Fashion Week or Campaign Season

This month, fashion week took over all the big cities. While watching the runway shows, I kept wondering where these pieces end up. The pieces are sculptural, full of clashing patterns, and extravagant materials. Yet at the same time, these brands' stores are full of cream sweaters, black trousers and a wall of simple handbags. For a long time I assumed the runway was just art for art's sake; I now know this is a strategic move. The runway is a party platform's "extreme stand."

In a two-party system, parties pack their platforms with an overlapping mass of moderate policies in the middle of the scale, where most voters are. But a party can't go completely bland, or it loses its most loyal supporters at the edges. So each party will sprinkle a few extreme stands to please its far-out voters. A fashion house does exactly this. Its stores are the moderate mass, full of wearable basics that could belong to almost any label. Its runway is the sprinkle of extremes for editors and collectors. Like a party's extreme stands, those looks aren't meant to win over the average shopper. Take Loewe under Jonathan Anderson. His runways featured heels made from nail polish bottles, birthday candles, and cracked eggshells. Yet the brand's defining product was the Puzzle bag, a structured, clean leather bag. 

Although they might not be consumed, these extreme stances let a customer differentiate one brand from another. Strip away the logos, and one luxury house's camel coat is nearly impossible to tell from another's. The runway isn't where a brand makes its sales. It's where a brand shows what it stands for.

 

A Transfer Portal Dilemma

The introduction of the transfer portal into college sports, particularly football and basketball, created an interesting example of the prisoner's dilemma. Coaches and programs can choose to cooperate and minimize their use of the portal, or they can defect and seek out transfer players. For our purposes, let us consider only two programs. There is a Pareto-efficient outcome where each decides not use the portal (cooperate). However, each program has an individual incentive to defect; using the portal while the other does not gives them a competitive advantage. Since each faces this incentive, they defect and are both worse off than they would be had they each cooperated. What if they didn't reach this equilibrium?

Let's consider a comparison of two coaches currently participating in the transfer portal dilemma: Curt Cignetti and Dabo Swinney. Cignetti turned around an Indiana team that went 3-9 in the year prior to his arrival to a 16-0 national champion in just two years. He did this with a roster that added 52(!) transfers during this period. Dabo Swinney has been stubborn in his refusal to allocate resources towards the portal in favor of developing high school recruits, taking only 3 transfers over the same period. Swinney has fallen from the heights of his pre-portal success and Clemson has turned into a middling program. As noble as Swinney's motivations may be, Cignetti's defection and Swinney's insistence on cooperation have created the outcome we may expect. Cignetti's behavior demonstrates the benefit programs can gain from defection while others continue to cooperate.

The Future Harm of Rational Ignorance

Rational ignorance assumes that the cost of acquiring information may outweigh its immediate benefit. There is a significant stepback of this idea. Rational Ignorance can be very harmful to you because deciding not to deepen your understanding on certain topics now, may result in greater marginal cost in the future. This can be seen when you will urgently need an information/skill after several years if you had learned/mastered it in the past. This missed opportunity will probably cause you to waste your precious free time as you get busier with a career. Currently, many college students have free time that tends to be used unwisely. Therefore, depending on the developments later in your life, such unwillingness to learn additional information may stab you in the back. 

A good thing to note is that financial information can have value beyond the present decision. The majority of university graduates going into their first job had none or minimal information on how to do their tax deductions or plan their retirement savings. Most of their arguments were backed by the idea that retirement is “decades away and there is time”. This prevents many people from managing money in the best possible way and end up paying much more taxes than needed, for example. The finance saying “Money is worth more today” directly implies that rational ignorance underestimates that time is worth more today than tomorrow, specifically the opportunity you had to learn something more. In simpler words, rational ignorance may seem beneficial when the immediate cost of learning outweighs the immediate benefit, but this ignores the future value of information. Learning something today may have a small immediate payoff but provide significant benefits over your lifetime.

Rational Voter Theory in the NBA

ESPN recently released their annual list of the NBA's top 100 players of 2026, decided on by 7 panelists. These professionals have dedicated their lives to watching basketball feeding their analysis to fans who, however dedicated to their teams, cannot hope to watch every game every night. In this, we arrive at the theory of a rational voter. There are many opportunity costs to watching basketball, such as working, studying, or doing Public Choice homework. This means that the MC curve of the casual fan must slope up with increasing opportunity cost for each additional unit of basketball consumed. Additionally, without being paid for watching the game nonstop, there are obviously decreasing marginal benefits of another unit of basketball (watch a Kings versus Nets game to find out). At some point, where MB=MC of basketball knowledge, there is an optimal point. Can we show this empirically?

