Wakeboarding Prisoner's Dilemma

     For Fall Break I went to Lake Anna to practice wakeboarding for the last time this year. When I went out Saturday morning, it was different than most wakeboard runs. Not because it was 48 degrees outside, but because my brother wasn't able to come. My brother and I both wakeboard a lot and whenever we practice we are always trying to one-up each other in the tricks we can perform. However, he snapped his ACL in half while wakeboarding a few weeks ago so he cannot practice until April. I was thinking about this as behind the boat and I realized I wasn't being as risky as usual because my brother was not there and because of a Prisoner's Dilemma.
     While practicing, you can wakeboard aggressively or more smoothly and relaxed. When I am with my brother, I want to make sure I look better than him, so I wakeboard aggressively. He attempts to be as good as me (though rarely does) so he also practices aggressively. However in practicing that way, falls often hurt more and injuries can sometimes happen (hence his ACL). So, the ideal situation would be if we both took it easily to reduce the risk of injury. However, the potential respect and admiration from our peers in the boat is so great, we are each incentivized to practice aggressively. As we do not usually wakeboard at the same time and wakeboarding aggressively is a dominant strategy, the result is that we both wakeboard aggressively which is an inefficient dominant strategy equilibrium. Mueller contends that in small groups this can be overcome through social pressure or deals, but to reason with my brother has high transaction costs and would likely not provide high marginal benefits. It is possible that the impact of the water knocked some sense into him, so hopefully after he is recovered next Spring he would be more willing to come to an agreement about how we will practice.

Public Choice, My Dear Watson

Sherlock Holmes is such a popular fictional character because of how differently he behaves from the average person. Sherlock Holmes cares little about the impressions others have of him (except when theatrically proving the police wrong with a solution to a case), and instead pursues private utility at all costs. Although some psychologists have described Sherlock Holmes as psychopathic (to which, in the modern-day television adaptation, Holmes responds that he is merely a high-functioning sociopath), perhaps he can be better described as an approximation of a perfectly rational, utility-maximizing individual for the purposes of economic modeling.

In the first Sherlock Holmes novel, A Study in Scarlet, Dr. Watson reflects upon Sherlock Holmes’s startling ignorance in many common fields of knowledge. Although Holmes knows the details of every murder committed in London in recent memory and can deduce the brand of cigar used by a suspect by glancing at an ashtray, he shows a perplexing dearth of knowledge in many other areas. The reader learns that Sherlock Holmes does not know that the earth travels around the sun, and also knows no information about philosophy or literature. Although this lack of knowledge is surprising for someone as brilliant as Sherlock Holmes, Sherlock actually seeks a rational level of ignorance. The following is a graph of Sherlock Holmes’s allocatively efficient level of ignorance for astronomy compared to that of the average population. 

To start, Holmes’s private marginal benefit of learning astronomy is lower than that of the average person. He cares very little about ever needing basic astronomy information for day-to-day conversation due to his diminished desire for social approval, and he is also certain he will not need to understand astronomy for his detective work. His private marginal cost of learning astronomy is higher than that of the average person as well, because the opportunity cost of maintaining his occupational reputation as genius private detective is advanced time spent researching specific subjects and developing his deductive reasoning ability. As a result, the allocatively efficient level of knowledge of astronomy for Sherlock Holmes is extremely low.

One of Sherlock Holmes's under-appreciated attributes is that he represents a utility-maximizing actor in an economic system. A world where everyone is a little more like Sherlock Holmes might be a less friendly place, but at least it would improve the applicability of economic models. 

