Sunday, December 20, 2015

Highly Linkable

Let's start with a trip out of town. Got your playlist ready? Sherman, to the Way Back Machine!

Read Jeffrey Tucker's sensible, thoughtful perspective on terrorism and its two great horrors.

Speaking of terrorism, here comes Adam to ruin everything. (HT: KPC)

A top candidate for the most disruptive technological breakthrough of the the next two decades is driverless (or less human driven) cars. The Atlantic has a good discussion of the two approaches driving this disruption.

Scott Sumner summarizes much of what is misunderstood in thinking about monetary economics. This is a bit wonkish, but keep in mind this: getting monetary policy correct is very probably VASTLY more important for your well-being than who wins the next presidential election. The combination of [insert the major candidate you are most opposed to] and good monetary policy is >>> [insert your favorite major candidate] and bad monetary policy. It is not even close.

The Market is a beautiful wonder, and the benefits of free exchange are truly immense. Consider as Cato at Liberty's Chelsea German points out discussing Andy George's projects how expensive a suit or perhaps a simple sandwich would be if we didn't have market exchange. When we limit The Market, we should do so with careful concern and minimal impact.

Assuming we cannot find a strongly compelling reason to prohibit an exchange, a good rule is: If you may do it for free, you may do it for money as Jason Brennan and Peter Jaworski point out. This would include some outcomes that we might at first glance find troublesome but upon further inspection would analyze to be quite beneficial (albeit counterintuitive) as Liberty Street Economics points out when considering payday lending.

One of the key ways the market works its magic is through the price system. An effective market needs an effective price system. It is a remarkable method of capturing cost. Substitutes for that system are quite inferior as in the case Arnold Kling points out discussing locavorism.

Not Exactly The Monty Hall Problem

This New Year's Eve is the opening round for this season's College Football Playoff. Oklahoma will play Clemson followed by Alabama playing Michigan State. The two winners will then face off for the National Championship 10 days later.

Since my Sooners are in the playoff this year, I've been thinking a lot about it. One random thought that crossed my mind was a bit of a logic puzzle. Read it through and answer quickly, and then think about it a while to see if you would like to revise that answer.

Suppose the following:

You are a fan of one of the teams in this year's playoff. One night while dreaming a genie with light-brown hair appears before you offering a choice among a few options*. The one you choose will be the future.

The options are:
A. Your team's total points scored in the playoff will be 75 points.
B. Your team's total points scored in the first game will be at least 50 points.
C. Your team's total points scored in the playoff will be 75 points, and at least 50 points will be scored in the first game. 
D. Your team's total points scored in the playoff will be 50 points, and you can choose how many to allot to each game.
Which do you take, and can the options be objectively ordered from best to worst?

My answers are below the jump.

*It is helpful to know a little bit about college football to fully appreciate this puzzle. The average points scored by winning teams is about 37 while the average points scored by losing teams is about 19. The lowest final score a team can have is 0 and the next lowest is 2 (a score of 1 is not possible). There are no ties in college football--overtime is played until a victor is determined. Last year out of 776 games played in the highest division of college football (the one of relevance here) a team scored 50 points or more 150 times and only 7 times did that team lose. Also last year a team scored 25 points or fewer 698 times and 564 times that team lost. Note that my data does not include the bowl and playoff games from last year.