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Chris Blattman writes:
Strategy part 3: Figure out the national bargaining fraction. Anchor too low and some cabbies will simply stop talking to you. Unfortunately, that fraction is hard to predict. In Ethiopia, it seems to be about 70%. He’ll counter with 130% the target, and you get to the price you want in about two rounds. Very civilized. This, of course, is based on a sample of four. But my standard error is very low.
I especially love discovering the bargaining fraction and number of rounds in a country. Within a city it is surprisingly consistent, from taxis to markets. Cross-country variation is huge.
Based on travel this year, here is my guesstimation of starting fraction and rounds:
- Ethiopia: 0.7 with 2 rounds
- Argentina: no less than 0.9 and 1 round.
- Canada: 1 and 0
- Uganda: 0.5 and 4 rounds
- Liberia: 0.1 and 8 rounds
- Morocco: 0.001 and upwards of 754 rounds (including mint tea).
I don’t do that much exotic international travel, but I do recall in Singapore that there was no negotiation at all but still it was impossible to know what the fare was because the meter was programmed with all kinds of fixed charges, surcharges and variable mileage rates depending on time of day. Plus major roads have tolls that are adjusted every second depending on traffic and the risk was born by the passengers. So I would call Singapore a 1, -1. (It was always dirt cheap in the end anyway.)
There were no fire engines, horse-drawn or otherwise. The citizens were the fire department. Each house had its own firebuckets and in the event of a fire, everyone was meant to pitch in. That meant taking your firebucket and joining the line of people from the water tank to the fire.
Does the story so far give you a warm, fuzzy feeling? Friendly folk working together, helping each other out and living by the Kantian categorical imperative. Let me rain on your parade – I am an economist after all. The private provision of public goods is subject to a free-rider problem: The costs of helping someone else outweigh the direct benefits to me so I don’t do it. Everyone reasons the same way so we get the good old Prisoner’s Dilemma and a collectively worse equilibrium outcome.
People have to come up with some other mechanism to mitigate these incentives. In Concord, they chose a contractual solution. Each fire-bucket had the owner’s name and address on it. If any were missing from the fire, you could identify the free-rider and they were fined.
This is the story we got from the excellent tour guide at the Old Manse house in Concord. Home to William Emerson, rented by Nathaniel Hawthorne and overlooking the North Bridge, the location of the first battle of the American Revolution. (We were carefully told that earlier that same historic day in Lexington, although the Redcoats fired, the Minutemen did not fire back so that was not a real battle.) The house has the old firebuckets hanging up by the staircase.
Central Square has gentrified since my days living on Harvard Street. There’s a Starbucks (whoopee). There’s still a range of eclectic stuff left over from the dodgy past – the Middle East is still there and the Toscanini’s. They’ve been joined by some high-end restaurants. One of them, Central Kitchen, was recommended to us with the caveat that those of us in the sunrise of our forties might be able to bear the background music better than those approaching the sunset. They were right- I hardly noticed the music. I did notice the food.
Closest I’ve come to Mussels from Brussels are Jean Claude van Damme movies. So, my reference point for the best mussels I’ve eaten is the Hopleaf in Andersonville on the North side of Chicago. And I prefer them cooked in beer rather than cream and wine. Central Kitchen does them in some kind of herb butter. They plonk some frites on top with aioli. The mussels were soft and delicious, bless their little hearts. The broth was wiped up with stellar bread. Jacques Brel on the stereo and a Chimay in my hand would have completed the picture. No need for beer – I was happy with the pinot noir.
The main course was very good but couldn’t live up to the moules. And it was too big and too expensive – I felt bloated at the end. Next time, a salad for the appetizer and the moules for the main course.
We shared the cinnamon beignets for dessert. They were stale. The falling down chocolate cake has to be ordered thirty minutes in advance. Next time.
Short weekend trips from Evanston lead to the Chicago Botanic Garden. It can be quite beautiful despite the drone of cars from the freeway running next to the garden. There are houses and malls all around and it is hard to escape the feeling that the garden is an artificial green oasis plonked into suburbia.
Just some the reasons why Drumlin Farm, just forty minutes away from our present abode in Boston, was such a big hit. The garden aspect we enjoy in Chicago is replaced by a spectacular working farm. There are many short trails and vegetables and eggs for sale, not just for display. Plus sledding in the winter. We joined the Audubon society as we expect many visits during the year.
I don’t know if my pizza standards have gone up or this place has gotten worse but I was unimpressed. The crust was too crisp and hard. The toppings were too rich so the flavours were muddy. I actually prefer the Upper Crust in Brookline even though it’s chaotic and loud.
