Category: Media
My very good Conversation with Richard Hanania
Here is the video, audio, and transcript. Here is part of the episode summary:
The first half of the conversation stays close to the text [Conrad’s Nostromo], covering the novel’s political backdrop, its deliberately scrambled timeline, the near-total absence of religion in Conrad’s universe, Nostromo’s own vanity and treatment of women, a close reading of the “folly and murder” passage, the Fredric Jameson claim that no Latin American author could have written this book, and their very different research methods for preparing. Then the conversation opens outward, moving through why Latin America has unusually high crime despite not being especially poor, Panama’s surprising success story, Shakespeare’s objective greatness, the state of media criticism after the AI boom, who on the populist right is actually worth reading, why conservative women hug and liberal women shake hands, what Hanania wants to write and learn next, and more.
Excerpt:
COWEN: Here’s one thing that struck me, and I’m not sure you’ll agree. Early in the novel, there’s all this talk about the Italians and Garibaldi and liberty, and the extent to which I think this book is also a critique of classical liberalism is what surprised me reading it for the second time. The first time was probably, I’d guess, 30 years ago, that Conrad is not against the classical liberal prescription, really, but he views it as another pathology inserted into a hopeless situation.
It just morphs into some form of corruption and interest groups. It’s replaced by the autocrats, but it turns out to not really matter more. There’s, again, this dead hand of history. The indigenous groups, their customs, their norms are really what rule the area. The foreigners come and go, and they may steal or extract wealth, but at the end of the day, the talk of liberty and democracy, for him, it’s a kind of fraud. I think it’s also a recognition that imperialism was not going to do the job.
HANANIA: Don’t you think that the Occidental Province had a higher GDP per capita than the rest of the country? It wasn’t just they made money. It seems like there was real wealth. Getting to the end, to the spoilers, the miners actually march on the city because they’re so loyal to Gould. They like what’s going on. There is actual improvement in people’s lives. It’s not that nihilistic, right?
COWEN: It may be higher GDP, but keep in mind GNP may be what counts. I don’t think Conrad thought in those terms. I don’t read him as a consequentialist, though I’m mostly one myself. For him, progress is about moral progress. He doesn’t see a lot of moral progress in this setting. The point that that’s not happening is, for him, at least more important than, oh, living standards went up a bit or, well, isn’t this better than the even poorer societies they had earlier on? I think he grew up in what we now call Poland, but then was ruled by Russia. The idea of foreign rule is something he had such a strong instinctive dislike of. And you see it in his other books as well that he’s a cynic about foreign presence, though I don’t think he’s saying things were better before.
HANANIA: No, I don’t think I agree.
COWEN: I didn’t think you would agree. That’s why I said that.
HANANIA: There is a noble savage idea. There’s one part where he goes into the rant when Sotillo, the general, is torturing Hirsch. I think he goes into a rant about how primitive man did not devise as much sadistic torture, which I don’t think is probably true, but that’s Conrad’s idea. Basically, there’s a kind of innocence there.
I look at the Hernandez and the robbers and the people who are living in the countryside. Those people are purest case of noble savage. There is part of that. You’re right. Conrad is into honor. This is a book about love and men caring about women. There’s Monygham, the doctor’s loyalty to Mrs. Gould, and then Decoud’s loyalty to Antonia. His other books are about this. Yes, he’s a romantic. He’s not a romantic in politics. He thinks politics is a dirty—
COWEN: Agreed.
HANANIA: —unromantic world. If he thinks socialism and populism on a scale of one to 10 are like a one and classical liberalism is a four, to me, he’s a classical liberal, even though he’s not an eight or a nine on classical liberalism.
COWEN: I think I read him as believing in contingency as the most important truth of politics and a geographic relativism. I don’t think he has much Rousseau in him of idealizing the noble savages, but he sees the noble savages are not noble. They’re terrible, but what’s terrible in them gets recreated in us at higher levels of wealth and power. That, for him, is the most fundamental truth of politics.
Interesting throughout, recommended. And here is Richard’s prescient recent book Kakistocracy: Why Populism Ends in Disaster.
Inequality in Equal Land
Adam Nash has a good post on wealth inequality:
…Every year, we pull the most recent data from the US Census on household wealth, cut by age.
…invariably, the students’ initial response is a reaction to the apparent disparity in wealth between households based on age.
For many students, it just doesn’t seem fair at first blush. Households between the ages of 65 to 69 have a median net worth that is 9.83x that of households under 35. You can almost hear their cries, “the Baby Boomers are hoarding all the wealth!”