Twitter Polls: Rational Ignorance Problem

Last week in one of my ECON elective courses there was a group presentation. Before the presentation began, a girl from the group projected that she had voter registration forms and we could "easily register, only spending a couple minutes after class" to do so. Immediately, I thought of how big of a problem this girl was going to cause for the county of Charlottesville and the state of Virginia. To illustrate this destruction in the making I will compare this to polls on Twitter.
Ever since Twitter has allowed users to create polls, I have been a rationally ignorant voter. I vote on every Twitter poll I see. It does not matter if I have absolutely no clue what the topic of the poll is, I will vote. The method of voting is so easy, the only cost that I incur from voting is the strength I use in my thumb to press which option I desire. The utility I get from pressing that random answer cannot get any easier to obtain. Every time I do this though, I am actually hurting the true effectiveness of said poll. You see, the costs of actually taking time to go look up what I need to know about said poll, or message the maker of the poll about the topic, is too high for me to do and still be able to gain utility from voting. Just like how I am voting on random twitter polls I see, many from people who I do not even know, this girl in my class was encouraging students who may not even be from Virginia or Charlottesville, to effect the outcome of the upcoming election. Many of us do not even know who is running or what topics of legislation the election is covering.
This is a classic example of why making voting for public offices "easier" actually conflicts with the desired social outcome that would benefit society the most. Johnson writes "Even if individuals could be driven to the polls by social pressures, by fines, or by 'costless' electronic voting, there is no assurance that those individuals who did vote would have sufficient knowledge to vote their own interests". I hope in the future this girl can also handout pamphlets or brochures that provide all the information needed to become knowledgable of the current election before she attempts to pressure or make easier this registration process to vote.

Median Voter Theory: Israel

Say what you wish about the current state of political affairs in both the US and the UK; it is certainly...messy.  Israel, however, may take the cake in the contest for most unsustainable political circumstances.  After two legislative elections within the span of six months, Israel is still without a functioning governing coalition. With the rise of the Blue and White party and the defection of a long-time coalition partner, PM Bibi Netanyahu is in the political fight of his life. As a third election looms in the horizon, dysfunctional government appears to be the new status quo for the foreseeable future. What insights can Downs' Median Voter theory offer in such a situation?

This model roughly demonstrates the current ideological spectrum of Israel and her political parties:

This model most closely resembles figure 7 of Downs' paper.  There exists a bimodal distribution of voters on the left and right, though more voters fall on the right. Though there are a number of small parties throughout the spectrum, they roughly group in coalitions concentrated on the left and right. Before the Blue and White party was formed, Likud was closest to the median voter. As predicted, they dominated elections for the last 20 years. To maintain power in government, however, Likud had to form coalitions with far-right, ultra-Orthadox parties. These far right parties have increasingly pulled Likud to the right, and subsequently further and further from the median voter. As Downs correctly predicted, a new party formed near the center and to the left of Likud. This "faction of desirous compromise" manifested as the Blue and White party, a centrist big-tent party, primed to gain voters at the expense of the Likud party.

The particular problem in this situation, however, is that while both parties are centered near the median voter, neither can get enough support from parties to the left or the right to form a governing coalition. As predicted, ideological purity is king in this political system. Far be it for either Likud or Blue and White to partner with the Arab parties. And good luck in getting the secularists to join the ultra-Orthodox in a government. As it sits now, those 61 seats seem all that more elusive for all parties involved. 

Perhaps, as has been rumored, a unity government may be the only way out of this political quagmire. 

Modern Beauty and the Prisoner's Dilemma

      In a feminist theory course last semester we discussed the tensions present in modern narratives on women’s liberation. While some hail individual choice and self-expression as the ultimate indication of an equal society, others recognize that although the power of decision is crucial for women, that does not indicate that all choices are feminist choices. Consider the topic of makeup, or plastic surgery. While we have come to a general conclusion that cosmetic enhancements may be a mode of self-expression that is powerful for the individual, that does not mean that there should not be serious considerations of the social environment that may put pressure on women to look a certain way.
I realize now that the conclusion I kept nearing last term was that makeup (or Botox, or plastic surgery) can likely create a prisoner’s dilemma. This is not a black and white situation, for I am not discussing the makeup artist but rather a woman who would rather not wear makeup but fears she must, for example in the workplace, to look presentable. The individual woman’s choice is based upon the choices of other individuals by which she is surrounded. Makeup, Botox, and plastic surgery are all time consuming, expensive, and range from being potentially harmful to the skin to dangerous if procedures go awry. Though this may seem simplistic, consider the idea that, to an extent, women have settled into a prisoner’s dilemma situation in which all are defecting to spend X minutes a day putting on makeup before work, but if no one did then no one else would feel as though they “have” to, and those minutes could be spent more freely. 
       The dominant strategy arises here because as less and less people wear makeup and we arrive at a point in which all women are wearing nothing on their face, then one woman would feel inclined to do so, as it would make her more attractive. Therefore, whether Person A chooses to wear makeup or not wear makeup, it is likely that Person B is better off wearing makeup, so we reach a state in which everyone may begin to follow suit. This same logic is applicable for plastic surgery or botox. This may result in other effects, such as the way our society accepts sexist ageism or the fact that cosmetic enhancements have been shown to increase popularity on dating apps such as BeautifulPeople. The consequences show this is something to consider. 

