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Assorted Links (12/28/2012)

Here’s a list of articles that I have been reading lately:

Families Await, Lament Moscow’s Move

professional.wsj.com

“Adoptive parents in the U.S. who have been assigned to children, and in many cases have met them in Russian orphanages and have dates to bring them home, warily await the country’s proposed ban on U.S. adoptions.” This is genuinely cruel – as this article points out, Russia “… has about 120,000 registered orphans but fewer than 20,000 Russians listed as prospective adoptive families.”

Dear Mr. President, Zero-Sum Doesn’t Add Up

online.wsj.com

“In The Wall Street Journal, P.J. O’Rourke asks: Is life like a pizza, where if some people have too many slices, other people have to eat the pizza box?” As far as I am concerned, P.J. O’Rourke’s op-ed in today’s Wall Street Journal wins the award for the best op-ed ever…

Six Reasons To Keep Capital Gains Tax Rates Low

news.investors.com

“The advantages of low capital gains taxes have led many economists to call for ending these taxes altogether. Eleven OECD countries today don’t tax long-term capital gains.”  This is an Excellent tutorial on the economics of capital gains taxation. This article explains how going over the fiscal cliff will prospectively raise the cost of capital for US firms while reducing the rate of private investment and future growth prospects for the US economy…

College graduates earn 85% more than those with high school-only

www.bizjournals.com

“Adults with bachelor’s degrees in the late 1970s earned 55 percent more than adults who had not advanced beyond high school. That gap grew to 75 percent by 1990 — and is now at 85 percent. The margin is smaller, though still sizable, when adults with bachelor’s degrees are compared to counterparts …”

Port Closures Approach, As America Nears The Container Cliff

blogs.wsj.com

“It might not be as economically deadly as the tax hikes and spending cuts due on Jan. 1, but a looming crisis at America’s ports has retailers worried.” First there was a fiscal cliff, then there was a milk cliff, now we have a dock cliff. Here a cliff, there a cliff, everywhere a cliff cliff!

Hobby Lobby faces millions in fines for bucking Obamacare

religion.blogs.cnn.com

“Craft store giant Hobby Lobby is bracing for a $1.3 million a day fine beginning January 1 for noncompliance with the Patient Protection and Affordable Care Act, dubbed Obamacare.”

Why Celebrate Christmas When We Do?

www.firstthings.com

“It is generally believed that the birth of Christ is celebrated on December 25 because our savvy Christian forebears with a flare for marketing took over a winter solstice holiday from the surrounding pagans. Not so, apparently.”

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A Christmas Prayer for North Korea's Christians

A Christmas Prayer for North Korea’s Christians online.wsj.com In North Korea, public worship is dangerous, and a ‘congregation’ might mean two people on a park bench, silently sharing their faith.]]>

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A Christmas Prayer for North Korea’s Christians

A Christmas Prayer for North Korea’s Christians

online.wsj.com

In North Korea, public worship is dangerous, and a ‘congregation’ might mean two people on a park bench, silently sharing their faith.

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In Hoc Anno Domini

In Hoc Anno Domini

online.wsj.com

The Wall Street Journal publishes its traditional Christmas editorial on freedom and faith. This editorial was written in 1949 by the late Vermont Royster and has been published annually in the Wall Street Journal ever since.

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Bloomberg, LaPierre and the Void

Bloomberg, LaPierre and the Void

nytimes.com

This quote captures the moment perfectly: "Our society is divided between an ascendant center-left that’s far too confident in its own rigor and righteousness and a conservatism that’s marched into an ideological cul-de-sac and is currently battering its head against the wall."

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The Most Persecuted Religion

Cooper, Huffman and Adlerstein: The Most Persecuted Religion

online.wsj.com

Rabbi Abraham Cooper, Rev. John Huffman and Rabbi Yitzchok Adlerstein write that Christians are targeted-by independent groups or governments – in 131 of the 193 countries in the world.

Categories
Economics Game Theory Social Science

The game theory behind the new NBC show called "Take it All"

Take it All which recreates a well-studied problem in game theory called the Prisoner’s dilemma.   According to the Prisoner’s dilemma Wikipedia article, a “classic” example of this game is as follows:

“Two men are arrested, but the police do not have enough information for a conviction. The police separate the two men, and offer both the same deal: if one testifies against his partner (defects/betrays), and the other remains silent (cooperates with/assists his partner), the betrayer goes free and the one that remains silent gets a one-year sentence. If both remain silent, both are sentenced to only one month in jail on a minor charge. If each ‘rats out’ the other, each receives a three-month sentence. Each prisoner must choose either to betray or remain silent; the decision of each is kept secret from his partner until the sentence is announced. What should they do?”
This game is called the Prisoner’s dilemma because the solution to the game involves joint betrayal rather than joint cooperation, even though joint cooperation is the better outcome for both.  To see this, consider the following “payoffs” (in terms of prison time) that Prisoner 1 and Prisoner 2 associate with the strategies “Betray” and “Keep Silent”.