Almost all of the graph, however, is aging! Nash considers a totally equal society called Equal Land. In Equal Land:
- Everyone works from the ages of 25 to 64, retiring at 65
- Everyone lives to the age of 85
- Everyone makes the same amount, $100,000 per year
- Everyone saves 10% of their income, every year while they work
- Everyone makes 8% on their savings, every year
- Everyone spends 4% of their portfolio, every year in retirement
The result is that in equal land the distribution of wealth is even more unequal by age than in our world! This is not to say all or even most inequality is explained by age. Most inequality in our world is within-age, not between-age. But when you look at an age-wealth graph specifically, almost all of what you are seeing is just age and the power of compounding.
Eleven outstanding film and television reviews by Tyler Cowen and Alex Tabarrok
From the Archive–these posts are written by ChatGPT
These selections emphasize the quality of the criticism: original interpretations, close attention to the work, and arguments worth considering even when you disagree. They are not a ranking of the films and television shows themselves. The list includes five reviews by Tyler Cowen and six by Alex Tabarrok. Several of the original posts reveal major plot developments; the descriptions here keep those revelations to a minimum.
1. Tyler Cowen — The Devil Wears Prada: A Straussian Interpretation
July 2, 2006 · Film · Spoilers in the original review
“Make no mistake about it, this is a movie about sheer power lust.”
Cowen reads beneath the film’s apparent moral lesson about rejecting a demanding career. His interpretation asks which relationships the ending restores, whose approval still matters, and whether the heroine has actually escaped the ambitions she appears to renounce. The result is a compact argument about power, independence, and emulation. Why it belongs: A memorable example of Cowen’s ability to turn a popular entertainment into an argument about motives. Read it after watching, when you can assess his interpretation against the ending. Read Cowen’s original review
2. Alex Tabarrok — Fleabag and Killing Eve
June 6, 2019 · Television · Major spoilers
“Fleabag is much darker and more religious and mystical than most people realize.”
Tabarrok connects the two series through sexual power, moral agency, and religious failure. His reading of Fleabag draws on textual and visual parallels to argue that its comedy conceals a much darker moral structure. The comparison with Killing Eve expands the argument beyond a single protagonist. Why it belongs: One of his most ambitious pieces of television criticism. Its characterization is contestable, but the sustained interpretation gives readers something substantial to argue with. Read Tabarrok’s original review
3. Tyler Cowen — Toni Erdmann, Misunderstood Masterpiece
February 5, 2017 · Film · Major spoilers
“The emotionally unrewarding nature of contemporary cosmopolitan life, but also the limits of rootedness.”
Cowen brings together family relationships, corporate humiliation, gender, and the relationship between Germany and Eastern Europe. He resists treating the film as a simple celebration of authenticity against professional life. Both the cosmopolitan daughter and the father who disrupts her world become objects of scrutiny. Why it belongs: The review connects intimate discomfort to larger social structures without reducing the film to a single message. Cowen’s suggestion that some of the father’s appearances might be imaginary should be read as his speculative interpretation. Read Cowen’s original review
4. Alex Tabarrok — Perfect Days, in “What to Watch (or Not)”
August 7, 2025 · Film · Some spoilers
“the routine is also a narcotic for the lost.”
Tabarrok challenges the comforting interpretation of Perfect Days as a lesson in finding happiness through simple routines. He recognizes the beauty of the protagonist’s life while asking whether its carefully maintained rhythms also protect him from painful relationships. His discussion of “crown shyness” turns a natural image into a metaphor for emotional distance. Why it belongs: A concise, sensitive counterreading that allows beauty and avoidance to coexist. The film discussion appears within a composite post that also covers Ballard and Billy Joel. Read Tabarrok’s original review
5. Tyler Cowen — Her
December 29, 2013 · Film · Light spoilers
“Will they enslave us, will they be our dogs, our friends, our trading partners, or something else altogether?”
Cowen treats the film as an exploration of the possible relationships between humans and artificial intelligence. He also attends to its visual and literary ancestry, making the review more than a response to the premise. The central question is how unfamiliar forms of intelligence might fit into emotional and social life. Why it belongs: It captures intellectual excitement about a film while opening questions that extend far beyond it. Its 2013 date makes the discussion especially interesting to revisit amid later debates about AI companionship. Read Cowen’s original review
6. Alex Tabarrok — Contagion
September 19, 2011 · Film · Limited plot discussion
“we have been lucky not virtuous.”
