Matt and I recently discussed whether we thought the government should intervene to correct intra-personal externalities that arise from time inconsistency in peoples’ behaviour. We particularly talked about smoking: models of smoking which incorporate hyperbolic discounting predict that people will want to quit in the future but will never be able to quit when the […]
We mentioned a while back that the way politicians’ reputations are besmirched by allegations of misconduct coudl be due to the mistaken recollections of their constituents. Of course, there are rational reasons to mistrust politicians who are investigated for misconduct too, as Stuart Armstrong points out: more guilty people get tried and acquitted than the […]
You all probably know by now that Eric Maskin was among the recipients of this year’s ‘Nobel prize’ in economics for his work on mechanism design. Browsing a few of his papers I came across one that reminded me of agnitio’s post on free software. Contrary to the obvious intuition, Bessen and Maskin propose that […]
Matt posted earlier today about someone who gains utility from thinking about buying something even if they never actually buy it. There’s actually quite a lot of work that’s been done on utility gained from anticipation. George Loewenstein’s 1987 paper reports a study in which people were willing to pay more for a kiss they […]
My attention has been drawn (thanks Paul) to an article which describes how one might find the optimal number of members of parliament in a representative democracy. In a nutshell, a parliament with too few representatives is not “democratic” enough, possibly leading to an unstable political system, in which various undesirable forms of political expression, […]
Economists like to claim that their discipline is about providing tools for analysis, not answers to ready-made problems. OK, so they’re hardly alone in that but Dani Rodrik links an interesting paper by Michael Greenstone that walks the walk. Greenstone …shows how data from world financial markets can be used to shed light on the […]