Bram Cohen on restaurant reservations
An anonymous reader posted this link in the comments, from Bram Cohen's blog:
Restaurants which generally sell out have an interesting dilemma. In principle they could make more money with higher prices, but then they'd risk not selling out, and empty seats would quickly wipe out any revenue gains from raised prices, not to mention harming that elusive 'buzz'. In practice such restaurants generally wind up leaving some money on the table, no pun intended, and take the stability of always selling out over the potential of higher revenues.
I've come up with a variant on dutch auctions which solves this problem quite beautifully. The restaurant continues to charge the same amounts it does currently, with the same menu, but there's a 'seating fee' for sitting down which might be charged if the restaurant sells out in advance. The amount of the seating fee is determined by when the restaurant becomes completely booked, with the fee going down the later the selling out happens, possibly going down to zero at the end. By making a reservation when the potential seating fee is a certain amount, a customer is declaring that they're willing to pay the seating fee for that time period if it is necessary, but they aren't penalized for making an early reservation unless it would have been necessary to do an early reservation to get a seat. By waiting to make a reservation until later, a customer is declaring that they are unwilling to pay a higher price, but also allowing for the possibility that the restaurant will become fully booked and they won't get a seat. One of the nice features of this system is that the reservation system is essentially unchanged, allowing for trivial support of reserving particular time slots and tables.
This system also works for concerts and other events which have the potential to sell out.
What has happened to surprise marriage proposals?
"You do not propose to a woman without absolute assurance that she'll say yes," says Ethan, and Mr. Brentan agrees.
There is broader context:
In 1972, on a park bench in Birmingham, Ala., Garner Lee Green's father proposed to her mother. The proposal came out of the blue. She said yes.
"That doesn't happen to people anymore," says Ms. Green, who is 30. And it certainly wasn't the way her husband asked her to marry him several years ago. The two of them talked for a long time about how and when the proposal would happen. "I was ready before he was, so we had to come to a meeting of the minds about a time frame. The negotiations lasted about six months," Ms. Green says.
So what are the economics? Presumably a proposal "out of the blue" is more likely to be accepted, and offered, when there is potential disagreement about the correct "market prices" of various potential partners. A lower status man might try to snare a higher-quality woman, perhaps by catching her off-guard, or he might be trying to signal, with his daring and panache, that he is higher status after all.
The most likely ones to accept such proposals are women who are unsure of their "quality," either on the mating market or in unmarried life. Accepting the proposal takes on one kind of risk but relieves the woman of another.
Overall it seems that women are today more certain about the utility value of their alternatives to a surprise marriage proposal and that means they turn them down. The proposals may seem like harmless "cheap talk" (propose to lots of women above your station in life and thus the custom persists, even if it rarely succeeds), but Google-savvy, credential-savvy women can evaluate men better than ever before and the lower status guys don't get close enough to them to try a shock proposal, much less make it stick.
Is it a prediction that rapid, surprise proposals are more common in societies where male high achievers are hard to identify in advance? How important is inequality of income and volatility/uncertainty of income?
Perhaps for aesthetic reasons, I find the decline of the surprise proposal slightly sad (though in part reflective of some positive societal developments), and I am pleased to reaffirm that I do not believe in the consultative approach.
I thank Daniel Lippman for the pointer.
Debt facts
Greece resolved its last sovereign default only in the mid-1960s and Portugal had an International Monetary Fund programme as recently as 1984. (Spain’s modern history is much better, despite holding the record – more than 12 – for most independent sovereign default episodes.)
The article, by Ken Rogoff, lays out a version of what I call Austro-Euro business cycle theory. It is an especially good short piece.
Not From The Onion: PA Big Brother
I thought this was a joke but apparently it's real.
Very good sentences
OH: "Facebook is the people you went to school with. Twitter is the people you wished you went to school with."
