Month: November 2012

Ethical software up for grabs

Does your car swerve off the bridge or plough through the nearby crowd?  In case of an impending accident, which ethical standards will govern your driverless car?  (Which govern you?)  “And over here, at a price discount, is the Peter Singer Utilitarian Model.  The Roark costs $800 more.”

Or perhaps it will be put up to a vote, or handed over to OIRA.  California can run a referendum.  Alex earlier called this the Google Trolley problem, after the famous philosophical conundrum.

Joshua adds in the comments: “Can’t we just give the robot cars like three general guidelines and let them figure out the details on their own?”

For the pointer I thank Gordon H.

Why do older players commit more technical fouls in basketball? (model this)

Surprisingly, the average player gets whistled for more technicals each season they are in the league, according to Stats LLC. For instance, rookies average less than one technical. That number grows to an average of two technical fouls by the third year of a player’s career, and to more than three technicals by the fifth. Players average closer to four technicals per season upon reaching their 12th year.

Why the additional whistles? A primary reason: Players get ruder as they get older.

“Guys will call you ‘Mister’ early in their career, then they develop a comfort level to where it becomes a first-name basis,” said retired official Steve Javie, now an ESPN analyst. “They’re more comfortable talking to you, and sometimes that leads them to express their emotions a bit too much at times.”

The technical-foul disparity is most pronounced for players who enter the league as high draft picks.

Here is more.  What are the other implied predictions of this model?  And this is interesting too:

While players get more technicals the longer they stay in the league, coaches do the opposite. The average NBA coach picks up six technicals a season his first six years on the job before mellowing out. Those who coach 13 years or more average fewer than four techincals per season.

Are Prediction Markets Against the Public Interest?

Here is more on the CFTC’s attack on Intrade:

Why doesn’t Intrade just obey the complicated law and become a licensed exchange? They tried, but the CFTC won’t give them a license. When an established, licensed U.S. commodity exchange applied for permission to do what Intrade does, the CFTC turned them down, too.

Most importantly, in rejecting Nadex’s application to trade “political event derivatives contracts” the CFTC said this:

As a result of reviewing the complete record, the CFTC determined that the contracts involve gaming and are contrary to the public interest…

Thus the CFTC’s attack on Intrade is not about following or not following a particular regulation; it goes much deeper, the CFTC is arguing that all such markets are against the public interest.

Addendum: Kenneth J. Arrow, Robert Forsythe, Michael Gorham, Robert Hahn, Robin Hanson,
John O. Ledyard, Saul Levmore, Robert Litan, Paul Milgrom, Forrest D. Nelson,
George R. Neumann, Marco Ottaviani, Thomas C. Schelling, Robert J. Shiller,
Vernon L. Smith, Erik Snowberg, Cass R. Sunstein, Paul C. Tetlock, Philip E. Tetlock,
Hal R. Varian, Justin Wolfers, and Eric Zitzewitz disagree with the CFTC (among others).

The culture that is Beverly Hills, vending machine markets in everything

Beverly Hills Caviar has unveiled its first touch-screen vending machine at the Burbank Towne Center, offering “a large selection of the world’s finest selection of caviar, truffles, escargot, bottarga, blinis, oils, Mother of Pearl plates and spoons, gift boxes and gourmet salts.”

Prices range from under $50 up to $500, KNX 1070’s Vytas Safroncikas reports.

Here is more, courtesy of Mark Thorson and also Daniel Lippman.

Addendum: Corrected link here.

Attention Scarcity, Ego Depletion and Poverty

Poor people often do things that are against their long-term interests such as playing the lottery, borrowing too much and saving too little. Shah, Mullainathan and Sahfir have a new theory to explain some of these puzzles. SMS argue that immediate problems draw people’s attention and as people use cognitive resources to solve these problems they have fewer resources left over to solve or even notice other problems. In essence, it’s easier for the rich than the poor to follow the Eisenhower rule–“Don’t let the urgent overcome the important”–because the poor face many more urgent tasks. My car needed a brake job the other day – despite this being a relatively large expense I was able to cover it without a second’s thought. Compared to a poorer person I benefited from my wealth twice, once by being able to cover the expense and again by not having to devote cognitive resources to solving the problem.

SMS test the theory with small experiments in which people are asked to play simple games. Poverty is simulated by giving some players fewer game resources. Players in the “poverty” conditions are then shown to devote more attention to the current round and less attention to future rounds, including borrowing more from future rounds. In perhaps the most surprising experiment, SMS have players play a family feud game with and without hints:

Experiment 5 offers more direct support for
the notion that scarcity creates attentional neglect.
One hundred thirty-seven participants played
Family Feud. Some participants could see previews
of the subsequent round’s question at the
bottom of the screen; others could not. We expected
that poor participants would be too focused
on the demands of the current round to
consider what comes next, whereas rich participants
would be able to consider future rounds
and whether moving on was beneficial. All participants
could borrow with R = 3. As predicted,
poor participants performed similarly with previews
(–0.02 T 0.87) and without (0.02 T 1.11),
while rich participants performed better with previews
(0.32 T 0.98) than without (–0.35 T 0.92)
[scarcity × borrowing interaction, F(1, 133) =
4.29, P < 0.05, hp
2 = 0.03; for unstandardized
scores, see table S5].