For the remainder of the week, I will be packing up and heading back to Chicago. Summer is over. Blogging will be light until I get back. If you are new to the blog and want to catch up on what’s here, here is a rough guide. The meat tofu and potatoes of the blog appear under the tags Economics, Game Theory, and Incentives. Sandeep and I also write a lot on the subject of Food and Wine.
But, my favorite content is collected in the tags Banana Seeds and Vapor Mill.
Banana Seeds: seeds are meant to suggest ideas (did you know that “seminal” has the root “sem” which is latin-or-something for seeds.) But bananas don’t really have seeds, or at least the seeds they have are kinda pointless since that is not how bananas propogate. So Banana Seeds suggests pointless ideas. (It also has a lewd connotation.)
Vapor Mill: Academics are supposed to be “paper mills:” cranking out articles. The posts with this tag are ideas that conceivably could lead to real papers, but either because we are too lazy or not expert enough in the field, will instead probably just remain “vapor.” (There is another lewd connotation here too.)
The New York Times has a great pub guide to the Cotswolds. The pub! Why has this concept not been imported wholescale into the States? There is the odd gastropub now in Chicago but they do not capture this ambiance:
There are the spacious stripped wood tables, the milky light coming through the frosted windows and the fire smoldering across the room. And my big plate of fresh fish and chips (for the equivalent of $15) is sumptuous. Amid the low murmur of relaxed conversation you can feel the easy comfort, the happiness, of human beings at rest. And with the old plow tackle hanging from the ceiling, and the flagstone floor, and the bushy hops among the beams, there’s a sense of history’s being a friend, of this means of relaxation’s being sanctioned and endorsed through having been enjoyed for centuries. You sense it’s true that Europeans — even the English — still know how to live.
To reach this sense of peace, there has to be good beer (OK – I will now accept that cold lager might be necessary as well as the room temperature English bitter!), no TVs, a sense of welcome and a slow, slow pace. Going into a neighborhood pub where the regulars treat strangers with suspicion is annoying. Remember the movie An American Werewolf in London? That took things to an extreme, turning the strangers who enter the pub into werewolfs, but you get the picture. Americans are more welcoming than the English so the friendly atmosphere should be easier to pull off here. It’s the leisurely pace that is harder to replicate. But I think someone should try.
I have visited and stayed (!) at one of the pubs, the Falkland Arms in Great Tew. It was long ago (March 1999?) and it seems the management has changed. The beer is different and the food seems better. The rooms have also been renovated. That last fact is very important. I remember the shower had the lack of pressure that is typical of England. In addition, it vacillated randomly between being boiling hot and icy cold. My wife, who is hardy, got flu soon afterwards. Hopefully, the showers have been updated from the nineteenth century to at least the twentieth. Next time I visit Oxford, I’m looking forward to heading to the Falkland Arms and enjoying the slow pace of pub life.
Actually it is in Seatauket, but you won’t notice that you have crossed any boundary. It’s called Sushi Ichi.
Go there for lunch. Tell them how much you want to spend and what kind of -tarian you are. Then ask them to prepare whatever is best to fit those constraints. You won’t be disappointed. It doesn’t hurt that there is a fishmonger right next door.
A taxi driver has a fixed cost: he has to get out of bed, get into his cab and start roaming the streets. He is compensated by a fixed rate per mile. The combination of these two creates a basic incentive problem which explains a lot of common frustration with cab rides. In order for the fixed rate to compensate the cab driver for his fixed costs, it must be set above the flow marginal cost of driving. The implication is that the cab driver always has an incentive to extend your trip longer than is necessary. And he has an incentive to reject short trips. And they saturate airports but you can’t find them in your neighborhood, etc, etc…
The first photo shows a bike which has a lock but is not tied to a lamppost or bike rack. The second shows a whole row of bikes, some locked as in the first photo, and some totally unlocked. Some of the bikes look old but all are perfectly serviceable.
I’ve been on Capri for a week for work. Here are some impressions largely of Anacapri.
Hotel
We stayed at the Casamariantonia. There were four of us so we got a suite. It’s pretty pricey but actually cheaper than the hotels. The hotel is family-owned and they are pretty helpful – the father walked with us part of the way to show directions to a rustic path from Anacapri to the Blue Grotto. The grandmother makes fresh tarts for the breakfast buffet. Our room was nice and had a small kitchen. There’s a grocery store opposite so you can cook if you want to. There’s balcony where you can hang out and good air-conditioning. Two downsides: no swimming pool (they are waiting for a permit) and no WiFi in rooms (you have to go downstairs to the lobby). This is the main reason for my lack of posts!
