By Chewxy, on January 30th, 2010%
In my experimental economics class 2 years ago (wow, it’s been that long?) we studied something called the Winner’s Curse. Essentially, what happens is when the winner of an auction (of a common value type) typically overpays for the auction. In some sense it’s a phyrric victory. Of course, the extreme form is by overpaying. Some other forms of the Winner’s Curse, feeling as if one has overpaid is also included (only if you consider independent value auctions as a form common value auctions).
I was involved in one such auction today.
So, as you may have known, I’m moving houses again, to a different state (and I complained about the design problems of the Rock Band guitar). Today I was involved in house inspections for rentals in the new state that I am going to be living and working in. Back in the Old state, looking for houses was a simple thing – there was very little competition. But over in New state was the first time I saw 30 people rock up to a tiny apartment and having half of them picking out the forms from the real estate agent. In all my years of finding places to rent, never had I encountered such competition. Continue reading Winner’s Curse
By Chewxy, on December 5th, 2009%
I will be first to admit I first fell in love with economics thanks to Levitt and Dubner. The first Freakonomics book transformed my view of economics, from a drab and dull (and dry) subject, to something far more interesting. I guess my career path wouldn’t have been as an economist, if I had never read the book. 4 years on, I am now a proper economist (still working towards my PhD though), and Levitt and Dubner has done it again, and had come out with the sequel freakquel to Freakonomics, called Superfreakonomics.
I frequently read back to the original Freakonomics, to see if my level of understanding of economics is up to par. I told myself, that if I can work out the methods the economists come to their conclusion by myself and just the data, I would have made it. By 2007, I was able to reverse engineer the findings, and the way the academics think in Freakonomics (with a little cheatcode known as JSTOR and other academic journal sources).
Anyways, I recently bought and read half of Superfreakonomics while waiting for a business meeting to start. I promptly came home and read the other half in the bath tub. And I like the book. If anything, Levitt and Dubner romanticizes the economics profession. It was a good reminder why I had read economics in university – to be able, and I quote them, “…cold blooded enough to sit around and calmly discuss the trade-offs involved in… catastrophes”.
Of course, now that I am working, doing analysis, nothing is as it seems in both Freakonomics books. The commercial work environment is a highly political arena, and we economists in general don’t get to do fun stuff as described in Freakonomics as frequently as we’d like to. Sometimes, when we come to a conclusion that is not favourable to the company, some clever things have to be done to the numbers (and yes, from reports from my friends who are working, every company (sample size of 4) does, to some degree, some fudging of numbers in their analyses).
Continue reading Superfreakonomics – A Review
By Chewxy, on September 10th, 2009%
A Pareto Optimal Choice
Wait, wait, wait!! Before you go “again, Chewxy blogging about his groceries pattern”, this is not about MY groceries. But yes, you’d guess right, I’m going to talk about some economics in this one.
The reason for this blog is because I read Dan Meyer’s blog article about optimizing queues in, well, a supermarket. Of course Dan’s blog is more interesting, because he went out and collected empirical data on queues.
Well, me being me, and having insomnia (and desperately needing to do something about my I’m-so-lazy funk), I hacked up a simulator to find out how to choose the best line.
I made 3 types of shoppers: the Random Walk shopper, the Smart shopper and the Even Smarter shopper. This is how they choose their lines:
- The Random Walk shopper randomly chooses a checkout line. He doesn’t care about how many people are there or how many items are there in the line
- The Smart shopper chooses the shortest line. He doesn’t care about how many items each person has in the line
- The Even Smarter shopper looks at each line. He randomly picks 3 or less shoppers in each line and gauges their number of items, then chooses the line with what he thinks has the least number of queuers with the least number of items. I think this heuristic is realistic (woo that rhymes), because humans cannot possibly have perfect knowledge.
I assume that all goods take the same time to scan, which takes 1 second. Which is what Dan himself assumed. Of course, he also assumed perfect information, which I didn’t. And because I don’t assume perfect knowledge, this exercise to find the best queue to be in is done by means of iterative simulation, as opposed to just finding the minima of each session. Continue reading Which Line To Choose At Supermarket Checkouts
By Chewxy, on July 29th, 2009%
In keeping up with my fetish of blogging about my groceries, I went groceries shopping yesterday and was rather alarmed with a relatively large groceries receipt. It was more than twice what I usually spent per week, and the food I bought won’t even last me for a week. Alarmed, I went through my receipt, and found that there had been no errors. Then I started questioning myself, to see if what I know about my average weekly groceries spending were correct. I keep a close tab on my spendings, and so I tabulated them. This is the result (and my line of enquiry):
I know I pay for my groceries using only EFTPOS. I never pay for my groceries with cash. I only shop at Coles and I shop almost every week. These facts has facilitated a lot of conveniences for me (like allowing me to pull very accurate data off the bank’s site). So here’s how my average weekly groceries spendings (for the past 100 times I went to Coles) look like in graphs: Continue reading A New Kind of Random?
By Chewxy, on June 22nd, 2009%
Note to self: I don’t think self-promotion in an exam paper is a good idea. I’ve done it twice already O_o. I don’t think I should do it in the next exam.
I’m quite glad I blogged about this. It came out in the exam. I don’t think I did a good job explaining it though (hence . . . → Read More: Self-Promotion in Exam
By Chewxy, on June 20th, 2009%
I am not a mathematician. I can point you to one, though – Kurt Godel. He is dead, so I guess you gotta wait till the End Times or the scientists at Umbrella Corp to perfect the zombie creating virus. Kurt will tell you that any consistent set (such as the [censored, exam topic] set) is . . . → Read More: How Screwed I Am For Exams
By Chewxy, on April 8th, 2009%
This is Fehr and Schmidt (1999)’s inequality aversion model (I really should install LaTeX):
alpha represents the coefficient of envy, and beta represents the coefficient of guilt.
Now this model assumes that one is indifferent towards people who have the same payoff as one. Why am I bringing this up? I dunno, actually. I’ve been doing . . . → Read More: Envy/Guilt
|
|
|
