A couple years ago NPR's Planet Money podcast had an episode about Somali pirates. (The pirate part starts at 9:35). There was all sorts of interesting stuff about division of labor, allocation of shares, pirate venture capital, etc. Some of this paralleled early modern piracy (as given a scholarly analysis in Peter Leeson's work and a romantic perspective in innumerable books and movies since Treasure Island) but in other respects it's very different. In particular, whereas early modern piracy was mostly about seizing cargo and the crews were left alone if they surrendered promptly, Somali piracy is more similar to piracy in antiquity in that it's basically maritime kidnapping. The typical instance of Somali piracy isn't that different from what a young Julius Caesar experienced when he was kidnapped by pirates and held for ransom on his way home from political exile in Asia Minor. One interesting detail in Plutarch's report is that, "When these men at first demanded of him twenty talents for his ransom, he laughed at them for not understanding the value of their prisoner, and voluntarily engaged to give them fifty."
It's not entirely clear if we should take Plutarch's report at face value (he also tells us that Caesar constantly insulted his captors as being, for instance, too uncivilized to appreciate his poetry) but for the sake of argument let's accept that Caesar rather brashly gave away too much information in the game of price discovery. According to a hostage negotiator quoted by This American Life, giving away this information is apparently typical of hostages and is counter-productive to their release as it narrows the bid-ask spread. Economists would describe hostage negotiation as a bilateral monopoly price negotiation that is structurally just a special case of chicken. That is, unlike a barrel of oil or a freight car full of soybeans which can trade on an extremely liquid market with innumerable buyers and sellers, a hostage has exactly one seller (the kidnappers) and exactly one buyer (the employer and/or family of the hostage). When there is only one buyer, the opportunity cost for ransoming the hostage is zero. Likewise, the employer and/or family has no realistic alternative means to recover the hostage. In order for everybody to walk away happy, we need a cooperate-cooperate outcome: the kidnapper has to give up the hostage and the employer/family has to give up a ransom. This structure also characterizes art theft, which in practice is not a matter of fencing art on the black market but ransoming art to a museum's insurance company.
If we model a bilateral monopoly negotiation only two things should matter. The first is, as always in a game of chicken, the willingness to accept failure. The more willing you appear to walk away, the more bargaining power you have. In a more protracted game this can cash out as willingness to delay which we can treat as a defect-defect outcome on the installment plan. In fact in the Planet Money episode on Somali piracy, the hostage's party did balk and break off negotiations for weeks at a time until the pirates were willing to come down on price.
The other thing that should matter is the capacity to pay. If the pirate knows for an absolute fact that the hostage's people simply can't raise more than a million dollars then it would be pointless for them to demand two million dollars. Of course there is an issue of information asymmetry in that the hostage's party has much better information on its assets than do the pirates and so the pirates may be skeptical of the hostage's party pleading poverty (especially if the hostage has foolishly told them how much money they can get). We see this at work in the TAL story's point that kidnapping insurance holds the condition that you can't tell anyone you have kidnapping insurance.
Here's something that the econ model tells us shouldn't matter: the going rate. In normal markets the going rate matters, but only because it provides the opportunities for substitutes and this creates the "law of one price." For instance, when I go to a grocery store and see a loaf of bread for $4 I won't buy it. An economist would say I forgo this purchase because I know perfectly well that the going rate for a loaf of bread is about $2.25 and so I can go elsewhere and get bread cheaper. Similarly if I go to the Honda dealer to buy a Honda Accord, it is relevant for me to mention price quotes offered by other Honda dealers for an Accord or even how much Toyota dealers ask for a Camry because it is entirely credible that I'll walk off the lot and go to rival car dealers offering very close substitutes for this dealer's cars. However if my sister is locked in a basement in Ciudad Juarez and the kidnappers can credibly commit to not letting her go unless I raise $x, it is completely irrelevant that in the past kidnappers accepted ransoms of $x/2 since I don't have the relatively good fortune of dealing with a kidnapper who demands $x/2 but am stuck with one who demands $x. There are no other places where I can buy the freedom of my sister and so the only price that matters is the one being demanded by her particular kidnappers. (Note to any cartels reading this: I don't have a sister).