 

Prisoner 2

Prisoner 1

Betray

Keep Silent

Betray

A) 3 months in jail, 3 months in jail

C) Go free, 1 year in jail

Keep Silent

B) 1 year in jail, Go free

D) 1 month in jail, 1 month in jail


Suppose Prisoner 2 decides to betray Prisoner 1.  Under the “Prisoner 2 Betrays Prisoner 1” scenario, Prisoner 1 will only have to spend 3 months in jail if he betrays Prisoner 2 (corresponding to cell A above), and a full year in jail if he keeps silent (corresponding to cell B above).  Now suppose Prisoner 2 decides to keep silent.  Under the “Prisoner 2 keeps silent” scenario, Prisoner 1 goes free if he betrays Prisoner 2 (corresponding to cell C above), and spends 1 month in jail if he keeps silent (corresponding to cell D above).  So no matter what Prisoner 2 does, Prisoner 1 always spends less time in jail if he betrays Prisoner 2.  By symmetry, no matter what Prisoner 1 does, Prisoner 2 always spends less time in jail if he betrays Prisoner 1.   Thus the dilemma… Now, let’s consider how Take it All recreates the Prisoner’s dilemma.  The show begins with five contestants playing a first round, four contestants playing a second round, and three contestants playing a third round.  The final two contestants after round three advance to the “Prize Fight” which mimics the Prisoner’s dilemma game shown above.  In the Prize Fight, the strategy pair for each contestant is “Keep Mine” (i.e., keep my winnings from Rounds 1–3) and “Take it All” (i.e., keep my winnings from Rounds 1–3 and also take my opponent’s winnings from Rounds 1–3).  If both contestants choose to “Keep Mine,” they will each keep the prizes they have won in the prior rounds (this is analogous to ending up in cell D in the Prisoner’s dilemma payoff matrix shown above). If one contestant chooses “Keep Mine” and the other chooses to “Take it All,” the contestant that chose “Take it All” will go home with all the prizes — theirs and their opponents (this is analogous to ending up in either cell B or cell C D in the Prisoner’s dilemma payoff matrix).  But if both choose “Take it All,” they both go home with nothing (this is analogous to ending up in cell A in the Prisoner’s dilemma payoff matrix).  If one were to play this game purely on the basis of self-interested action, then the obvious strategy would be to always “Take it All”, in which case NBC doesn’t have to pay out at all.  However, the interesting (and somewhat creepy and provocative twist) here is that the show’s host (Howie Mandel) gives both contestants time to try to convince each other that they won’t betray each other.  Thus, the “suspense” is whether one’s opponent follows through on his or her verbal “promise” to “Keep Mine”. Now consider what happened earlier this week on a “Take it All” episode: From a business perspective, I think that it is quite clever to produce a game show based upon a prisoner’s dilemma game.  The production costs for a show like this are nominal, and most of the time the production company won’t have to pay out a jackpot.  It doesn’t take a game theory expert to figure out that the incentive structure of the game is incompatible with a (Keep Mine, Keep Mine) outcome.  The  likely outcome is (Take It All, Take It All), in which case no prize is paid.  Occasionally one can expect a (Keep Mine, Take It All) outcome, as was the case earlier this week.  This also works to the NBC’s benefit; the “drama” of the game creates a buzz and possibly more viewership (thus bringing in more revenue from commercials).  In all likelihood, NBC also manages the risk of a (Keep Mine, Take It All) outcome by purchasing an insurance policy covering the cost of the jackpot from Lloyds of London… Let me make one final point about Prisoners Dilemmas and television shows.  The next time you watch a Law and Order re-run, keep in mind that virtually every Law and Order episode is organized around some variation of a Prisoners Dilemma game.  The downside of realizing this is that this makes Law and Order much less interesting to watch, since you can often deduce what will likely happen just a few minutes into each episode!  ]]>

Categories
Economics Game Theory Social Science

The game theory behind the new NBC show called “Take it All”

There’s a new NBC game show called Take it All which recreates a well-studied problem in game theory called the Prisoner’s dilemma.   According to the Prisoner’s dilemma Wikipedia article, a “classic” example of this game is as follows:

“Two men are arrested, but the police do not have enough information for a conviction. The police separate the two men, and offer both the same deal: if one testifies against his partner (defects/betrays), and the other remains silent (cooperates with/assists his partner), the betrayer goes free and the one that remains silent gets a one-year sentence. If both remain silent, both are sentenced to only one month in jail on a minor charge. If each ‘rats out’ the other, each receives a three-month sentence. Each prisoner must choose either to betray or remain silent; the decision of each is kept secret from his partner until the sentence is announced. What should they do?”

This game is called the Prisoner’s dilemma because the solution to the game involves joint betrayal rather than joint cooperation, even though joint cooperation is the better outcome for both.  To see this, consider the following “payoffs” (in terms of prison time) that Prisoner 1 and Prisoner 2 associate with the strategies “Betray” and “Keep Silent”.