It's complicated. The NBA All-Star game participants are selected by a combination of media member, player, and fan voting, the results of which are published. One would probably expect when comparing player and fan differentials to media rankings that the players would be closer to the "truth", i.e. maximum knowledge, as their MB of knowledge is higher and their MC is lower, on account of their salaries and scouting reports, and thus higher equilibrium point. However, players only averaged .3 points closer to the media than fans on average.

Perhaps this means that players are actually under-consuming knowledge, as they consistently rank close to the fans who aren't paid millions to study film. This could be explained by the now-famous NBA player Twitter habit. The rational voter consumes the knowledge that is easiest to find first, meaning social media in this case. Take a twitter-controversial player like Lika Doncic as an example: players rank him around 10, yet the media has him at 4. As another example, a rookie player like Cooper Flagg is placed by players at 34, yet rises to 23 in the eyes of professionals. This is an interesting example of it being rational to consume more - one would expect better game-planning for players who are more accurate about the skill level of their opponents.

No Impact, No Problem

This past Friday, early voting opened in the state of Virginia, and my grandmother made the front page of the Richmond Times Dispatch, eagerly casting her ballot on the first day she possibly could, grinning ear to ear and proudly sporting her red, white, and blue. My grandmother has held an astounding enthusiasm for voting for as long as I have known her, and it is something I have always greatly admired about her. However, the rationality behind her eagerness to vote is questionable, as her candidate for the House of Representatives this year is currently forecasted to have a 99% chance of winning and is expected to receive 71.1% of the vote, meaning there is essentially no chance her vote would have an impact. When weighing the expected marginal benefit she gains from voting against the marginal cost (PB - C), the P is so tiny that it is most certainly negative.

Of course, this isn’t special to my grandmother’s district. We have discussed extensively that the probability of an individual vote being pivotal is essentially always zero, but in her case we can also rule out that she is voting because she overestimates this probability, as she is very aware her candidate will win in a landslide whether or not she chooses to vote. So why does she do it? I immediately called her after seeing this headline to ask her this very question, and she replied word for word: “It's a constitutional and globally unique right that I must never take for granted at any time”. She doesn’t vote because she thinks her individual ballot will elect a candidate or influence policy, she votes because she loves what the act of voting itself represents. She votes, and votes enthusiastically at that, because she is so grateful she can. As discussed in class, this high utility associated with voting, independent of whether her ballot influences the election, can be factored in, significantly increasing her marginal benefit. Accounting for this alters her equation to PB + HighUtility - C, which her behavior suggests is likely much greater than zero. So, despite knowingly having no tangible impact on the candidate elected, my grandmother's marginal benefit of voting still exceeds her marginal cost, and she proudly heads to the polls. Maybe you can make the news too if you cast your vote this election season :)

A Non-Regulatory Approach to Addressing a "Public Health Crisis"

     Recently it seems as though more and more experts and commentators have been focusing on the harms of legalized sports betting. Many states have attempted to tackle the issue with either public regulation or a private monopoly supported by anti-competitive state policy (e.g. only Draft Kings can facilitate bets). The impetus for these regulatory measures is not just that legalized gambling poses a risk to those with gambling addictions but there are also negative consumption externalities that may affect the public at large. Compulsive gambling has been linked to increased bankruptcy rates (with many families becoming financially ruined due to a member's gambling problem) and lower productivity across the board, especially among young men. Many states, such as New York, have incredibly high tax rates on gambling revenues, reaching upwards of 50%. 

In spite of the regulatory initiatives, the issue remains that these books receive a disproportionate amount of revenue from excessive gamblers. As evidenced by numerous horror stories of sportsbooks attempting to lure problem gamblers back to using their platform, these books still have an incentive to circumvent these regulations. Additionally, a high tax rate means thinner profit margins. In the long run it is certainly possible that markets and social awareness may mitigate the problems associated with problem gambling and protect vulnerable consumers and their dependents; however, protecting these consumers in the short run may require some unconventional policy solutions. One potential solution could be to introduce a reverse Pigouvian tax (essentially a subsidy) which encourages good behavior on the part of the sportsbook. This could take the form of an independent auditing agency determining whether or not the sportsbook has successfully barred problem gamblers from using the platform. If the book passes the audit, they could be eligible for entry into a lower tax bracket. While there are certainly drawbacks to this sort of policy (such as reducing state revenue) and I am not claiming it to be a permanent fix, it could offer protection for vulnerable consumers by mitigating a sportsbook’s incentive to go after them. Protecting these consumers would protect society writ large by reducing their negative consumption externalities. Instead of referring to this as a solution it may be wiser to heed the words of Thomas Sowell and refer to it as an advantageous trade-off. After all, as Sowell would say, there are no solutions, only trade-offs. 