And nonetheless, much like how most people who haven't studied statistics balk at the idea that the ratio of sample size to population size is irrelevant to statistical inference, people seem to have a strong intuition that the "market price" is relevant to a bilateral monopoly even though the whole idea of a bilateral monopoly is that there is not really a market but only a series of discrete one-off transactions. In the absence of substitutability, "comparable" transactions are irrelevant as they don't imply opportunity cost. This is the main thing I found so fascinating about the Planet Money episode, over and over again the hostage's party balked at the pirates demands as unreasonable in being out of line with the "market price." We only get the pirates' story second hand, but apparently at no point did they explain to the hostage's party that "market price" doesn't really exist in a bilateral monopoly. (Maybe Mogadishu University needs a better econ department).
There are two ways, which are only partially incompatible, to look at why people insist that there is a market price. The simple model is to see us as making Bayesian inferences about the price the other party is willing to accept. If a pirate asks me for $10 million when I know that previous ransoms for similar hostages from similar pirates were about $1 million, I face two possibilities. It may be that I'm facing an usually greedy or unreasonable pirate and $10 million really is the price from which he will not budge. However it seems more likely that I'm dealing with a regular pirate, who like most pirates in the past will ultimately settle for about $1 million but who is just floating a high initial figure in case I'm especially bad at this. In this sense the distribution of prices for similar transactions may not be directly relevant in the sense of providing opportunities for substitution (or the credible threat to avail myself of them) but it is still relevant as information about the zone of possible agreement. This is consistent with the Planet Money story in that Filipinos are cheaper to ransom than Europeans by an order of magnitude. Presumably this reflects Bayesian inference on the part of the pirates from the hostage's nationality as to how much the hostage's party should be able to raise. Alternately we could imagine that pirates always start with the same bargaining position but the Filipinos are less able to pay and so the pirates eventually reach this through ad hoc price discovery on a case-by-case basis. This strikes me as implausible though and I think pirates probably learned pretty quickly what they can reasonably expect for each nationality.
This is a nice explanation and it has the appeal of bending but not breaking the economic model of the actor, but it's not clear how seriously we want to take it and even if it's ultimately true it may not reflect the subjective experience. For instance, one of the main explanations for racial discrimination is that it reflects Bayesian inference about aspects of human capital that aren't readily observable. This model was devastated by Devah Pager's audit study showing that employers prefer to hire white men with a criminal record rather than black men without a criminal record, whereas the "statistical discrimination" model predicts that ascriptive discrimination should be weaker than and diminish greatly in the presence of information about relevant traits at the individual level. In the wake of the Pager study the best case you can make for the statistical discrimination model is that our intuitions are Bayesian in the aggregate but are too low level for us to override with directly relevant information (or, for that matter, with the conscious desire to avoid stereotyping on legal or ethical grounds). It's not unlike the argument that evolution made sex feel good so that we will propagate our genes, but it still feels good when you use birth control. So we might prefer a model that is ultimately consistent with people using prevailing price as information in bilateral monopoly negotiations, but is proximately and subjectively more about meaning.
Although the discipline of economics has many valuable things to teach us about how markets work, especially in the long-run, the subjective experience of someone bargaining does not necessarily reflect thinking through how a rational actor would apply price theory (competitive markets) or game theory (monopolistic markets) to the situation. Rather people take moralized approaches to exchange and seem to apply various relational models to exchange, which includes not only market exchange but also gift exchange, patron-client ties, and primitive communism. Moreover, even when people accept that a situation is one of market exchange it does not come naturally to think of price like modern economists think of it, as "market clearing." Rather much as people intuitively expect physical objects to behave by Buridan's impetus rather than Newton's inertia, people's intuitive notions about price can have less to do with how economics thinks of it than how Aristotle, Aquinas, and Marx thought of it, as "just price" or "fair price." We see the Aristotelian/scholastic/Marxist understanding of price institutionalized in price controls and laws against gouging. The intuition many people seem to feel is that the long-run prevailing price has moral weight and deviations from this price (as for instance in a supply or demand shock leading to "gouging") are immoral. Hence historical bread riots often involve not exactly stealing food but rather mobs enacting vigilante price controls. Most recently we saw this is in a class action lawsuit against concession prices in movie theaters. As an American and someone who studies exchange professionally, economics comes naturally enough to me that my immediate reflex to this story is to think this guy needs to understand two-part tariffs and tell him if he doesn't like the theater's prices nobody is forcing him to go there or to eat once he arrives. However the fact that somebody felt sufficiently indignant to sue over being offered the opportunity to buy a bucket of popcorn for $6 shows us that the perspective assumed by academic economics doesn't necessarily come naturally to people. Similarly, when the hostage's party is negotiating a ransom with pirates both the pirates and hostages may be behaving in ways that are ultimately consistent with a game of chicken under conditions of bounded rationality and Bayesian inference about asymmetric information, but in the immediate subjective sense they may simply be feeling that the recent run of ransoms sets an expectation of what it is fair to pay for this particular hostage.
