Thursday, December 29

Should charities threaten potential donors?

Earlier this year, I blogged about my dislike for charities who try to guilt donors by mailing out unsolicited gifts. While I find this to be an offensive practice, my friend Tom recently received a mailing from a charity called Smile Train that may have topped this. (In case you're wondering about the picture below, Smile Train "is dedicated to helping the millions of children in the world who suffer from cleft lip and palate").

Thursday, December 22

Last-minute Christmas gift idea

If you need a last-minute Christmas gift for an economist — or indeed anyone who is interested in the financial crisis — you might want to pick up This Time is Different: Eight Centuries of Financial Folly from your local bookstore.

The book, written by economists Carmen Reinhart and Ken Rogoff, goes back hundreds of years and looks around the globe to show that financial crises really aren't anomalies — when you look at the grand scale of history, there are clear patterns that emerge.

Monday, December 19

Betting on the bad guys

Should sports fans bet against their favourite team?

It's an intriguing question that piqued my interest when I happened upon a working paper by South African economics student Bart Stemmet, titled Hedging one's happiness — Should a sports fan bet on the opponent?

Hardcore sports fans know that it can be painful when your favourite team loses a big game. But what if you could buy insurance against the pain? As Stemmet points out, you can: just bet on the opposition. If the good guys win, you'll lose your bet, but it's a small price to pay for the sweet taste of victory. And if the bad guys win, the money you'll pocket from winning the bet will at least make you feel better.

Thursday, December 15

Game Theory of The Price is Right: Part 2

In my last post, I discussed some game theory behind the Cliffhangers game on The Price is Right. And while watching the stupidity of Cliffhangers players got me angry, what really got me thinking was the bidding itself.

To get up on stage (which comes with a chance to win bigger prizes), four contestants take turns guessing the value of an item (usually several hundred dollars). The one with the closest guess to the item's actual value, without going over, wins the item and gets to go up on stage.

Frequently, people make really dumb guesses. Someone will bid, say, $420 for an item, and another contestant will subsequently bid $415, giving themselves a $5 window in which to win the item. But more interesting is whether or not contestants decide to bid $1 above someone else. Frequently, someone will bid, say, $475 after another contestant has bid $420. They could have bid $421 (and indeed this does happen, as in the video below), but in the unwritten etiquette of The Price is Right, it's viewed as a low blow.

Monday, December 12

Game theory of The Price is Right: Part 1

In an attempt to improve my French, I have discovered a newfound appreciation for The Price is Right. Having watched the show as a kid but forgotten about it in recent years, I was excited when a Québecois version of Bob Barker's classic game show was launched this fall. I have found that it is an enjoyable way to keep up my French vocabulary.

It's also the first time that I've watched the show on a regular basis since studying economics, which can make for a surprisingly frustrating experience. For instance, on Cliffhangers (the "yodelling game"), I find myself cringing when contestants make their final bid.

Thursday, December 8

One issue per visit: A health-care inefficiency

When you have a public health care system (as we have in Canada), it can lead to inefficiencies.Carleton University's Health and Counselling Services provides a great example of this (hat tip to my fiancée, Laura). They have a rather strange policy: "Only one issue per visit will be addressed."

Let's say I have two issues I want to discuss with a doctor. Perhaps I'm concerned I have strep throat. Since I'm going to the doctor anyway, it would probably make sense to discuss a refill on a prescription that is expiring soon. Is it more efficient to tackle both these issues in one visit or in two separate visits?

Monday, December 5

Doggone unintended consequences

My friend Alixe sent me a cute newspaper article a while ago about the proliferation of purse dogs in the Yaletown neighbourhood of Vancouver. It seems that strata rules limiting dogs to 20 pounds or less in Yaletown condos means the small dogs are favoured. But the economist in me started thinking: could these strata rules have an ugly downside? At the margin, could they incentivize condo-dwelling dog owners to underfeed their pets?

The strata policies can put dog owners in an awkward dilemma. Let's say I'm a Yaletown condo owner with a very cute Boston terrier puppy, which according to Wikipedia has a weight range of 10 to 25 pounds. After several months, it grows to its healthy weight of 25 pounds. If my fellow strata members don't like my dog, I've got three options: get my dog's weight under 20 pounds, give away my dog, or move. Which option is least drastic? Probably weight control.