Category: Travel
Why is there dynamic surge pricing *for rides*?
“Surge Pricing Solves the Wild Goose Chase” is the title of the new paper by Juan Camillo Castillo and E. Glen Weyl, here is the abstract:
Why is dynamic pricing more prevalent in ride-hailing apps than movies and restaurants? Arnott (1996) observed that an over-burdened taxi dispatch system may be forced to send cars on a wild goose chase to pick up distant customers when few taxis are free. These chases occupy taxis and reduce earnings, effectively removing cars from the road and exacerbating the problem. While Arnott dismissed this outcome as a Pareto-dominated equilibrium, we show that when prices are too low relative to demand it is the unique equilibrium of a system that uses a first-dispatch protocol (as many ride-hailing services have committed to). This effect dominates more traditional price theoretic considerations and implies that welfare and profits fall dramatically as price falls below a certain threshold and then decline only gradually move in price above this point. A platform forced to charge uniform prices over time will therefore have to set very high prices to avoid catastrophic chases. Dynamic “surge pricing” can avoid these high prices while maintaining system functioning when demand is high. We show that pooling can complicate and exacerbate these problems.
Perhaps it is an analogy to suggest movie theaters might use more surge pricing if a low valuation buyer took up the seat for several showings of the movie rather than just one.
Why you should visit Lagos, and toward a new philosophy of travel
Those are the topics of my latest Bloomberg column, with side remarks on sex tourism, the Pulaski Skyway, and the Ruhr-Gebiet as well.
My favorite things Nigeria
Yup, I’m here. I made this list before setting off:
1. Popular music: Few from any country come close to Fela Kuti, the main question is how many you should buy, not which ones. Most of them! On the CD medium, that old series of “two albums on one CD” was the best way to consume Fela. On streaming, you can probably just let it rip. And rip. And rip. Other favorites are King Sunny Ade and I.K. Dairo, I don’t love Fema Kuti. You also might try Nigerian psychedelic funk rock from the late 60s and early 70s, for instance found here. Most of all, there are thousands of wonderful local performers in Nigeria, you can watch a few of them on the Netflix documentary on the Nigerian music scene, titled Konkombe, recommended and only an hour long.
There is now a good deal of hit Nigerian and Nigerian-American music, such as Wizkid. It is enjoyable but does not compare to Fela in terms of staying power.
2. Basketball player: The Dream is one of my three or four favorite players of all time. My favorite Hakeem was watching him pick apart David Robinson play after play after play…see the final clip on the immediately preceding link.
3. Novel: Chinua Achebe, Things Fall Apart. Honorable mentions go to Wole Soyinka, Ben Okri, and my colleague Helon Habila. There are also the Nigerian-American writers, such as Chimamanda Ngozi Adichie. Teju Cole is worth reading, including his non-fiction.
4. Movie: Well, I’ve seen parts of some of them, and you should at least sample some Nollywood if you haven’t already. It’s kinetic. The documentary “Nollywood Babylon” (Netflix) gives you some background. As for “Movie, set in,” I draw a blank. “Album, set in and recorded in” would be Band on the Run, Paul McCartney and Wings.
5. Actor: Chiwetal Ejiofor, he starred in “Twelve Years a Slave,” and is from a Nigerian family in Britain.
6. Presidential name: Goodluck Jonathan.
7. Artist: Prince Twins Seven Seven, or more formally Prince Taiwo Olaniyi Wyewale-Toyeje Oyekale Osuntoki. He received his nickname because he was the only surviving child from seven distinct sets of twins.
8. Food dish: At least for now I have to say jollof rice, a precursor dish to jambalaya, further reports to come however!
The bottom line: Lots of talent here, plenty more on the way.
Mediterranean fact of the day
More than 90 migrants were feared dead after the two latest boat sinkings between Libya and Sicily on Thursday, the United Nations reported, bringing the number of migrants killed in 2016 as they attempted the journey to over 5,000, compared with the 3,771 deaths recorded last year.
“This is the worst annual death toll ever seen,” William Spindler, a spokesman for the United Nations refugee agency, told reporters in Geneva, adding that 14 people, on average, drowned in the Mediterranean every day this year.
Here is the full NYT story, possibly with video noise.
