Archive for June, 2010

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Isner and Mahut in a prisoners dilemma

So the longest Wimbledon match in history is currently underway. As I type, Isner and Mahut are tied 56-56 in the last set; they’re tied 2-2 in previous sets.

According to reports (and common sense), the two men are exhausted and grimacing with each serve (though they seem to have rallied when they crossed the 10-game threshold). My guess is that they arms will be completely shot by this for the next few days. As a result, whoever wins this match will be at a severe disadvantage going into the next round, and will probably be so exhausted that he will lose. In other words, assuming winning the tournament is the goal and one that’s much more prized than merely advancing to a second round, it’s a classic prisoners’ dilemma. The dominant strategy by each player is to keep playing, even though every game further diminishes his likelihood of winning the next round, and therefore taking them out of contention for an overall win. In other words, every additional set that Isner and Mahut play decreases their chances of making it to the third round and thus reduces their combined expected utility.

Would there have been a way for them to have reached an optimal solution earlier on? Obviously sportsmanship precludes any kind of (spoken) match fixing, but mightn’t there be a rule change allowing a set to stop before it becomes a death match? For instance, before a match begins, players could agree to opt out of the normal rule and set a limit on the maximum number of sets they’ll play in a final, fifth match before the need to win by two games is eliminated. Setting this rule from the beginning of a match allows the players to circumvent the prisoners dilemma; whoever wins the match is more likely to win the tournament than in the absence of such a rule.

Efficiency concerns are seldom used in sports; we prefer the epic struggles and Pyrrhic battles. But that doesn’t obviate a little sideline thought experimentation.

Unlikeliest group of the day

From the Rolling Stone McChrystal article, one of these things is not like the other:

The general’s staff is a handpicked collection of killers, spies, geniuses, patriots, political operators and outright maniacs. There’s a former head of British Special Forces, two Navy Seals, an Afghan Special Forces commando, a lawyer, two fighter pilots and at least two dozen combat veterans and counterinsurgency experts.

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What are the most libertarian states?

Jason Sorens over at the The Fund for American Studies blog has a series of interesting posts attempting to identify the most libertarian states. Using factors that include Ron Paul’s vote share, the number of Ron Paul donors per state, Libertarian Party vote in the 2008 presidential election, and other variables, he concludes:

The states with the most libertarians are Montana, Alaska, New Hampshire, and Idaho, with Nevada, Indiana, Georgia, Wyoming, Washington, Oregon, Utah, California, and Colorado following.

Just in: Doctors respond to incentives, are human

A new study by Harvard health policy professor Joseph Newhouse finds that when Medicare payments to doctors for chemotherapy are cut, doctors respond by prescribing chemotherapy to more patients than they previously had, thus making up the difference. Predictable or unintended consequence, it’s still Econ 101. Still, policymakers act as if people (and doctors are people) can be immune to incentives. Since the Obama health reform pays for itself in part with medicare payment cuts, expect to see more of this sort of thing.

What’s especially interesting to me is how this underscores the insanely asymmetric relationship we have with doctors. The only difference between a doctor and a car mechanic telling you that you need to replace your Johnson rod is that you’re probably in a much more vulnerable position talking to a doctor.

Thanks, George W Bush, for the BP escrow fiasco

In today’s New York Times, David Sanger analyzes President Obama’s expansive use of the presidency not as a bully pulpit but to act as planner/shareholder/dad-in-chief:

But President Obama’s successful move to force BP to establish a $20 billion compensation fund that the company will have no voice in allocating — just a down payment, the president insisted — may have been the most vivid example of what he recently called his determination to step in and do “what individuals couldn’t do and corporations wouldn’t do.” With that display of raw arm-twisting, Mr. Obama reinvigorated a debate about the renewed reach of government power, or, alternatively, the power of government overreach. It is an argument that has come to define Mr. Obama’s first 18 months in office, and one that Mr. Obama clearly hopes to make a central issue in November’s midterm elections.

The real issue here isn’t — or at least shouldn’t be — the “size and scope” of government, to employ that chestnut. What’s really frightening about the way that Obama sees his role as unconstrained by law or regulation on what he can or cannot do. If the president decides that a private company should establish an escrow fund with the federal government, he doesn’t need a law or regulation to set up how this works. He just needs what Rahm Emanuel calls “a power other presidents have used — you call it jawboning.”

It may make every bit of sense for companies that drill offshore to, in the case of an environmental catastrophe, have an escrow fund managed to pay the victims of their recklessness, carelessness, or bad luck. And as Richard Epstein argued, BP doesn’t deserve to have its liability capped.

But if this is the case, there should be some kind of legal or regulatory means for addressing this. A whim of the president is not, in a country that can meaningfully be said to be governed by the rule of law, sufficient basis for this. And by putting the money in an “escrow fund,” it gives the illusion that there’s some kind of contractual or due process mechanism at play here. There isn’t. Procedure matters in a liberal democracy; getting to the “right result” isn’t enough.

Of course, Obama couldn’t do this if his predecessor hadn’t teed up such a perfect shot for him. So well done, Republicans. Your insistence that the “unitary authority” of the president allowed him to imprison and execute at will has been reapplied from real people to the legal persons that are corporations. Nothing Obama’s doing is inconsistent with the Bush doctrine on presidential power. The target has merely shifted. Heck, it’s really just a continuation of existing Bush administration policy: Hank Paulson did the same thing when forcing banks to take TARP money, though at least TARP could hide behind the fig leaf of congressional action.

Somewhere from his lair on Skullcrusher Mountain, Dick Cheney is smiling. And remember, libertarians told you so.

