In a fantastic display of the power of availability of substitutes, we're witnessing the opposition to legalization of marijuana in California by California Beer and Beverage Distributors.  Proposition 19, which proposes the legalization of marijuana in California, has various groups lobbying against it.  The main group funding the opposition to the proposition is the California Police Chiefs Association.  That makes sense to me for political economy...

Stephen Kinsella sends us to a post on economics education by Paul Gregory, author of an Economic Principles text since the 80s, which is now in its seventh edition.  Gregory tells us in the post that "There is no need for a new Economics 101. What we have experienced over the past two years is nothing new. There is nothing unexpected that has happened. Events however should serve as “teachable moments." I think that he's right about some stuff,...

On Thursday I gave a presentation at the School of Economics at the University of Cape Town about incorporating pop culture and better use of technology into your teaching.  I've been trying to experiment with various things in my teaching recently and I plan to experiment more in the future. Technology and Pop Culture in Teaching Economics from Simon Halliday on Vimeo. The talk began with a discussion of whether I think we should use slides or not.  I...

Jonah Lehrer recently wrote about the identifiable victim effect. In the piece he talks about the work of Paul Slovic and identifiable victims. I appreciate the work that Slovic has done. I have met and interacted with some of Slovic's co-authors and think the work is great. The idea behind identifiable victim bias is that people respond differently when they see one 'identifiable' victim rather than a bunch of statistics indicating the 'true' depths of poverty....

I didn’t ever think that I’d comment on the game theory of the fashion industry, but hey the fashion industry contains profit-maximising firms that rely on a brand to maintain their profits, so why not? We’ve known for a while that various fashion houses employ many tactics to improve their branding, for example sending free products to celebrities so that their products are associated with these celebrities. This morning, though, I came across an article in which...

I've just read this review - by John Gray - of Matt Ridley's book The Rational Optimist.  I originally intended to comment on the article's content, then realised that I had to refer to some commenters who would probably just troll (because, I suspect, their ignorance displays their misunderstanding of the position that they advocate).  Anyway, here's the extended version of the comment I planned to write.  My comment is intended to be about the comments...

I am slowly uploading my lectures from Cooperation and Competition (EC2007S) at the University of Cape Town to Cooperation and Competition - 1st Lecture 26 July 2010 from Simon Halliday on Vimeo. ">vimeo, a good video sharing site.  You can see the "channel" for the videos here: Cooperation and Competition.  You can subscribe to the RSS feed of the channel if you're interested.   Cooperation and Competition is a course in introductory game theory...

My sister is an actress, doing more stage acting and dancing than screen work.  My brother is a musician.  I dabbled in acting and singing for much of my youth, even heading up the University of Cape Town choir for a while when I was a student.  Now why is this relevant? As a consequence of these affiliations and activities I occasionally end up watching programs like So You Think You Can Dance (which my brother-in-law did quite well in previously) and...

Repost from Michael Meadon at Ionian Enchantment.  Note: Mike generally removes blogs that have been inactive for more than 6 months, so if you're no longer on the list and have resumed blogging, please email him.01 and the universe Acinonyx ScepticusAmanuensisASSAf BlogBotswana Skeptic Bomoko and other nonsense words Can Like To Have It (formerly Hello Universe, This is Nessie) Communicating Science, the African WayDefollyant's AntiBlog Digital Immigrant...

Today, at the University of Cape Town, I began to teach an undergraduate course in game theory.  The course is a broad-based introduction to game theory for students across the university's faculties: from humanities, to commerce, to engineering and the built environment.  We instruct with the textbook Games of Strategy (3rd ed) by Dixit, Reiley and Skeath.  The book is a good, broad-based and intuitive introduction to game theory, with mathematical formalisation...

Since arriving in London, I'd been intending to meet up with fellow sceptics, humanists and affiliated people. It took a while, but I got around to doing some stuff.  I've been involved in three things in the past two weeks: the Protest The Pope march at London Pride 2010, a meet-up of the Central London Humanist Group last week, and a talk by Simon Perry (he of Quacklash fame) at the meeting of Westminster Sceptics on Monday night.  I'll blog about each of...

So I watched this talk of Dan Ariely's with BigThink (embedded below). He covered interesting topics as always. But he also brought up my 'pet hate' when people talk about rationality and self-interest and how they are often conflated when people talk about behavioural economics in the popular press. What's the point here: a rational actor maximises the payoff or utility that they gain from taking certain actions, that is consuming goods, engaging in certain activities, etc. A self-interested individual who maximises their money has rational preferences over money and is self-interested and will therefore engage in activities to maximise the amount of money that they have, calculating the costs and benefits in order to do so. But a rational individual who has other-regarding preferences - that is they care about how other people behave - an individual who does so rationally may give some money away, may behave trustingly, and may punish individuals she sees infringing what she may perceive to be social norms. Notice that such an individual remains rational, but her preferences are not the preferences of an entirely self-interested individual who only wants to increase the amount of money that she has.

Anyway, I feel the need to bring this up because far too many people talk about rationality and self-interest interchangeably when they are not. One of the problems we encounter, for example is that you could hypothetically have irrational individuals, some of whom are otherwise self-interested and some of whom are other-regarding. We might not be able to differentiate between these individuals if their irrationality is such that they behave in ways that do not maximise what we perceive to be their preferences. But we may still have rational actors who are self-interested (also called self-regarding), other-regarding or bits of both.  So when Ariely says that trust and punishment (vengeance) are irrational he is not actually defining the problem properly, or he's assuming that the preferences of being are in fact the preferences of someone who is an entirely self-interested money-maximising individual.  I believe that the evidence indicates that most people are not wholly money-maximising and only self-interested - their preferences are structured differently.  Consequently his rumpus about rationality is a poorly constructed problem about preferences and not a problem about rationality. 

Later he is asked about companies and irrationality.  He then talks about something 'making sense'.  Logic and rationality are not the same thing.  This is a sophomoric error.  He talks about focus groups being less useful than we think they are.  If this were irrational then it would mean that they do not help companies to make profit, because rational companies go about maximising profits (or maximising share prices or some other goal).   

Ariely finally nods his head to other-regarding or social preferences toward the end of the interview when he talks about 'society' and social norms, but places nowhere near enough emphasis on it given the power he attributes to 'irrationality' and the time, content and rhetoric he dedicates to 'irrationality'. Oh well... 

Otherwise, his commentary on reward-substitution, differences in time preferences and other phenomena is interesting and apposite.  I recommend that you take a look at the video and see what Ariely has to say, but make sure that you realise he's trying to package the talk more accessibly.