 

Prisoner 2

Prisoner 1

Betray

Keep Silent

Betray

A) 3 months in jail, 3 months in jail

C) Go free, 1 year in jail

Keep Silent

B) 1 year in jail, Go free

D) 1 month in jail, 1 month in jail

Suppose Prisoner 2 decides to betray Prisoner 1.  Under the “Prisoner 2 Betrays Prisoner 1” scenario, Prisoner 1 will only have to spend 3 months in jail if he betrays Prisoner 2 (corresponding to cell A above), and a full year in jail if he keeps silent (corresponding to cell B above).  Now suppose Prisoner 2 decides to keep silent.  Under the “Prisoner 2 keeps silent” scenario, Prisoner 1 goes free if he betrays Prisoner 2 (corresponding to cell C above), and spends 1 month in jail if he keeps silent (corresponding to cell D above).  So no matter what Prisoner 2 does, Prisoner 1 always spends less time in jail if he betrays Prisoner 2.  By symmetry, no matter what Prisoner 1 does, Prisoner 2 always spends less time in jail if he betrays Prisoner 1.   Thus the dilemma…

Now, let’s consider how Take it All recreates the Prisoner’s dilemma.  The show begins with five contestants playing a first round, four contestants playing a second round, and three contestants playing a third round.  The final two contestants after round three advance to the “Prize Fight” which mimics the Prisoner’s dilemma game shown above.  In the Prize Fight, the strategy pair for each contestant is “Keep Mine” (i.e., keep my winnings from Rounds 1–3) and “Take it All” (i.e., keep my winnings from Rounds 1–3 and also take my opponent’s winnings from Rounds 1–3).  If both contestants choose to “Keep Mine,” they will each keep the prizes they have won in the prior rounds (this is analogous to ending up in cell D in the Prisoner’s dilemma payoff matrix shown above). If one contestant chooses “Keep Mine” and the other chooses to “Take it All,” the contestant that chose “Take it All” will go home with all the prizes — theirs and their opponents (this is analogous to ending up in either cell B or cell C D in the Prisoner’s dilemma payoff matrix).  But if both choose “Take it All,” they both go home with nothing (this is analogous to ending up in cell A in the Prisoner’s dilemma payoff matrix).  If one were to play this game purely on the basis of self-interested action, then the obvious strategy would be to always “Take it All”, in which case NBC doesn’t have to pay out at all.  However, the interesting (and somewhat creepy and provocative twist) here is that the show’s host (Howie Mandel) gives both contestants time to try to convince each other that they won’t betray each other.  Thus, the “suspense” is whether one’s opponent follows through on his or her verbal “promise” to “Keep Mine”.

Now consider what happened earlier this week on a “Take it All” episode:

From a business perspective, I think that it is quite clever to produce a game show based upon a prisoner’s dilemma game.  The production costs for a show like this are nominal, and most of the time the production company won’t have to pay out a jackpot.  It doesn’t take a game theory expert to figure out that the incentive structure of the game is incompatible with a (Keep Mine, Keep Mine) outcome.  The  likely outcome is (Take It All, Take It All), in which case no prize is paid.  Occasionally one can expect a (Keep Mine, Take It All) outcome, as was the case earlier this week.  This also works to the NBC’s benefit; the “drama” of the game creates a buzz and possibly more viewership (thus bringing in more revenue from commercials).  In all likelihood, NBC also manages the risk of a (Keep Mine, Take It All) outcome by purchasing an insurance policy covering the cost of the jackpot from Lloyds of London…

Let me make one final point about Prisoners Dilemmas and television shows.  The next time you watch a Law and Order re-run, keep in mind that virtually every Law and Order episode is organized around some variation of a Prisoners Dilemma game.  The downside of realizing this is that this makes Law and Order much less interesting to watch, since you can often deduce what will likely happen just a few minutes into each episode!

 

Categories
Science

Cooling Down the Fears of Climate Change

Matt Ridley writes the Mind and Matter column in The Wall Street Journal and has written on climate issues for various publications for 25 years. He is somewhat of a science polymath, having written on a wide variety of science topics – so many that he even has his own Amazon page @ http://amzn.to/V6Qn0E. His latest book, the Rational Optimist (cf. http://amzn.to/VPXE15), is on my reading list for the holidays. His latest WSJ article provides an interesting and informative assessment of empirical climate research:

Matt Ridley: Cooling Down the Fears of Climate Change
online.wsj.com

In The Wall Street Journal, Matt Ridley reports that the latest scientific evidence points to a further rise of just 1°C by 2100-and the net effect on the planet may actually be beneficial.

Categories
Economics Politics Public Policy

Actor Gérard Depardieu Surrenders French Passport

Apparently there is a diaspora of rich French citizens surrendering their French passports so as to avoid having to pay a recently passed top marginal income tax rate in France of 75 percent.  Quoting from the article accompanying this video, “French Premier Jean-Marc Ayrault said it was pathetic that people move to another country to avoid taxes after a Belgian mayor said that actor Grard Depardieu was moving to Belgium possibly to pay lower taxes.”