Sunday, September 26, 2021

Don't Cross the Streams: Economies of Scale in Ignoring Sports Teams

 Three weeks ago today, Sept. 5, I paid close attention to the St. Louis Cardinals baseball game against the Brewers. The Cards lost by giving up 5 runs, in stupid and inept fashion, in the 9th inning, blowing a 5-1 lead.

I announced that baseball season was (for me) OVER, and I would be ignoring the Cardinals and all of baseball from this point until Spring training, when pitchers and catchers report in February.

This promise I have kept, scrupulously. 

My impression (I wouldn't actually KNOW, of course, because I'm ignoring baseball) that soon after I unplugged the Cardinals have won some games, and are playing better. Given that their winning percentage at the time I began to ignore them was 0.51, it is a simple binomial calculation to show that the chances of them winning (say, I don't know) 15 games in a row is less than .000001. 

By any reasonable standard of inference, then, it is MY IGNORING OF THE CARDINALS that has produced any success (of which of course I am unaware, but have heard rumors). 

This is an enormous power; my good friend Christina Wolbrecht has gone so far as to suggest that I seclude myself in a remote Unibomber style cabin, to ensure that I am able to continue to ignore the Cards. I should note that Donna Gingerella has endorsed this proposal, on condition that I write home occasionally. 

So far so good. But I have a friend, a pathetic Reds fan (if that is not redundant, and of course it IS redundant), who has asked that I should ALSO ignore the Reds. He would be willing (I won't give his name, but his initials are Michael Martin) to pay a small amount for this service.

It struck me that this is quite a business opportunity. Rooting FOR a team is time-consuming; that's why I gave up on the Cards: it was taking a lot of time and sadness. But IGNORING a team is easy, and of course it SCALES. I could ignore MANY teams, with no additional cost.

But then I saw the problem in the reasoning: what if two teams I'm ignoring PLAY EACH OTHER. It would be the equivalent of "crossing the streams" in Ghostbusters. And that would be very, very bad. Egon said so.

So, sorry folks: ignoring the Cardinals is going to be my sole project for the rest of this year. I'm happy to accept bids to ignore YOUR team next year, once I have started watching the Cards again.

Friday, September 17, 2021

Transaction Costs in Everything: Thai Taxi Gardens

 For now, at least, Thailand has WAY "too many" taxis.

Parked, they take up a lot of valuable surface area, and create runoff for rain.

But if you put a small plot of "land" atop each taxi...voila! Modular commodification of excess capacity!

As argued in my recent book, these are LITERAL platforms!


Tuesday, September 07, 2021

Is Behavioral Economics Dead? Should It Be?

  Wow....Pretty harsh, from an insider of Behavioral Economics

But also this, rather embarrassing and even ironic since the study was "about" honesty... 

To be fair, Nassim Taleb and a few others have been very critical for a long time. But the collapse of house of behavioral cards is still pretty dramatic. 

Taleb's argument is very plausible: If human behaviors are evolved, then the existence of certain patterns cannot actually be "irrational," though it may be atavistic).




Monday, September 06, 2021

Transaction Costs in Everything

 As any reader of KPC knows, we often credit Tyler Cowen ("LeBron") for his occasional, but always insightful, series of posts on "Markets in Everything.

I have been accused of finding "Transaction Costs in Everything," so I might as well own that. My plan is to post at least weekly on this, and so have a collection of applications.

Prompted in part by this (accurate) comment from the LMM:

An example, then.

We had a piece of furniture, a bed frame actually, that we were going to throw away. But the LMM wondered if someone might want it. So she posted a "free, take it!" listing on NextDoor

Within half an hour, two people had said they wanted it. Instead of sending it to the dump, it was now actually going to be used by someone who needed it.

I was very excited by this, and of course launched off into my rambling: "Do you know WHY this happened, why someone will now use something we were going to throw away?"

LMM: "Well, it's not because of you...." (It is barely possible, as all my coauthors know, that I sometimes take credit for things I did not actually do, I'll admit that. So her response was not out of line...) 

MM: "Quite so. No, the answer is...." (LMM is staring at me, already mildly disgusted at the coming lengthy disquisition)

"transaction costs! Or rather the reduction in transaction costs. The small value of the thing we are giving away, an old bed frame, limits the amount of effort justified by finding someone who needs it. YOU would not have gone door to door, knocking and asking 'need a bed frame? need a bed frame?'  But you didn't have to. Because the transaction costs on both sides, announcing the availability of the free thing and finding a willing taker for the free thing, were reduced by a platform, the bed frame went to a higher valued use instead of the dump! The online platform helped us make better use for a bed platform! It's a triumph of cooperation in the new sharing economy!"

She's got that thousand yard stare at this point.

I continue, very excited: "Such an important, general insight! Why, I bet they'll put 'He's Reducing Transaction Costs in Heaven' on my tombstone!"

LMM (sotto voce): "Soon, I hope."