The link is here. That's from Ben Casnocha, but who is OH? Orrin Hatch? Or could that be the state motto of Ohio? Google would seem to indicate that the Ohio state motto is the anti-Thomist and indeed ultimately anti-philosophical "With God All Things Are Possible." In 1997, the ACLU filed suit against this motto, claiming it violated the separation of church and state but they did not win the case. Could this be Ben wishing it were the official motto of the state of Ohio because indeed all things are possible?
Assorted links
1. How Singapore advertises itself.
2. Markets in everything: Tokyo's cat cafes, good photos.
3. Mas-Colell on capital theory paradoxes.
4. New schemes for restaurant pricing, including the sale of tickets.
The Euro and precommitment
It's not the major problem, but one neglected aspect of the Eurozone crisis is simply that countries such as Greece and Portugal cannot precommit to stay in the Eurozone forever. So markets start wondering whether or when they will leave. That makes it harder for them to borrow (markets expect a currency devaluation), which turns up the pressure for them to leave. It also makes it harder for their financial intermediaries to stand on a permanently sound footing, given that deposit liabilities may not stay denominated in terms of Euros forever.
If Greece and Portugal were out of the Eurozone, few people would speculate on their imminent return, and so that state of affairs is more likely to have consistent (if sometimes bad) expectations.
Once something like this is up for grabs, it is often wiser to bet on the outcome associated with the more universally consistent expectations, whether or not you think that outcome is a good one.
Of course the market is also familiar with this logic, which in turn makes it yet stronger. It also means that tips and flips of sentiment can enforce runs and speculative attacks very quickly and at not-fully-predicted times.
Are girls now worse drivers than boys?
This was only one study, but it fits into some broader social trends:
In a survey of teenage drivers, Allstate Insurance Co. found that 48% of girls said they are likely to drive 10 miles per hour over the speed limit. By comparison, 36% of the boys admitted to speeding. Of the girls, 16% characterized their own driving as aggressive, up from 9% in 2005. And just over half of the girls said they are likely to drive while talking on a phone or texting, compared to 38% of the boys.
Nor are these teens meta-rational:
The study found that 65% of the respondents, male and female, said they are confident in their own driving skills, but 77% said they had felt unsafe when another teen was driving. Only 23% of teens agree that most teens are good drivers.
Sentences to ponder
Italy owes France $511 billion, or nearly 20 percent of French gross domestic product.
There is a good visual here and hat tip goes to Bob Cottrell at The Browser.
Where Greece went wrong
Here is another useful paper on Greek economic history. Here is one excerpt:
Rather than adopting policies to correct the macroeconomic imbalances of the Greek economy in order to restore macroeconomic stability and growth, the newly elected Socialist government further promoted policies for income redistribution and the expansion of the public sector. These policies reflected two aspects of the political and economic system of that period. First, they reflected the political priorities of the newly elected government, which was elected under a promise to the public for a radical change in the socioeconomic system. The expansion of the welfare state in the late 1970s had increased the public’s appetite for additional state transfers and for further measures to lower the gap between low- and high-income groups in the society. Second, they reflected the lack of any constraint, internal or external, in the conduct of economic policy. The debt-to-GDP ratio in 1981 was only 34.5%, despite the fiscal expansion that took place during that year. The debt-to-GDP ratio was the highest of the previous 30 years, but still at a relatively low level by world standards. Thus, the Greek government did not face any difficulties borrowing from the domestic and international markets in the early 1980s. This allowed the government to continue pursuing its expansionary policies. Moreover, the central bank lacked independence, a factor that Alesina (1988) and Cukierman, et. al., (1992) find to be inversely related to inflation. Even though the Currency Committee was officially abolished in 1982, the government continued to set the broad outlines of monetary and exchange rate policies during the 1980s. This meant that monetary policy was dominated by the need to finance fiscal expansion.
Although I still favor Greece leaving the Eurozone, we should remember they joined the currency union for a plausible reason, namely that their own monetary policy was a disaster in the making. Here's a very good post on how deeply structural the Greek problems run.