Peace and Good Will To All
*Island People: The Caribbean and the World*
That is by Joshua Jelly-Schapiro, published this November, a great book, could it be the very best book on the charm and importance of the Caribbean? Not the Caribbean of the cruise, but rather the real cultural Caribbean as found in Jamaica, Cuba, Haiti, and Trinidad. The Caribbean was open, globalized, multiracial, vulnerable, and deindustrialized before it was “cool” to be so, and so it stands as a warning to us all. Yet so few seem to care. The Caribbean cultural blossoming of the 20th century remains one of the most remarkable yet understudied sagas, but this book, among its other historical virtues, gives you a very good look under the hood.
Did you know that in the 1930s Cuba received more visitors from the U.S. than did Canada?
This is one of the very best non-fiction books of this year, and its depth of knowledge and understanding truly impressed me. Just to prod your memories here is the broader list.
Beware the powerful sports car hedge fund manager
We find that hedge fund managers who own powerful sports cars take on more investment risk. Conversely, managers who own practical but unexciting cars take on less investment risk. The incremental risk taking by performance car buyers does not translate to higher returns. Consequently, they deliver lower Sharpe ratios than do car buyers who eschew performance. In addition, performance car owners are more likely to terminate their funds, engage in fraudulent behavior, load up on non-index stocks, exhibit lower R-squareds with respect to systematic factors, and succumb to overconfidence. We consider several alternative explanations and conclude that manager revealed preference in the automobile market captures the personality trait of sensation seeking, which in turn drives manager behavior in the investment arena.
That is from a new paper by Stephen Brown, Yan Lu, Sugata Ray, and Melvyn Teo, and for the pointer I thank the excellent Kevin Lewis.
Gurgaon: India’s Private City
My paper with Shruti Rajagopolan, Lessons from Gurgaon, India’s private city, is given visual force and flavor by an excellent new video from Reason called Gurgaon: India’s Private City.
My Conversation with Joe Henrich
Here you will find the transcript, podcast, and video of the chat, Joe of course was in top form. In addition to a wide-ranging conversation on cultural and social evolution, we touched on topics such as Star Trek, Hayek’s atavism theory, what he learned from the Mapuche, the pleasures of cooking in coconut milk, why WEIRD matters, whether Neanderthals were smarter than humans, and whether Joe is a conservative after all. Here is one bit:
COWEN: The Flynn effect in the short run puzzles me more than in the long run. If I compare today to the 18th century, I can see where the difference might be. But in many countries, it seems the Flynn effect hasn’t stopped. Nutritional gains probably are over.
The environment — smartphones are newer than the Flynn effect, but it doesn’t seem to be changing now compared to a generation ago. They both seem quite complex. We’ve had TV for a while. People have books, market society. What exactly is the difference over the last generation in the short run?
HENRICH: It’s a cultural-evolutionary treadmill. One place where you see this is the complexity of television shows. Now, you have an ensemble cast and 20 different plots going on. You’ve got to track all these different plots. That wasn’t the television of the 1950s. It was one plot, one thing after another. Simple. The whole world is getting more complex, at least in terms of your need for analytic thinking.
COWEN: Some of that in your view is the supply-side effect. It’s not that we got smarter and they made TV better, it’s also they made TV better and that made some of us smarter.
HENRICH: Coevolutionary.
COWEN: Coevolutionary. This is going to make you out to be quite an optimist, then, because TV is going to get better and better. We’re just going to keep on getting smarter.
HENRICH: Yeah, of course.
And:
COWEN: You’re an anthropologist. You’ve spent a lot of time with economists — coauthored, worked with Paul Romer, Colin Camerer, others. As an anthropologist, what do you find strange about the tribe known as econ? [laughs]
HENRICH: I had a real opportunity. I was very fortunate in my career to be a professor of psychology and a professor of economics at the same time but to be neither in some deep sense. I would get to go back and forth from seminars in economics and psychology.
In economics, there’s this really competitive culture. The way I like to describe it: If you’re giving a seminar in economics, the crowd — everybody’s trying to show who’s the smartest guy in the room. Just on your first slide, someone will raise their hand. (I’m like, I haven’t said anything yet!) Then they’ll try to ask the killer question which undercuts your whole talk so that they can get you right at the beginning.
[laughter]
HENRICH: Whereas psychologists, they’ll sit quietly. They watch your talk. You go through your whole PowerPoint. You probably touched a lot of different research projects.
Then there’ll be question time; at first no hands will go up. Then someone will be like, “I got a question.” Then they say, “I just have one small question. I mean, it was a great talk and this is just a very minor thing.”
Then it could be a killer question at that point when they’ve done the preface. It’s a very strong cultural difference between the econ tribe and the psychology tribe.
