has a search space many, many times greater than chess, has fallen to a new AI from Google.

Go…our program AlphaGo achieved a 99.8% winning rate against other Go programs, and defeated the human European Go champion by 5 games to 0. This is the first time that a computer program has defeated a human professional player in the full-sized game of Go, a feat previously thought to be at least a decade away.

Importantly, AlphaGo isn’t based primarily on searching a huge space but on deep neural networks that learned first from human players and then from simulated play with itself. The techniques, therefore, are not limited to Go.

AlphaGo will face its greatest challenge in March.

AlphaGo’s next challenge will be to play the top Go player in the world over the last decade, Lee Sedol. The match will take place this March in Seoul, South Korea.

Win or lose, I will bet that Lee Sedol is the last human champion the world will ever know.