Gambling With My Future

Last Monday, I got a last minute notification on Handshake from a recruiter about an interview slot open for the next morning, Tuesday, from 9:30-10:30am. I was chosen as an alternate for this company, so I was not able to initially secure an interview slot, nor was I expecting a slot to open up. But, this interview time slot conflicted with Coppock's class. I had to make a decision... skip class and go to the interview, or miss out on the interview opportunity and go to class.

So, I calculated my expected marginal benefit versus marginal cost. My expected marginal benefit would include the benefit of attaining the internship multiplied by the probability that I was offered the internship. This is a low probability, but not as low as the chance of a single vote determining the outcome an election. The probability would reflect the chance that I would make it past multiple interview rounds, competing against a large pool of applicants that have presumably prepared more than me for the initial interview. But, added to the equation would be the benefit of practicing my interview skills in order to prepare for different interviews. The marginal cost would be missing Coppock’s class, which I would feel morally guilty about. The cost would also include taking the time on my own to catch up on the material presented in class. Lastly, the opportunity cost of my time — scrambling to prepare for the interview instead of completing other work, dressing myself in professional attire, and taking the time to get to the interview and back to my next class was significantly high.

Did this expected marginal benefit plus the extra opportunity to practice interview skills surpass the marginal cost and opportunity cost of my time? The answer is no. In looking at a graph with MB and MC on the y axis, and a scale of ignorance to knowledge on the x axis, I valued more knowledge in Coppock’s class than ignorance. So, my marginal cost curve for attending class represented a low opportunity cost of my time, resulting in an equilibrium point that reflected more knowledge over ignorance. So, I did not take the last minute interview opportunity. I went to class, and I’m glad I did, because the topics covered gave me the inspiration to write this blog post.

Redistributing Everything but the Beer

Carson King, a 24-year-old Iowa State fan, prepared his sign for ESPN’s“College GameDay.” It read, “Busch Light Supply Needs Replenished” followed by his Venmo handle. Carson didn’t expect much. “College GameDay” boasts hundreds of clever, grammatically-correct, well-designed signs each week, so why would his sign – a simple black-Sharpie-on-a-white-background piece – go viral? Carson fully expected himself to end up in the poor class with income Y₁. After all, the odds that your sign is spotted in the crowd and people actually overcome the bystander affect to send a random stranger money for beer must be pretty low. This result depends on so many variables outside of his control, and he anticipated π₁ to be greater than π₂.

One week later, Carson received a grand total of about $270,000. That’s a pretty good haul for a week, and I would say – for the week at least – Carson found himself in the rich class with income more like Y₂.

Carson’s poster experiment represents a small-scale, real-world scenario of the equation we looked at in class. Before arriving at “GameDay,” Carson had no idea of whether his poster would bring him any money at all. He didn’t expect hundreds of thousands of dollars, and any small event could’ve changed the outcome. Traffic could’ve made him late to the show, or he could’ve broken his arm, preventing him from hoisting his glorious sign. Carson accepted that he could end up either in the rich or poor class and tried anyways.

His B value was pretty high as well. Instead of keeping the money to pay for his education, rent, or an Iron Throne made of Busch Light, he kept about $15 in order to buy exactly one case of beer as promised. The rest of the roughly $269,985 is getting matched by Venmo and Busch and donated to the University of Iowa Stead Family Children’s Hospital. Carson clearly values redistribution. Count him as a “yes” towards the class’ redistribution-policy vote.

Voting for Dinner

It would be great if there was a local restaurant named "I Don't Care" or "What Do You Want?" because these phrases are the most popular answer when it comes to asking my family what we should do for dinner. There is no dictatorial vote among my parents, my brothers, and myself, so we use a pure democracy to choose where to eat. Yet, when it comes time to deliberate and vote, many of my family members seem disinterested in participating. Only when the decision has been made do they speak up–by complaining. "We had that last week!" "But I don't like Italian!" Clearly, my family has differing utilities according to restaurant based on their preferences, otherwise they would not complain and we could pick randomly. Considering this, are they rational to not vote?