Tabarrok uses the film to examine preparedness and the difficulty of taking rare but consequential risks seriously. The review’s force comes from the relationship between cinematic imagination and public attention: a movie can make a danger emotionally intelligible when abstract warnings fail. Why it belongs: A strong example of film criticism becoming an argument about institutions and risk perception. Read its scientific and preparedness claims in their historical context: this is a review written in 2011. Read Tabarrok’s original review
7. Tyler Cowen — Technology in Kubrick’s 2001: A Space Odyssey
June 17, 2018 · Film · Spoilers near the end
“Finally the Solow residual is explained!”
Cowen combines observations about technological forecasting with attention to cinematic form, musical pacing, and narrative risk. The economic joke is characteristic, but the review also makes a case for the film’s sensory power and for seeing it on a large screen. Why it belongs: An entertaining blend of economic thinking and aesthetic attention. It shows how a familiar classic can yield fresh observations when approached through several disciplines at once. Read Cowen’s original review
8. Alex Tabarrok — Daredevil and the Doctrine of Double Effect
November 25, 2018 · Television · Some season-three details
“As I thought about this more, however, the Thou Shall Not Kill trope is least objectionable in Daredevil.”
Tabarrok starts with an objection to the superhero convention against killing, then revises his judgment by considering Daredevil’s Catholic commitments. The interesting move is to assess the character’s choices within his own moral framework rather than only through the viewer’s preferred calculation of consequences. Why it belongs: Criticism that visibly changes its mind. The post offers a useful discussion of character consistency and moral reasoning; its account of theology is best treated as part of that argument rather than a comprehensive doctrinal explanation. Read Tabarrok’s original review
9. Tyler Cowen — Borgen Season Four
July 23, 2022 · Television · Thematic spoilers
“I wish the content had more of ‘my kind of liberalism,’ but maybe the right-wing cultural critique makes for better TV.”
Cowen considers political power, gender, Greenland, and the media while separating his political preferences from his judgment of the drama. He asks whether a critique he finds less congenial might nevertheless produce stronger television. Why it belongs: A particularly clear example of judging artistic achievement independently of ideological agreement. The post is most revealing as a reflection on what makes political drama work. Read Cowen’s original review
10. Alex Tabarrok — The Remarkable Life of Ibelin
January 16, 2025 · Documentary · Reveals the film’s central turn
“What defines an ideal romance? What constitutes true friendship?”
Tabarrok explores how the documentary changes our understanding of a disabled young man’s life through his online relationships. Its construction prompts questions about intimacy, embodiment, and the limits of what even close relatives can know about another person. Why it belongs: A humane review that uses the documentary’s form to reconsider the value of online life. Although the original post labels itself “No spoilers,” readers who want to experience the central revelation unprepared should watch first. Read Tabarrok’s original review
11. Alex Tabarrok — The Gaslighting of Parasite
June 25, 2020 · Film · Major spoilers
“the most willfully misinterpreted movie that I have ever seen.”
Tabarrok challenges the prevailing interpretation of Parasite as an indictment of economic inequality. He builds his counterreading around the families’ conduct, the poorer characters’ treatment of other workers, and recurring imagery of smell and contamination. He argues that the film’s moral judgments cut against the political expectations many critics bring to it. Why it belongs: One of his most provocative and sustained film interpretations, and an essential inclusion in this selection. His reading is contestable, especially his insistence that the film’s judgments are unambiguous. That tension makes it rewarding to discuss alongside Cowen’s The Devil Wears Prada review: both ask whether a film’s apparent message conceals a different account of power and ambition. Read Tabarrok’s original review
The Panic Patrol
The Panic Patrol, a division of the department of future corrections, reminds us of past panics. Here’s one case in point I wasn’t aware of:
Interviewing Yiyang Zhuge (Zhong Shu)
Many people are writing to me, upset that I am interviewing Ziyang Zhuge, a well-known Chinese internet intellectual, who recently was accused of plagiarism. I am keen to proceed with the interview, and am happy to explain why. A few points:
1. The relevant facts here still are being disputed, and furthermore it all happened in Chinese. If I cannot personally adjudicate the matter, I remain inclined to proceed. I am also well aware that standards in China, including for plagiarism, are very different than in the United States. If someone tells me “A person in China did [fill in the blank]” my initial reaction is still “Are they interesting to talk to?”
2. I have had on numerous CEOs and business leaders. Your opinions of each will vary, but surely some of them are guilty of something. I do not regret any of them as guests, except insofar as they were boring. You also can debate whether a former CIA head, in this case John Brennan, ever did anything wrong. He was fascinating.