On My Honor

As the capabilities of AI have improved, the temptation for college students to cheat using AI has increased. According to a Berkeley study published in May, 9% of students who used AI admitted to using it to cheat. The study was conducted in the spring of 2024 and considering how quickly the technology has been adopted, coupled with the response bias inherent in asking students to admit to cheating, the current rate of AI cheating among undergraduates is likely much higher. As I lamented over this issue, I realized that the choice facing students about whether or not to cheat on a test with AI is a classic example of the Prisoner's Dilemma. 

Most students, even those with a solid understanding of the course material, would probably be able to improve their test score, even marginally, by consulting AI. If a student's classmates all use AI to cheat, their higher test scores will skew the grading curve, leaving the student worse off if he does not follow suit. Assuming the professor is oblivious, cheating becomes the dominant strategy for all students because it will give them a better score (higher utility) than if they do not cheat, irrespective of the choices of their classmates. However, ideally the UVA Honor Code would act as a deterent so that no students would cheat, resulting in the Pareto-Efficient solution. 

Census Data: Private or Public?

    The U.S. Census Bureau runs many annual or monthly programs to guide congressional apportionment and federal funding. This data is a public good as it is non-rival and non-excludable. Anyone can use the data to conduct analysis and it is impossible to exclude as people are needed to conduct the polls. However, the Census suffers from the free rider problem, the poll rates have been falling over the past couple years. People will continue to use the data but fail to respond to polls sent out by the Bureau. As a result, the polls are not representative of the population they seek to emulate. 

    With the emergence of the iPhone and the increased digitalization, technology companies have unprecedented amounts of data on the U.S consumer. Along this shift, the government could turn to private companies to supplement or replace its own polling. This is already partially happening, the BLS uses a dataset purchased from J.D. Power to estimate its new-vehicles price index, and airline fares data from the Department of Transportation instead of running its own survey. If this trend continues, access to population data could depend on paying a company for it, turning a non-excludable public good into an excludable private one. 

I Swear We're Not That Messy.

I’ve lived with my roommates for over a year, and despite the substantial amount of time we spend together, collectively cleaning our apartment is the worst. Either we are too lazy, too busy, or unwilling to claim our mess. However, we prefer to keep a clean living environment. Since some of my roommates refuse to use a chore chart, how our apartment’s common spaces ultimately end up getting cleaned presents itself as a classic prisoner’s dilemma. 

The ultimate goal is to have clean common spaces in our apartment. We each have the choice between cleaning and not cleaning. Each of us has a dominant strategy: don’t clean and hope the other cleans up. The sub-optimal options would be for one person to clean and the other free ride on the results of the roommate’s cleaning. The Pareto Optimal solution would be for all of us to clean collaboratively, where even though we would have to put in effort, it would take less time and our apartment would be clean. However, we all expect someone else to do the work, and while we wouldn’t have to do the work (meaning higher utility), our apartment stays dirty (sub-optimal utility). 

This being said my roommates and I ironically hate a dirty living environment. Outside of this dilemma, we do end up cleaning our apartment. While our apartment ultimately gets cleaned, it does so at sub-optimal utility levels where we all put in different amounts of effort. Yet, this "collaboration" is not a change in dominant strategies, but rather the result of a durable relationship and repeated cleaning interactions. Over the weeks of living together, each of us developed a "nice strategy" at some point and chose a sub-optimal decision to clean our common spaces. Regardless, I hope that maybe this year I can finally convince everyone to get the chore chart. Our lives would be so much easier.

Why do we always have to stand at concerts?

I love live music. I am writing this as Mumford and Sons is playing at JPJ. While I wish I could go, I am going to see Sam Barber on Thursday, and I told myself I wouldn’t do two concerts in a week. But there is one thing that always makes me mad at concerts. And it’s a classic prisoner’s dilemma. Take Ting Pavilion here in Charlottesville. It has a great lawn in the back where you could set out some chairs or a picnic blanket. And yet I never do. Why? Because there are always a few people standing right in front of me blocking the view. 

If we all cooperated, we could sit down, be comfortable, and enjoy the concert without sore legs from standing for hours. However, since the people in front of me are always chasing the best view by standing up, they block my view and it is rational for me to stand up as well. At this point, we have ended up with about the same view we would have had sitting down, but with tired legs and people bumping into you.

Yet, everyone is acting rationally and will stand so as not to be the seated person with his view blocked by the standing crowd. As a result, we will likely not reach the desired cooperation that maximizes comfort and view unless the event venue provides different areas where you must either sit or stand. But my solution. Just get pit tickets so you can be closer to the stage since you’re going to be standing regardless. 