If the expected marginal benefit of casting their vote on dinner exceeds the marginal cost of doing so, it seems they would vote every time. With only six voters, the expected marginal benefit is likely sizable, since the probability that one vote matters is not negligible like it would be in a political race. Thus, the problem must be that there is a significant cost to voting for them to be rationally abstaining. I believe the cost they face comes from the fact that we vote vocally, so each person has to suffer the chore of defending their preference, entertaining complaints, and being "responsible" if the food or service is subpar. Each abstaining voter would rather let the vote play among those who choose to participate, then attempt to sway the decision in a non-democratic manner, either by persuasion or complaining.

I would prefer if every single family member voted, so everyone's preferences would be expressed and the non-democratic cycle of whining would end. To solve this dilemma, I can propose two solutions. First, we can add a non-probabilistic benefit to voting. I suggest that each person who votes can have dessert at the restaurant. Second, we can minimize the cost to voting by formalizing the vote with a secret ballot. Personally, I think there is some value to the vocal vote, because it gets my family to discuss the options. Therefore, the first solution takes the cake.

Professor Elzinga Conspiracy Theories

            One of my housemates writes for The Cavalier Daily. The other night, following an editorial meeting, Bridget came home in a fit of rage about a proposed story idea. Nearly the entire meeting was dedicated to a discussion about Professor Elzinga always scheduling a midterm on Election Day. Conspiracy theories were being thrown out left and right about Elzinga’s motivation behind this scheduling regularity, everything from the day falling in the tenth week of class to Elzinga purposefully attempting to keep students from the polls (disclaimer: I have no idea if Professor Elzinga even schedules exams on Election Day each year, but if he does, I definitely do not buy into these theories).

            Let’s take it as fact, for the purposes of this post, that Professor Elzinga does schedule a midterm each first Tuesday of November. This means that, more likely than not, students taking ECON 2010 will have a higher marginal cost of voting than many of their peers who are not taking Professor Elzinga’s class. The increased marginal cost is attributed to any number of things that affect students on the day of a midterm: the study time lost if a student chooses to go vote, a lack of concentration on the upcoming test, and potential for unforeseen conflict if a student breaks their typical midterm preparation ritual. The only way that an ECON 2010 student’s marginal cost of voting would not increase in this situation is if they are fully invested in the idea of Dutch Knockout and are banking on the final.  

            Therefore, if we take Professor Coppock’s example of a $20 marginal cost of voting to be the standard for UVA students, a UVA student taking ECON 2010 will have MC > $20 come Election Day. In a situation such as this, the “something” that would make voting rational, D, of a student taking ECON 2010 would have to be greater than the D of a fellow UVA student not enrolled in ECON 2010, ceteris paribus, in order to justify going to vote.

            I told Bridget, after hearing this story, to report back to her editorial team that one conspiracy theory, for sure, can be thrown out the window. An economist like Professor Elzinga knows full well that the probability of one of his students’ votes being decisive in an election is a number so small that we can call it zero—therefore, scheduling an exam to keep his students from the polls cannot be the explanation.

Andy Samberg, economist extraordinaire

In January 2013, a group of performers-turned-economists known as "The Lonely Island" released a hit single called "YOLO", in which they emphasize the importance of living a life that is consistent with minimax regret theory. For this group, the term YOLO is an acronym, which means "you oughta look out". They give sage advice to our nation's youth, warning them that they "should never trust a bank, they've been known to fail / and never travel by car or bus, boat or by rail". This flies in the face of the careless ideology that has penetrated popular culture, which suggests that one should consider probabilities when assessing potential risks. But perhaps their most profound insight is that one should "wear titanium suits in case pianos fall on you". Looking at the table below, we can clearly see that they are correct in this assessment, according to minimax regret. The potential cost of not wearing a titanium suit would be instant death, and the potential cost of wearing one is simply needing to buy the suit (and maybe a little bit of discomfort while wearing it). Clearly, this is an easy calculation: avoid death, and wear a titanium suit at all times. And based on the fact that the music video has nearly 90 million views on YouTube, it appears that their impeccable logic is taking the nation by storm. Thanks to The Lonely Island and their lead singer Andy Samberg, we can expect the rate of piano-related deaths to plummet.

	Piano falls on you	Piano doesn’t fall on you
Wore a titanium suit	0	Cost of the suit
Didn’t wear a titanium suit	Instant death	0