The most highlighted non-fiction passage on Kindle
Can you guess the author? The passage is this:
…the more money they made the next day on the streets. Those three things–autonomy, complexity, and a connection between effort and reward–are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make that ultimately makes us happy between nine and five. It’s whether our work fulfills us.
The full list is here and it is worth a good look. Keep in mind that Kindle readers are far more literate than average. And if you need extra background, here is Kevin Drum on The Shack.
Hat tip goes to WillWilkinson.
Insurance markets in everything
From Der Spiegel (in German), there is notice of a market which surprises even me. Many Parisians ("Schwarzfahrer") don't pay to ride and Metro and risk legal fines. For seven Euros a month, you can buy insurance against having to pay those fines. The group also considers itself part of a protest movement for the right of free public transport.
Talk about adverse selection… Presumably it's understood that you don't pay the fare and the relevant risk is simply how often you are caught.
For the pointer I thank Steffen Reinhold. Ferdinando Monte sends along this English-language version.
Assorted links
Presumed Consent and Organ Donation
A New York assemblyman wants NY to adopt a presumed consent law for organ donation.
The legislation, introduced by Assemblyman Richard Brodsky, a Westchester Democrat, is in two parts: the first step would end the right of the next of kin to challenge the decisions of their dead or dying relatives to donate their organs.
In a second measure, which is far more contentious, people would have to indicate in official documents – their driver’s licenses, most commonly – that they specifically don’t want to donate organs. If the box is not checked, it is presumed the person wants to donate.
The first thing to note about this proposal is that contrary to what Brodsky suggests, the problem isn't families who refuse to follow the wishes of the potential donor–as a rule, families who know, follow. The problem is that families often don't know what their loves ones would have wanted because many people don't sign their organ donor cards.
In fact, the way presumed consent actually works is not by overriding the wishes of the family it's by making the wishes of the potential donor more clearly known to her family. In most presumed consent countries the family still has the ultimate say in practice because what doctor is going to want to go against the wishes of the family in a time of grief? Instead, presumed consent increases the probability that families say yes by changing their background information from my loved one didn't opt-in to my loved one didn't opt-out.
So under presumed consent we get more families saying yes–but not all–and there are other constraints such as the number of people who die in a way that makes their organs available for transplant and the availability of transplant surgeons and facilities to do the operation and so forth.
In a roundtable on this issue with Sally Satel, Art Kaplan and others, Kieran Hiely notes:
Spain’s success is due to effective management of the transplant
system, not a simple legal rule. Similarly, Italy’s donation rate grew
rapidly in the 1990s thanks to investment in its system, not because of
its long-standing presumed consent law. Some countries, notably
Austria, do have “true” presumed consent, with no kin veto. But they do
not outperform countries like the U.S. by any great margin.
I'm actually a bit more positive than Kieran, the best evidence is that presumed consent raises donation rates by perhaps 20-30%. Not bad, but not enough to eliminate the shortage. To do that, as Satel notes in her contribution to the roundtable it will take live donation.
Kieran also writes:
It’s also worth remembering that, since the 1970s, the U.S.
“transplant community” has worked hard to allay public concerns that
surgeons might be too eager to harvest organs, or that the state might
play too calculating a role in deciding what happens to the bodies of
potential donors.
The latter point is especially important in the United States. Brazil, for example, switched to presumed consent and then switched back to opt-in when people became fearful and outraged and donation rates fell. It's not hard to imagine similar blowback in the United States.
It's also worth remembering that considered as a whole the U.S. system is the best in the world. Spain does have a very high rate of deceased donation, but it does poorly on live donation. Iran leads the world on live donation because it compensates donors but due to religious feelings about the sacredness of the body Iran, like other Muslim countries, does poorly on deceased donation. The US does well on both deceased and live donation and in total leads the world.
We can do better but we do need to tread carefully.
Esther Duflo at TED
Here is Esther Duflo, this year's
John Bates Clark medal winner, giving an overview of her work on using randomized trials to evaluate development policies.
Hat tip to Shruti Rajagopolan.