3. I once had on Sam Bankman-Fried, now a convicted felon. It was an excellent episode, and I will point out my lines of questioning were more perspicacious than many people since have realized.
4. I once had on a convicted murderer, Shaka Senghor. It was an excellent episode, and if I recall only a single person wrote me to complain. I would gladly have more criminals on, and they do not all have to be repentant in the manner that Shaka is. Would not a pickpocket guest be intriguing? For Althusser however it is too late.
5. Without knowing the full story, I suspect the case of Yiyang Zhuge (neither a felon nor a murderer) is most analogous to having on the CEO of DeepSeek, Liang Wenfang. At this point it is pretty well known that DeepSeek (and other Chinese AI models) distilled a lot from Anthropic’s Claude. That is a violation of terms of service, and in economic terms it is an event and a depredation of pretty serious magnitude. I still would be delighted to have Liang Wenfang on the show, and I would do so without obsessing over the issue of distillation. How about it Liang Wenfang?
Xi Jinping is welcome too. Chairman Mao, is pork belly with red sauce over- or underrated? The world awaits your response.
There are now eight episodes
The Everyday Abundance podcast explores the hidden histories behind everyday activities and the technologies we don’t even know are technologies.
Virginia Postrel and Charles C. Mann dive into the surprising stories behind everything from brushing your teeth to driving your car.
Listen, subscribe, and rate us on Spotify, Apple Podcasts, Amazon, YouTube, or wherever you listen to podcasts.
Here is the link, self-recommending of course…
What should I ask Roman Mars?
Yes I will be doing a Conversation with him. Most of all he is obsessed with design, here is Wikipedia:
Roman Mars is an American radio producer. He is the host and producer of 99% Invisible, a KALW radio show and podcast, and a founder of the podcast collective Radiotopia, which he describes as efforts “to broaden the radio landscape [and] make shows that aren’t bound by conventions” of public radio in the United States. In 2020, he co-authored the New York Times best seller The 99% Invisible City with Kurt Kohlstedt…Mars, with Elizabeth Joh, also hosts the podcast What Roman Mars Can Learn About Con Law.
His TED talk on city flags is a good introduction to his thought.
So what should I ask him?
Brian Chau at work
I am automating investigative journalism at Effort.News
We’re breaking five stories today based on verifiable financial data which everyone missed for years.
Here is the entire thread, which also describes the five stories.
Congratulations to Ross D. and others
Ross Douthat, an opinion columnist at The New York Times, is leaving to join the CBS News program “60 Minutes” as a correspondent, the show’s executive producer said in a memo to staff on Tuesday.
Mr. Douthat is among a group of journalists joining for the show’s 59th season, which will premiere on Sept. 13. The writer Sebastian Junger and Gianna Toboni, a former Vice News correspondent, will become contributors, along with Trevor Phillips, a British journalist who joined CBS last month. Norah O’Donnell, the former anchor of “CBS Evening News,” will be a correspondent as well.
They are the first significant hires at the long-running Sunday program since CBS’s new editor in chief, Bari Weiss, orchestrated a shake-up that led to the departure of three top correspondents this spring, including the veteran journalist Scott Pelley.
Here is the full NYT story.
The Odyssey
Worth seeing, and I enjoyed it — but a few observations I haven’t seen elsewhere.
For all the praise of IMAX and 70mm’s supposed clarity, several scenes are out of focus on the actor. Pulling focus is harder with a large-format negative. The problem is compounded by Nolan’s fondness for darkness: too many scenes are dark enough to squander much of what the format offers. The sound was earth-shaking in the way we have come to expect from Nolan but there is no song.
The “woke casting” controversy is a non-issue — barely noticeable in practice. The film is obviously conservative in temperament. Helen gets some of the best lines, and Nolan’s slight disfigurement of her traditional arc is exactly right. The Circe scene is the best in the film.
Tyler is entirely wrong about Calypso. Odysseus’s seven years with her were among his most enjoyable. I have no doubt about this.
The deeper flaws are structural. Nolan loves to play with time, and the resulting flashbacks and memories ironically shortchange the odyssey itself — making the journey feel shorter and less arduous than it should. This is very much in the mode of Interstellar: a sequence of set-piece locations strung together. One planet/one monster/one scene–on to the next. But Odysseus as a character on an odyssey never quite coheres.