Tiebout vs. Housing Crisis

 After graduating and securing a job offer, most college students will often require living in a different city from their parents. Thus, living costs and specifically housing rent act as a major determinant in the selection process. According to Tiebout, preferences for public goods are revealed through the location each person chooses thanks to their expected full mobility. Even when people are mobile, real-world financial constraints may cause them to trade off their preferred bundle of public goods against lower housing costs. This fact diminishes the importance of your living location being informative about your public goods’ preferences which ends up distorting the optimal allocation of government funds. In this way, we can come up with the understanding that personal savings/gains outweigh the importance of the revenue - expenditure patterns in your community. 

In the case of the Bay Area, people are moving out of San Francisco in recent years because of the spikes in housing costs. Tiebout recognizes mobility costs, but modern housing costs provide an additional and particularly important financial constraint that can affect whether people can actually choose the community that best matches their public-good preferences. For this example in California, families are moving to areas with lower quality schools and greater climate risk which are quite unusual for a normal or rational person. This shows people are ready to trade their public goods’ preferences for acquiring a greater personal financial benefit on living costs. Tiebout's model could be extended with an additional assumption by explicitly considering the tradeoff between private financial benefits and local public goods. This can be another way you can consider self-interest to act as your marginal cost and public good to be your marginal benefit. You will continue consuming the right public good for you as long as your self interest would not be harmed. In other words, housing costs can cause the observed location choice to reflect a tradeoff between private financial costs and preferences for local public goods, rather than revealing public-good preferences alone.

Watch Your Trash! (Or Charlottesville Will)

Over the first few weeks of the semester, a pile of trash quickly amassed at my friends' house on University Circle - cardboard, trash bags, carpets, and every item you can possibly imagine that is involved in moving into a college residence. This mountain of trash was a negative externality that reduced the well-being of UCircle residents by being an eyesore, stinking up the area, and blocking people wanting to walk on the sidewalk without my friends compensating them. I initially imagined several Coasian solutions that could be employed to solve this problem, such as paying a sum to other residents that allowed my friends to maintain this level of trash or paying a resident to dispose of the trash themself.

The issue of trash collection was highlighted in Mueller 7, focusing on the city of Dhaka, Bangladesh, where the municipal government solution was ineffective because employees would often fail to show up, which left the garbage to rot in the streets and angered residents. Luckily we have stronger institutions in the United States than Bangladesh, and the municipal government's trash collection service is largely effective from what I gather by word-of-mouth. Yet even though residents pay a fee for trash collection in Charlottesville, it does not mean residents are free to dispose of it how they please. Charlottesville's Code of Ordinances section 5-148 prohibits the accumulation of trash and debris on private property, including but not limited to garbage, rubbish, paper, trash, among other forms. 

After my friends' trash mountain had nearly doubled in size, one day a man living on UCircle literally walked in through their front door and threatened to report them to the city. My friends researched the repercussions and realized the city of Charlottesville would have the property cleaned by a contractor but would send them a bill for a minimum of one half-hour of labor plus an administrative fee of $75. They quickly elected to clean up the trash themselves. In this case, the other residents would be unlikely to take a Coasian bargain my friends proposed when a quick phone call could fix their problem. Charlottesville city ordinances apply regardless of whether residents pay for the government's collection service or a private one (e.g., Skyline Disposal). It appears the threat of Friedman's rule-maker and umpire came to the rescue of the other UCircle residents.

Eyes on the Street: Urban Presence as a Public Good

When we think of the public goods that constitute our public safety apparatus, our minds are usually drawn to things like police and sidewalks. We've discussed both of these examples at length in class, highlighting their non-rivalrous and non-excludable characteristics, alongside their contribution to public safety. While these are indeed public goods, there exists a far more consequential public good that we often omit from our conception of this so-called public safety apparatus: our eyes.

The constant presence of eyes on city streets, that is, people occupying city streets and sidewalks, is perhaps the most effective public safety method of all. Jane Jacobs characterizes this idea as "eyes on the street" and explains it extensively in her book the Death and Life of Great American Cities. The argument goes, that the presence of other people on city streets serves as a deterrent for potential criminals and people up-to-no-good. In this sense, we are our own police, and also the first line of defense against crime. Our eyes, then, are a public good because they serve as the "eyes on the street" which deter crime, and this benefit is both non-rivalrous and non-excludable. It's non-rivalrous in the sense that our "consumption" of crime deterrence does not prevent others from the same indulgence. It's non-excludable in the sense that we cannot exclude others from "consuming" the crime deterrence that our eyes offer.