Cheap, fresh crack and sport events

Where and when will be the best place and time to get fresh cheap crack and enjoy watching the sporting event of the year?

Rio 2016 of course!

While the decision who gets to host the Olympics is dirty politics (I'm sorry Barack!), the supply of "fresh, cheap, quality" drugs can be attributed to the miracle of competition!

As the Economist article on Rio "The bottom line " says, there are three large competing drug fractions in Rio. Fierce competition among the gangs is bringing the prices (and I presume quantities) close to the perfect competition outcome.

Is this the way to go? It definitely is, if you believe that humans are truly rational and that drug addiction is in fact utility maximizing.
It might not be, if you think the drug addicts are not fully rational. Monopolistic drug dealer would increase prices and slash quantities sold, so decreasing the number of drug addicts (being drug addict is more expensive => the outside option gets more attractive). On the other hand it would create extra revenues for the drug cartel, these would likely be used in ways not consistent with the "best interest" of the majority society.

Anyway, if watching sporting events and doing crack is your thing, start shopping for a ticket!

Levitt On The Daily Show

Jon Stewart interviews Steve Levitt about his new book, 'Superfreakonomics'.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Steven Levitt
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

What about the book review PL?

Improving the rules of football

“The first-move advantage in chess is the inherent advantage of the player (called White) who makes the first move.” Chess’ flesh and blood version, “American” football, suffers from the same problem. When it comes to overtime, the team that gets the ball first by winning a coin toss wins more than 60% of the time. Obviously, letting luck decide the outcome of a game based on the rule-of-law is problematic.

Tim Harford explains how Chris Quanbeck, a Green Bay Packers fan, came up with the idea to auction off possession of the ball in the natural currency of the game: field position. The team willing to begin furthest from its scoring line would receive the privilege of possession. Yeon-Koo Che of Columbia University and Terrence Hendershott of Berkeley formalized  the idea. As they explain with the figure below, the auction outcome should end up around the 18 yard line, where the chance of winning is counterbalanced by the risk of a dangerous fumble or interception.

But doesn’t adding luck, in the form of a (random?) coin toss, make the game even more exciting and “human”? I would think that, quite contrary, the auction would add another layer of strategic decisions based on game theory and psychology…in other words, what football fans, such as David Romer and Steve Levitt, really want.

As Quanbeck puts it, “Imagine the excitement of live bidding!  Two head coaches meet face-to-face at center-field in a test of guts and strategy.  The home crowd goes crazy as the bidding proceeds, imploring their coach to take the ball and drive to victory.  However, the hometown coach must stay cool to ensure he doesn’t end up pinned against his own goal-line on fourth down.   Either way, the coach has nobody to blame but himself.  If you want the ball, take it.  But be careful what you ask for”.

Foreign volunteer busy writing a blog and smoking pot

"How to keep the bed net project going when the nets were first impounded and delayed at customs, the truck driver transporting the nets got drunk and didn’t make the trip, the clinic workers are off at a funeral for one of their coworkers, the foreign volunteer is too busy writing a blog and smoking pot, and the local village head is insulted that he was not consulted on the bed net distribution."

Source: Easterly

Mr. Volcker's plan to reform banks

In this article from the NYT, a description of the struggle Mr. Volcker is facing in advancing his reform plan for the banking sector. In a nutshell, this would be a "modern" version of the Glass-Steagall act, separating investment banks from commercial banks.
Mr. Volcker is literally and figuratively a "giant", because of his reputation built during his chairmanship of the Fed. The period in which he defeated the high inflation mounting in the US at the beginning of the 1980s is known as Volcker's disinflation. He now and then hired as an external advisor whenever important reforms are needed, and now he is the head the president’s Economic Recovery Advisory Board. While the Obama team is thinking at maintaining the current setup with heavier regulation (changing capital requirements, highlighting guidelines in payment structure for managers), Mr. Volcker is advocating a simpler system where "no bank would be too big too fail", because in his view: “no form of economic organization can fully contain bouts of destructive speculative euphoria”.

30% to 40% of World Bank lending is stolen

"Embezzlement and theft of World Bank funds may be the rule rather than the exception... 30% to 40% of World Bank lending is stolen (not lost to inefficiency but actually stolen)...
Workshops, conferences and projects aimed at “reducing vulnerabilities” or “reforming governance” are so much more palatable to the organization’s managers than digging up evidence of wrongdoing and pressuring governments to prosecute and recover funds. ....all our workshops and technical assistance may simply provide diversions that allow criminals to get away with their loot."

This is from this CGD post about this book.

Viva Competition!

"Prof. Anspach played his first game of Monopoly as a child in the mid-1930s in Czechoslovakia. In 1938, his family fled Europe to America on the cusp of the Holocaust. Years later, he earned a Ph.D. in economics from Berkeley. One day in the 1970s, he tried to explain oil cartels and the downside of monopolies to his 8-year-old son, William. The economist searched toy stores for a more philosophically pleasing alternative to Monopoly, but found nothing. He then set out to create a game that would be a sort of "Monopoly backwards," in which players compete to break up existing monopolies rather than create them. He called it "Anti-Monopoly.""

What's more, he even uncovered the drak secrets behind the Monopoly board game and fought to break thier monopoly! More in the WSJ.

ht: Bridge

How easily can ones brain be fooled?

How easily can ones brain be fooled? It turns out that pretty easily (at least when it comes to recognizing colors, distances etc...). Look at the two squares marked A and B and compare their color.





Square A seems significantly darker, doesn't it? It turns out, both are the same color... I think the perceived color difference is even bigger in the second case: Compare the color of the little squares that are in the middle of sides of the cube. (I marked these squares with a little tick).



The one on the upper side is dark brown, the other one is orange! There seems to be no question about that. Again, both have the exact same dark brown color. Here are the relevant squares (everything around them was deleted).





The question is, can our brain be fooled so easily in different situations? For instance when one assesses probabilities and uncertainty. I think so (I would recommend the Kahneman, Tversky:Judgement Under Uncertainty: Heuristics and Biases).
The real question is whether the "enlighten" policy maker can do anything about it (maybe he suffers from the same bias-VS comment about casinos banning Martingale strategy players on prev. post) and whether he should do anything about it (maybe people are perfectly happy thinking that the little square is orange rather than brown)...

Rodrik on rising protectionism

While Dani Rodrik has been silent on his blog, he is still producing commentaries on Project Syndicate. Here there is his last sceptical view on the argument made by many scholars that Protectionism is on the rise because of the crisis. While questioning the numbers per se (does anyone know of a comparison between pre-crisis and post crisis protectionist measures??), the further point he raises, is that the difference between the Great Depression and today's crisis, is the presence of safety nets in modern economies. These, in his views, have succesfully reduced the workers' demand for protection by means of tariffs.