We are told repeatedly that Odysseus is smart but we shouldn’t need to be reminded. Odysseus is both beloved and resented by gods, a man whose men will follow him to the ends of the earth and then betray him but Mat Damon just doesn’t bring it. Things happen to him; he responds stoically. What we needed was the equivalent of Kirk defeating the Kobayashi Maru — a moment that makes the audience understand, viscerally, that this man bends the rules and contends with the gods by the sheer force of his wit and will. Of courses the Trojan horse is this but Nolan treats this as something of which Odysseus is ashamed and the other clever bits are downplayed. Damon never gets his Kobayashi Meru. The odyssey is a slog, rather than an adventure. Could have used a bit more Sinbad, a bit less Dark Knight. The dialogue, as Tyler noted, is lame.
Not Nolan’s best film but still better than most films and for scale, ambition, and grand themes well worth the 3-hour investment.
What should I ask Michael Moritz?
Yes I will be doing a Conversation with him, based around his new book Ausländer: One Family’s Story of Escape and Exile. Mike of course was a pioneering venture capitalist through Sequoia, and before that had a distinguished career as a journalist, which included books on Chrysler, Apple (the first such book I believe?), and soccer coach Alex Ferguson of Manchester United. Here is his Wikipedia page.
So what should I ask him?
Chloe vs. History
Excellent use of AI to create relatively accurate and realistic tours through history. Chloe is an engaging and personable guide–a fact of some importance.
Hat tip: Kevin Bryan.
My Conversation with Dave Baszucki
Dave is CEO and co-founder of Roblox, and here is the audio, video, and transcript. From the episode summary:
With over 100 million daily active users and projected revenue bookings of $7 billion this year, it is one of the largest gaming economies in the world—and one that has made millionaires out of teenage developers in Argentina, South Korea, and everywhere in between.
Tyler and Dave explore why Roblox decided early against prioritizing advertising revenue, why Dave thinks the main competition of Roblox is its own execution speed rather than Fortnite, whether every mega platform inevitably becomes an everything app, how falling token costs will change the platform, why he insists all the games on Roblox are beautiful, whether Robux should have a floating exchange rate, why admitting you have kids under 13 on your platform turns out to be a competitive advantage, why he’s skeptical of blanket social media bans, what his son’s experience with bipolar disorder taught him about metabolic health, his two-year sabbatical between companies that involved a motorhome trip across North America and a stint hosting talk radio in Santa Cruz, why Mutiny on the Bounty remains one of his favorite books, what he’ll learn next, and much more.
Excerpt:
COWEN: What percentage of your games now do you feel are beautiful?
BASZUCKI: All of them.
COWEN: Some look just quite ordinary. They might be fun, but I wouldn’t say they’re beautiful, right?
BASZUCKI: Well, I was trying to go a couple levels out of the box on you there. The reason I feel they’re beautiful is when you said that, I immediately went to look and feel, but then I tried to imagine the 12-year-old or the 18-year-old or the 30-year-old struggling to build something wonderful and the human connection to those games. By that definition, I think they’re all beautiful. They are all the efforts of creation of real people trying to pour their hearts out to make something that other people love to play.
On an artistic basis, I think you could ask me what percent of paintings in the MoMA do I think are beautiful. I’d probably say 20 percent. If I had to look at 1,000 Roblox games, I wouldn’t name which is more beautiful to me because I think that’s less important than really the heartfelt work of all the creators.
COWEN: I’ve been struck when I look at gaming at how much people don’t seem to care much about the visual beauty of their games. I would have expected something different, say, 15 years ago, and they just want a game that engages them somehow. Normal standards of visual beauty seem to have fallen away. Is that incorrect? Would you correct that impression in some manner?
BASZUCKI: I think you’re absolutely correct. What I feel you may actually be describing, if we looked into other disciplines, the evolution of story from the campfire to written to audio to a movie, and the increasing fidelity; all of those stories, in a way, are beautiful, but at the time, for the vast majority of the creators, it may be that writing is just easier than producing a 4K Hollywood movie. I feel that’s a little bit like the metaphor you’re talking about right now in gaming.
For the vast majority of people, their story or their idea for their game is actually pretty beautiful. Whether it’s a fashion game like Dress to Impress or it’s a grow garden game, the games are arguably beautiful, even if they don’t look photorealistic. What I think we’ll see is, over time, as AI helps accelerate the ability to make games look really polished in any style the creator wants—could be photorealistic, could be anime, could be a Warner Brothers 2D cartoon look—you and I might say that looks more beautiful, but the core gameplay is still somewhat the original gameplay. I think we are going to see games arguably look more beautiful, even though I think they’re all beautiful.