International soccer and fiscal policy

The list of countries that qualify for the World Cup is always a motley one. There’s Brazil playing against just-got-in and didn’t-register-properly North Korea, which Radley Balko suggested fielded a side with eight Kim Jong-Ils. Over in Group  E there’s defending world champions Italy, we’d-rather-be-playing-rugby New Zealand, Slovakia (motto: “No, sorry, you’re looking for Slovenia; they’re in Group C; no bother, it’s a common mistake”), and Paraguay (notice that every country ending with “guay” qualified for the World Cup).

Qualifying for the World Cup is a big deal and source of national pride (except in the United States). Could this pride be leveraged for macroeconomic ends? I have a modest proposal.

The Stability and Growth Pact limits the ability of Eurozone countries to run excessive deficits and incur excessive debts. Supposedly. As we’re seeing in Greece, it doesn’t seem to be doing a very good job at this. And Greece is far from the only country to openly flout the Pact.

Would World Cup disqualification work any better? That is, what if FIFA or the regional governing bodies (like UEFA) only certified for World Cup participation countries that adhered to some basic rules of fiscal discipline, keeping their deficits in check and debt below some reasonable percentage of GDP?

It wouldn’t be unprecedented. After all, in club soccer, teams are regularly disciplined for financial irregularities with point deductions and even outright relegation. This seems to be a more-or-less effective way of keeping team management on the up-and-up. The same might well hold for nation-states.

Obviously this isn’t foolproof, and surely there will be countries that game the system. But it would at least allow the exclusion of countries like Greece who threaten the financial stability of an entire continent. To mix my sport metaphors, Greece deserves some time in the penalty box. That need not be executed just by diplomatic means.

Since the endogenous costs of reckless fiscal policy don’t seem to effectively dissuade countries from marching into the abyss, perhaps the damage to national pride accompanying disqualification from international soccer’s biggest quadrennial tournament would prove more effective.

California: America’s bread basket and food regulator

Baylen Linnekin has published a new law review article that you should read if you care about your right to eat whatever you want. He points out that California is leading the charge in regulating and banning politically incorrect foods, including hollandaise sauce and Caesar dressing, taco trucks and other street foods, eggs, raw milk, trans fats, and many others. This should worry the rest of us because as goes California, so goes the nation. For example, California was the first state to ban foie gras, and soon other jurisdictions followed suit, including famously Chicago.

Before reading Baylen’s article, I had no idea that California was responsible for so much of our food production. When you think of America’s bread basket, you tend to think of the midwest, but in fact it is California:

The sheer volume and variety of crops grown in California defy overstatement. The state leads the nation in production of almonds and walnuts and seemingly every crop alphabetically in between. In addition to almonds and walnuts, California is America‘s sole producer—meaning it is home to ninety-nine percent or more of the country‘s overall production—of figs, raisins, olives, clingstone peaches, persimmons, prunes, pomegranates, sweet rice, and clover seed. The state leads the nation in production of asparagus, avocados, bell peppers, broccoli, carrots, cauliflower, celery, cut flowers, dates, eggplant, garlic, grapes, herbs, kiwi, lemon, lettuce, lima beans, melons, nectarines, onions, pears, pistachios, plums, raspberries, strawberries, turnips, and more than a dozen other crops. All told, California farms account for nearly half of America‘s domestic production of fruits, nuts, and vegetables. California growers ship the vast majority of these crops to other U.S. states. California also accounts for all of America‘s nut exports, and three out of five fruit and vegetable exports.

California also has the most vibrant restaurant industry in the country. To me, this begs the question: If California’s agricultural and food industry is so massive why hasn’t it successfully organized to block food regulation? Is it simply the case that green lobby is much bigger?

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Ask not for whom the watch beeps

I’m at a conference in Philadelphia today with about 100 people in an auditorium. Around two in the afternoon, someone’s watch made a “beep beep” sound, and it took me a minute to realize that this was a sound marking the hour and one that I hadn’t heard in years.

Do you remember in the 1980s and 90s when a chorus of digital wristwatches emitted perfunctory peels every hour on the hour? I realized today that this seems to have completely disappeared. Why is this? A few hypotheses, ranging from the blindingly obvious to the more subtle (and therefore less likely correct):

  1. People are less likely to wear watches. This is the most obvious theory. Some estimates show that watch sales have fallen off over the last few years, but not by the order of magnitude that would be required for the virtual elimination of the hourly watch chime. Even if 50 percent fewer watches were sold this decade, and stipulating for the moment that watches are not durable goods, that still doesn’t explain it. Anecdotal evidence suggests that cell phones and iPods have rendered the wristwatch obsolete (at least as a method for telling time), but they haven’t gone the way of the buggy whip yet.
  2. Preferences have changed towards analog wristwatches. This makes some sense; since we have the time in our pocket (plus calculators, contacts, appointments, memos, and all the other snazzy things our watches used to do before PDAs and cell phones), watches perform only two functions: telling the time and signaling status.
  3. People no longer want to be told when the hour strikes. What explains this change in preferences, however? Why would this have changed?
  4. People never wanted hourly chimes to begin with but watches came with them turned on by default. Call this the Sunstein and Thaler theory.
  5. People still want hourly chimes but don’t want to wear watches to get them. This makes little sense since presumably cell phones could be made to chime hourly, or developers would create an app. (Oh wait, they did.)
  6. My sample has changed. I’m in a professional environment now rather than school and college. Since I graduated from college about the time that cell phones became ubiquitous, I have a difficult time disaggregating a number of social trends from this other revolution.

Granted, this is a completely pedestrian observation. But it is remarkable that, at least from my perspective, something as ubiquitous as the hourly watch chime seems to have disappeared overnight, and without much fanfare.

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