Saturday, December 4, 2010

Some Links: Sometimes, kids will cooperate.

Careful how you try to introduce game theory to your kids. They may seem competitive with each other, but they will cooperate against a common foe. (Marginal Revolution)
Bill Easterly on the new Human Development Indicators: "The HDR addressed [a criticism of the previous human development indicators] by making the problem much worse. Previously we were all whining about differences in the value of life of 70 times between rich and poor – now it’s a differential of 17,000 to one. Sorry, Zimbabweans, UNDP thinks your lives are worth 50 cents. (Aidwatchers)
Lotteries don't have to have a negative sum for their participants. (Freakonomics)
Bayesian Bees. The author suggests 5 lessons we could learn from bees. Here are two:
1. Minimise the leader's influence on the group. Here we humans have much to learn.
2. Seek diverse solutions to the problem. Humans realised only recently that diversity is good for a group.
(Marginal Revolution)

Thursday, December 2, 2010

Follow-Up on the Austrian Explanation of the Financial Crisis

Via MR:
the increase in lending was greatest in 2006 and the first half of 2007,
after the federal funds rate had already returned to a level consistent
with normal benchmarks.
In other words excessively low interest rates, the crux of the Austrian school's departure from the Keynesian school, does not go far in explaining the biggest increases in lending. That is not to say that there aren't useful insights from other aspect of the Austrian school's analysis, namely the fact that agent's rationality and ability to process information from market signals is imperfect. (But one could also correctly argue that these are views that the Austrians SHARE with the Keynesians.)