I’ve always wanted to write an ethnography: My Life among Two Strange Tribes: The Psychologists and the Economists.
Do read, hear, or watch the whole thing.
Here you can order Joe’s book The Secret of our Success: How Culture is Driving Evolution, Domesticating Our Species, and Making us Smarter.
Lagos, Nigeria bleg
I’ll be there soon! What should I do and see and eat? I thank you in advance for your suggestions.
I am a big believer in going places to learn things and for me this is the next step. I am looking forward to the trip.
China markets in everything, Titanic disaster edition
You too may soon be able to feel what it was like to hit an iceberg on the Titanic.
Construction of a life-size replica of the doomed passenger ship began in China’s southwestern Sichuan province on Wednesday with a keel-laying ceremony and fireworks to mark the occasion.
It is part of Star Energy Investment Group’s plans for a tourist resort along the Qijiang River in Sichuan’s Daying County.
And it will eventually come with a simulation of the iceberg collision that sank the original ship in the Atlantic Ocean on April 15, 1912.
Backers say the project will also play on the 1997 blockbuster “Titanic” movie, starring Leonardo DiCaprio and Kate Winslet.
Steven Star Chief Executive Su Shaojun said it should not be strange that it is in China.
Here is further information, via Peter Metrinko.
Does seasteading have a future?
I was pleased to see their title for the column: “Go Wet, Young Man.” Here is one of the claims:
Counterintuitively, I see the greatest promise for seasteading as a path toward more rather than less human companionship.
…some of the elderly have started living on cruise ships full-time. A good assisted-living facility might cost $80,000 a year in the U.S., more than many year-long cruises. (Cruising could also be cheaper than living in an expensive neighborhood.) Furthermore, the cruise offers regular contact with other passengers and also the crew, and the lower average age means that fewer of one’s friends and acquaintances are passing away. The weather may be better, and there is the option of going onshore to visit relatives and go shopping.
The cruise ship removes the elderly from full-service hospitals, but on the plus side, regular social contact is good for health, passengers are watched much of the time and there is a doctor minutes away. Better health and human companionship could be major motives for this form of seasteading. I could imagine many more of the elderly going this route in the future, and some cruise lines already are offering regular residences on board.
The goal of this seasteading enterprise is to pack people more tightly together rather than to open up broad new vistas for a Wild West kind of settlement. The proprietors make physical space more scarce, not less, to induce better clustering. So seasteading does have a future, but it is to join and build a new and crowded communitarian project, not to get away from one.
Do read the whole thing.
China Kidlington visit of the day
Ever since busloads of Chinese tourists began arriving in this sleepy, nondescript English village this summer, the 13,723 residents of Kidlington, about five miles north of Oxford, have been variously baffled, annoyed and delighted.
The sudden influx of Chinese has also grabbed headlines and spawned a national mystery.
Why, for example, do the Chinese tourists ignore the village’s handsome 13th-century church and its thatched-roof cottages, preferring instead to peer through windows, film parked cars and traipse on the lawns of Benmead Road, a humdrum and modern residential street? One tourist asked a stunned resident if he could help mow her lawn. (She politely declined.) Another jumped joyously on a child’s trampoline in the front yard.
No one seems to know why, read more by Dan Bilefsky at the NYT.
Addendum: See this possible “limits to arbitrage” explanation.
There is no musical great stagnation
Two years ago, the New Mexico Department of Transportation decided to spice up a particularly desolate stretch of Route 66 between Albuquerque and Tijeras by adding grooves in the road that will play music when you drive over them. If you drive the speed limit of 45 mph for the quarter-mile stretch, you can hear “America the Beautiful” play through the vibrations in your car’s wheels.
The grooves in the road work just like the rumble strips or “drunk bumps” that vibrate your car when you start to drift out of your lane. But these rumble strips are precisely positioned to create different pitches when you drive over them. The result? The notes to “America the Beautiful” rising from the bottom of your car.
Though I guess it means travel speeds are not really going up…
The pointer is from Peter Metrinko.
Why you should worry less about the weather, especially when you travel
Here I am referring to your personal plans, not to climate change. The weather can make your current circumstances seem more difficult or less pleasant. But extreme weather also tends to make your memories of journeys stronger and more lasting (“…remember that time in Goa when the monsoon came earlier than anyone thought…”). Since we overemphasize the maximization of current utility, and under-invest in the creation of significant memories, we worry too much about the weather.