The dialogue is a bit slow to get underway, but there are many interesting parts.
A Beautiful Theory Falls to Ugly Data
My latest paper, A Test of the Coase Conjecture Using Prices of Electronic Books, with the excellent Tim Groseclose, has just been published. The Coase Conjecture is another one of Coase’s little ideas — the original paper is six pages — that has spawned hundreds of follow-up papers and thousands of citations.
The idea is simple. A monopolist of a durable good has a time-inconsistency problem. Set the monopoly price in period 1 and he will be tempted in period 2 to cut the price and mop up the customers whose valuations sit between the period-1 price and MC. But the same logic applies in period 2, and again in period 3, and so on — eventually the price unravels to MC. Consumers see this coming, the monopolist knows the consumers see it coming, and so the monopolist cuts price to MC in period 1. And since a “period” is just the interval between price changes, the whole unraveling happens — in Coase’s phrase — “in the twinkling of an eye.”
The theorists, most notably Gul, Sonnenschein and Wilson and Fudenberg, Levine and Tirole, formalized Coase’s insight and showed that under quite general conditions the logic goes through. Which is rather surprising, since, as Tim and I point out, Coase’s conjecture implies that many patents and copyrights are essentially worthless — a prediction wildly at variance with the facts. Other theorists, including Stokey, Ausubel and Deneckere, and Board and Pycia, have offered variants under which the Coase outcome does and does not obtain.
For all this theory, there have been almost no direct tests of the Coase Conjecture apart from a handful of lab experiments. Ours is one of the first papers to take the conjecture to the real world. We look at e-books, an unusually clean setting: digital goods are durable, marginal costs are low, resale is limited, and prices can be changed quickly. Using the prices of e-books that are in the public domain as a proxy for marginal cost, we ask: (a) do prices rapidly fall to MC, and (b) does the market clear in the first period? The answer to both is no. E-book prices begin well above MC, sales continue over many periods, and prices don’t even decline monotonically.
We reject the Coase Conjecture decisively.
The paper has an interesting history. The theorists (or the referees we guessed were theorists) praised the paper for taking the theory seriously but inevitably had a fillip to offer, distinguishing the world of pure theory from empirical tests. The empiricists, on the other hand, said our tests were too simple since no one takes the theory that seriously. It’s good to see the paper find a home!
We reject the Coase Conjecture decisively, but it remains to say why. We can rule out some explanations — it’s not rising MC, and it’s not the finiteness of buyers (which can support a perfectly price-discriminating Pac-Man equilibrium).
Two theories remain: 1) sellers can commit not to lower prices, and 2) the outside-options model of Board and Pycia. I prefer the former, my co-author prefers the latter. To me, commitment just isn’t that hard. The standard story is that profits are like cookies on the table and the monopolist can’t resist — but at least the people tempted by cookies get to eat the cookies! The Coase profits are illusory: the monopolist races to MC in period 1 precisely because they know they won’t resist later and as a result they don’t even get a taste of profit! Too clever by half. I say, show some backbone. Firms are *all about* commitment — to workers, consumers, contractors. Why not to a price? My co-author points out, however, that this is more Tabarrok-vibe than carefully laid out theory.
Tim likes the Board and Pycia model which begins with the plausible idea that consumers have outside options — if they don’t buy the book today, they will buy another book, rent the movie, or borrow from the library — and crucially, once they take the outside option, the consumer never returns to the market. You might think outside options would make it *harder* for the firm to set a high price, but Board and Pycia show in a very clever but extended argument that when you carefully work out the full equilibrium the opposite holds: outside options give firms a time-consistent incentive to set and keep a high price. Tim explains the argument further here (see also our paper for an intuitive breakdown).
In any case, the Coase Conjecture — at least as modelled by the theorists — fails in an environment most conducive to it.
A beautiful theory falls to ugly data.
Justin Wolfers update
Wolfers’s moment of clarity ultimately sent him down a road less traveled by academic economists: creating his own media company.
On Wednesday, Wolfers, 53, announced that he had founded Platypus Economics, an independent media start-up that aims to reach a mainstream audience. The name is a nod to his Australian roots, cheekily referring to the odd-looking mammal native to his birthplace. He’s funding the business himself, using the income from his textbook sales.
…To get his content channels off the ground and build an audience, Wolfers is teaming up with Initial Digital, the digital media division of the Initial Group, an entertainment company that’s backed by the private equity firm TPG.
Here is the full NYT story.