Restaurants
Our favorite by far was Da Gelsomina (photo was taken there). They have a swimming pool too. There is hefty charge (incl for sunbeds, towels, umbrella as well as entrance) but you get a discount if you eat there and/or stay at Casamariantonia. There is the usual Capri fare, ravioli caprese, insalata caprese, pennette aumm aumm etc, and it’s all done very well. There are also dishes you do not find elsewhere (e.g. gnocchi with gorgonzola and arugula), great fried stuff as an appetizer. They make their own organic wines which are delicious. Down the road from the restaurant there are two spots with amazing views of the lighthouse and the Faroglioni, three dramatic rocks in the ocean. They also have rooms. It’s a bit out of the loop at the top of a hill but they have a free bus service to drop you off and pick you up in downtown Anacapri. Might try it next time.
At 1.4 Euros to the dollar, costs mount up. Pizza is a good standby to tighten the belt. Ristorante Arcate does good pizza. Trattoria Il Solitario does pizza and also some original pastas (e.g. paccheri with lardo and fava beans).
What to do
1. Capri Walk up to Villa Jovis, Emperor Tiberius’s old home. Now in a state of decay. Great views. Walk back into town and eat at Bar Jovis or at Da Gemma, Graham Greene’s favorite restaurant with great views over the mountain and sea. There’s a bunch of chi-chi shops if you are into that kind of thing.
2. Boat trip Splash out for the personal boat ride (around E 50 more than the sardine can version). How else would you ride through the hole in the central Faroglioni?
3. Walk to Grotta Azzurra Take nice old pedestrian walk from Anacapri, not the main road. If you get lost you can find the main road.
4. Hike: There is a great walk along the sea from one pirate watchtower to another (not suitable for young kids).
Things to watch out for: Chair lift up to top of Monte Solaro has individual seats – not good for kids. Grotta Azzurra closes when sea is choppy and there can be a long wait. Go either before tourist hordes arrive from Naples or after they leave. Incidentally, Naples is a bit overwhelming. It feels like Bombay. So be prepared!
Apparently the price you are quoted when you search for fares on Spain’s high-speed railway depends on whether you search in English or Spanish:
When I searched the site earlier that day from my office, I searched in Spanish. A one-way ticket from Barcelona to Madrid could be had for around 44 euros on a “tarifa Web,” their Internet special fare with 30 day advance purchase.
When I was at home, ready to finalize my purchase, I opted to search with the site language set to English. The price was nearly 110 euros.
The economic logic is standard: language is a way to segment the market and this segmentation is profitable if the two markets have a large difference in price-sensitivity. Presumably if you are searching in English then you are a tourist and you have fewer alternative modes of transportation. This makes you less price-sensitive.
I thank the well-travelled and multi-lingual Mallesh Pai for the pointer.
What is there to do outside Chicago with bored young boys? I imagine easy day-trips to Cape Cod or Cape Ann for parents in Boston. And I can’t even speculate about the options available in San Francisco or Palo Alto….I turn green with envy just thinking about it.
Unsuccessful hikes in rural Wisconsin, a horrible weekend in a seven golf-course resort outside Galena have soured us on the idea that any escape is possible. Over the last year, on the advice of seasoned veterans of the Midwest, we’ve decided to give the day-trip one more whirl. Saugatuk, Michigan, was a big success. Good food, good beer, cheap house rentals, private sandy beaches and pretty countryside. Just what the doctor ordered.
Closer to us and in some ways more historically interesting – Lake Geneva in Wisconsin. I thought its description as the Newport of the Midwest was a stretch till I saw mansion upon mansion lining the shore of Lake Geneva. The empire than Wrigley’s chewing gum built is as impressive as any feudal monarch’s. And it has a chewier, softer and more benevolent foundation than the war and pillage that lead to a typical King’s wealth. The boat ride that allows the great unwashed a fleeting glance into the capitalist palaces does not hold a child’s attention for long.
For that, we had the East Troy Railroad Museum. The first carriage we saw had “Evanston Express” displayed on it. An old El car that ran between Evanston and Wilmette. The museum has a good cappuccino and smoothie stand and there is an ice cream parlor next door. The trip we took in an open carriage was exhilarating. We spotted old train stops that had been left to crumble. People waved from the houses and cars we passed. Our joy was infectious. At the start of the ride, on one side of the line are McMansions and on the other trailer parks. This is left behind soon for countryside and then finally a farmer’s market. But it’s the open carriage itself that’s most fun. With old lights and seats that flip around for the trip back.
