At a recent Algorithmic Fairness meeting, there was some discussion of algorithmic homogenization. The concern, as expressed, for example in Kleinberg and Raghavan (2021) is that “the quality of decisions may decrease when multiple firms use the same algorithm. Thus, the introduction of a more accurate algorithm may decrease social welfare—a kind of “Braess’ paradox” for algorithmic decision-making”. Now, no new model is needed to exhibit such a paradox for algorithmic decision making. The prisoner’s dilemma will do the job for us. Consider the instance of the dilemma in the table below. C ..read more

Sydney Afriat passed away on December 31, 2021. I learnt this in the course of a hunt for one of his papers (more on this later). Unsurprising given his vintage, but disconcerting that I could recall no notice or announcement of this event. Not even Google’s knowledge panel for Afriat records his death. Eventually, I found a one paragraph bulletin at the University of Ottawa and the Econometric Society web site lists him in the deceased section of the Society’s fellows. For someone who was once described as belonging “to that select group of economic theorists who have become a legend in their ..read more

Recently Ashwin Kambhampati, Juuso Toikka and myself were engaged on a project that grew out of Carroll’s robust contracting paper . A byproduct is a new proof of Carroll’s main result which is reproduced here. It shows how his main result is a consequence of linear programming duality.  Let be the set of possible states and be the output in state . Without loss we may assume that . An action for an agent is a pair where is a probability distribution over and a cost. Denote by the set of known actions of which a typical element is written as    Let be the contract that ..read more

From time to time, I return to Polya’s `How to Solve It‘ for advice to give my students. In spite of the passage of time it remains as trenchant and as useful as ever. One thing, however, I would amend (not emend); his second of three rules of style: The second rule of style is to control yourself when, by chance, you have two things to say; say first one, then the other, not both at the same time. My proposal: The second rule of style is to control yourself when, by chance, you have two things to say; say first one, then stop. My colleague Santosh Venkatesh (whose Probability Theory ..read more

Like Tilman Borgers I believe that all behavioral economics and social psychology books should be housed in the self-help section of the bookstore. Indeed, Tilman tells me, that when bookstores existed he made it a point to move such books out of the Economics section and place them in the section they properly belonged to. Unsurprisingly, I enjoy tales of behavioral scientists behaving badly (and turn a blind eye on my own tribe). This post is prompted by one such instance. In August of 2012, PNAS published a paper by Shu, Mazar, Gino, Ariely and Bazerman. It was an amalgamation of two indepe ..read more

Around the mid 2010’s Google introduced automated bidding. Other platforms have followed suit. Rather than bidding directly for an `eyeball’, an advertiser delegates the bidding to the platform. In order to inform the bids that the platform will submit on their behalf, the advertiser submits two numbers to the platform. One is their budget and the second is their ROI target which can be thought of as  . Hence, the ROI is the inverse of the cost per click. Some observers have remarked that auto-bidding is strange because one asks the auctioneer themselves to bid on one’s behalf. Others hav ..read more

While my colleagues have been using Chat GPT to determine what it knows about important things, such as sunk costs and elasticity of demand, I was curious to learn what it knew about me. Here is a snippet: “He is currently a Professor of Economics at the University of Pennsylvania, where he has been a faculty member since 2018. Prior to that, he was a Professor of Economics at the University of Chicago Booth School of Business, where he also served as the Dean from 2012 to 2019.” I have, alas, never been a Professor of Economics at Booth, nor have I served as dean either at Booth or anywhere e ..read more

At dinner, some weeks ago, among my companions, was a cardinal of the profession. The cardinal lamented the fixation on the top 5. This cardinal, rebelled against it by declining to use the term in letters of reference, promotion and tenure. The cardinal urged a focus on the content of the work rather than the ranking of the outlet. While sympathetic to the sentiment, I think the proposal mistaken in some contexts. Specifically, for promotion and tenure letters, one is writing for `outsiders’. The intended audience is not part of the specialty. The letter serves as a marker of credibility for ..read more

Lower the height of the basket and impose a restriction on the height of players, say 5 foot 8. This will increase the pool of available players and eventually improve the quality of play compared to the status quo where we are restricted to choosing players who are at least 6 feet ..read more

In a 2020 paper in the Journal of Economic Literature, Heckman and Moktan argue that the obsessive focus on top 5 publications has a deleterious effect on the profession. In addition to documenting the impact a top 5 publication has on career outcomes, they argue that their hold distorts the incentives of junior faculty. For example, junior faculty may scrap a possibly good idea if it can’t get published in a top-five or focus on ideas with a ready made audience on the relevant editorial boards. In addition to insufficient experimentation/exploration, there are two other consequences we should ..read more