One concern might be that
the poor did not have enough time to consider
the previews. But the experiments above found
that the poor were using too much; they were
overborrowing. Their performance in the nopreview
condition left substantial room for improvement.
Even if poor participants had used
some of the borrowed time to consider the previews
and move on sooner, they could have improved.
That is, the previews benefited the rich
by helping them save more; they could have benefited
the poor by helping them borrow less. But
it appears they were too focused on the current
round to benefit.

Thus, SMS show that poverty (over)-stimulates attention to urgent problems which results in less attention given to important problems–thus, reduce some day to day urgencies and people may become more open to devoting attention to important problems like deworming or hygiene or paying the rent which would in the not-so-long-run result in greater benefits.

Crucially, notice that SMS’s experiments are about the effect of poverty not about the poor. In other words, at least some of our discussion of the poor may suffer from the fundamental attribution error.

Oliver Hahl on status and authenticity

He is on the job market from MIT, Sloan School, here is his intro, here is his home page.  Here is one of his pieces (pdf), with Ezra Zuckerman, which I found fascinating:

The Denigration of Heroes: Why High-Status Actors are Typically Viewed as Inconsiderate and Inauthentic

We develop theory and report on experiments that address the tendency for high-status actors to be deemed—even by high-status actors themselves—less considerate and more inauthentic than low-status actors.   We argue that this tendency, which potentially contradicts the fact that status is accorded on the basis of an actor’s capability and commitment, stems from two paradoxical features of typical status attainment processes: (a) The benefits of a high-status position typically carry an incentive to feign capability and commitment, thereby leading to suspicions of inauthenticity; and (b) Status is typically achieved through interaction patterns in which the high-status actor asserts its superiority and another’s inferiority, thereby leading to suspicions of inconsiderateness.  Three experimental studies are designed to validate this theory and help rule out an alternative hypothesis, whereby the negative correlation between status and morality derives from a psychological need for viewing the world as just or fair–leading evaluators to compensate those who lack status with higher attributions of morality.  Our studies, based on the “minimal group” paradigm, ask subjects to evaluate two arbitrary social categories based on members’ performance in a joint cognitive task.  Implications are drawn regarding high-status insecurity and the sources of instability in status hierarchies.

As I do every year, I have been surveying some of the more interesting papers on the academic job market.

CFTC Cracks Down on Intrade

CFTC Press Release: The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading.

Intrade and TEN jointly operate an online “prediction market” trading website, through which customers buy or sell binary options which allow them to predict (“yes” or “no”) whether a specific future event will occur, according to the CFTC’s complaint.

Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online “prediction market” trading website, which allowed U.S. customers to trade options products prohibited by the CFTC’s ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.

…David Meister, the Director of the CFTC’s Division of Enforcement, stated: “It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations.”

In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.

The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTC’s investigation of Intrade and TEN.

Intrade announces:

We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow US residents to participate in our real-money prediction markets.

Unfortunately this means that all US residents must begin the process of closing down their Intrade accounts. We strongly urge you to begin this process immediately:

What is it that Springsteen says, “Well the cops finally busted Madame Marie for tellin’ fortunes better than they do.”

Junior job market bleg

Whom would you recommend we hire at the junior level?  (This is for GMU economics, not MR or MRU!)  Please leave your suggestions in the comments.  We would even consider a non-economist, provided the person could teach some economics-related subjects, such as quantitative methods.  Field is open and the person doesn’t have to be strictly junior, although the salary will be.

Harsh words from Scott Sumner

And how about the…GOP decision not to negotiate seriously in 2011, figuring they could get a better result after the election that Karl Rove and Dick Morris assured them they would win?  How’s that decision looking right now?

In the spirit of Arnold Kling, I took out the two harsh words, but the link to Scott’s post is here.  Many people — dare I say exclusively from “the Right” — gave me a hard time over my “now we should cut a fiscal deal” stance in 2011, but I fully expect that today’s deal will be worse.

Here are some interesting remarks from Greg Mankiw.  And here Bruce Bartlett tells his story.

Gains from Trade: Lessons from the 2007-2010 Gaza Blockade

I haven’t read this paper, by Assaf Zimring, a job market candidate from Stanford economics, but I pass it along for its obvious current relevance.  Here is the abstract:

This paper uses detailed household expenditure and firm production data to study the welfare consequences of the blockade on the Gaza Strip between 2007 and 2010. Using the West Bank as a counterfactual, I find that being removed from world markets reduced welfare by 17%-28% on average. Moreover, households with larger pre-blockade expenditure levels experienced disproportionally larger welfare losses. These effects are substantially larger than the predictions of standard trade models. I show that this discrepancy is due to a combination of resource reallocation and reduced productivity. Using firm level data I find that the blockade triggered reallocation of workers across firms and sectors, especially from manufacturing and into services, and from industries that use imported inputs intensively, or export. In addition, labor productivity fell sharply by 24%-29%. This decline was however significantly higher in manufacturing (45%) than in services (5%).

The link and the author’s home page you will find here.