The train was driven by an enthusiastic old volunteer and there was a young volunteer guide. Public good provision that left us all charmed. Good to know that the torch will be passed from the Senior Members to the Junior Members and the East Troy line will live on.
The first time I ever flew to Canada, I was flying to Toronto and I forgot to bring my passport. This was pre 9/11 and so the immigration authorities still had a sense of humor. Upon landing they brought me to the basement to interrogate me. Only one question was required and it was ingenious. “What is the infield fly rule?” Only an American would know the answer to this question. (The immigration authorities knew the right trade-off between Type I and Type II errors. A quick survey of my dinner companions tonight revealed that indeed only Americans knew the answer, but not all Americans.)
Suppose there is a runner on first base and the ball is hit in the air where it is catchable by an infielder. As the ball hangs in the air, it sets off a tiny zero sum game-within-the-game to be played by the players on the ground watching it fall to Earth. For if the ball is caught by the infielder, then the runner must be standing on first base, else he will be out after a quick throw to the first baseman, a double play. But, if he does stay standing on first base then the infielder can allow the ball to fall to the ground forcing the runner to advance. Then a quick throw to second base will get the runner out. And again a double play unless the batter has already made it to first.
Apparently this goes against some moral code deeply ingrained in American culture. Is it that the optimal strategy is random? Is it that we don’t want our heroes stranded between bases waiting to see which way they will meet their end? Is it that we don’t want to see the defense gaining advantage by purposefully dropping the ball? Whatever it is, we have ruled it out.
The infield fly rule states that in the above situation, the batter is immediately called out and the runner must stay on first base. No uncertainty, no inscrutability, no randomization. No intrigue. No fun.
But we are game theorists and we can still contemplate what would happen without the infield fly rule. Its actually not so bad for the runner. The runner should stand on first base. Usually by the time the ball descends, the batter will have made it to first base and a double play will be avoided as the infielder can either catch the ball and get the batter out or drop the ball and get the runner out. But not both.
In fact, if the ball is hit very high in the infield (usually the case since an infield fly almost always occurs because of a pop-up) the batter should advance to second base and even to third if he can. That is, run past the base runner, a strategy that otherwise would never be advisable. This forces the infielder to catch the ball as otherwise the best he can do is force out the runner on first, leaving a runner in scoring position.
So in these cases an infield fly does not really introduce any subtle strategy to the game. When the team at-bat plays an optimal strategy, the outcome entails no randomness. The final result is that there will be one out and a runner will remain on first base. And the fielder can always catch the ball to get the out.
However, this is not the only situation where the infield fly rule is in effect. It also applies when there are runners on first and second and also bases loaded. In those situations, if we did away with the infield fly rule the strategy would be a bit more subtle. And interesting! Lets try to figure out what would happen. Post your analysis in the comments.
(conversation with Roberto, Massimo, Itai, Alesandro, Wojciech, Alp, Stefan and Takashi acknowledged)
Next time: eliminating stalemate (another mysterious artificial rule) in Chess.
Update: Ah, a reader points out that the infield fly rule is waived when there is only a runner on first. Good thing my friendly immigration officer didnt know that! (even if he did, he would know that only an American would get the question wrong in that particular way).
WiFi on airlines is coming. On some airlines it is already here. This article talks about a few of the providers and discusses service plans and pricing options.
“Yes, broadband is coming. We’re sitting there asking, ‘Who pays? Is it the airlines or the customers? And what will they pay? What is the right technology? … When does all of this happen?’ We’re in weird economic times,” Moeller said.
Its interesting that in high-end hotels the WiFi is paid for by the guest whereas in the cheap hotels the WiFi is free. So far this pattern is playing out on the airlines too with JetBlue offering free WiFi and others charging hefty fees. Of course it is not truly free so the way to understand this is that on airlines with business travelers it makes sense to charge a high price at the expense of excluding the cheapskates. On the low-cost airlines revenue is maximized by setting a low price that virtually everyone is willing to pay. If everyone is paying the price then it saves on transaction costs by rolling it into the airfare. And it makes us feel good to be told that it is “free.”
Every news story about airline WiFi has the obligitory porn reference.
As for the possibility of passengers offending their seat-mates by surfing for inappropriate content, Blumenstein said nine months of Wi-Fi availability on American yielded no such incidents. Still, airlines including American, Delta and United have requested screening for potentially offensive content, he said.
This is never going to be a problem. There is a key complementary activity and the ban on that activity is easily enforced. Without the complementary activity there will be no demand for porn.
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