Oh, and one more thing about Caesar. Plutarch tells us that after he was ransomed he got some ships, raided the pirates, and had them all crucified.
When President Obama left, I stayed on at the National Security Council in order to serve my country. I lasted eight days.
In 2011, I was hired, straight out of college, to work at the White House and eventually the National Security Council. My job there was to promote and protect the best of what my country stands for. I am a hijab-wearing Muslim woman––I was the only hijabi in the West Wing––and the Obama administration always made me feel welcome and included.
Like most of my fellow American Muslims, I spent much of 2016 watching with consternation as Donald Trump vilified our community. Despite this––or because of it––I thought I should try to stay on the NSC staff during the Trump Administration, in order to give the new president and his aides a more nuanced view of Islam, and of America's Muslim citizens.
Long after research contradicts common medical practices, patients continue to demand them and physicians continue to deliver. The result is an epidemic of unnecessary and unhelpful treatments.
First, listen to the story with the happy ending: At 61, the executive was in excellent health. His blood pressure was a bit high, but everything else looked good, and he exercised regularly. Then he had a scare. He went for a brisk post-lunch walk on a cool winter day, and his chest began to hurt. Back inside his office, he sat down, and the pain disappeared as quickly as it had come.
That night, he thought more about it: middle-aged man, high blood pressure, stressful job, chest discomfort. The next day, he went to a local emergency department. Doctors determined that the man had not suffered a heart attack and that the electrical activity of his heart was completely normal. All signs suggested that the executive had stable angina—chest pain that occurs when the heart muscle is getting less blood-borne oxygen than it needs, often because an artery is partially blocked.
You can tell a lot about a person from how they react to something.
That’s why Facebook’s various “Like” buttons are so powerful. Clicking a reaction icon isn’t just a way to register an emotional response, it’s also a way for Facebook to refine its sense of who you are. So when you “Love” a photo of a friend’s baby, and click “Angry” on an article about the New England Patriots winning the Super Bowl, you’re training Facebook to see you a certain way: You are a person who seems to love babies and hate Tom Brady.
The more you click, the more sophisticated Facebook’s idea of who you are becomes. (Remember: Although the reaction choices seem limited now—Like, Love, Haha, Wow, Sad, or Angry—up until around this time last year, there was only a “Like” button.)
Meet the protesters who tricked conference attendees into waving Russian flags.
Two men made trouble—and stirred up a social-media frenzy—on the third day of the Conservative Political Action Conference by conducting a literal false-flag operation.
Jason Charter, 22, and Ryan Clayton, 36, passed out roughly 1,000 red, white, and blue flags, each bearing a gold-emblazoned “TRUMP” in the center, to an auditorium full of attendees waiting for President Trump to address the conference. Audience members waved the pennants—and took pictures with them—until CPAC staffers realized the trick: They were Russian flags.
The stunt made waves on social media, as journalists covering CPAC noticed the scramble to confiscate the insignia.
Ambitious young Republicans at CPAC are torn over embracing the new nationalism of the president.
OXON HILL, Maryland — If you want to take the temperature of the conservative movement at CPAC, you need to know where to stick the thermometer. It’s not in the onstage speeches, or the myriad policy panels, or the boozy after-parties—it’s inside Exhibit Hall D on the ground floor of the Gaylord National Resort and Convention Center.
Here, in what conference organizers have dubbed “The Hub,” hundreds of blue-blazered and high-heeled young conservatives roam the cavernous hall—crammed with booths set up by right-wing think tanks, media outfits, pressure groups, and publishers—shopping for future careers. The general vibe is that of a trade show, with attendees perusing pamphlets about D.C. internships, swapping Twitter follows, and taking selfies with minor cable news celebrities. They buy t-shirts with cheeky messages on them (“God is great, beer is good & liberals are crazy”), and the lucky ones make off with a satchel full of swag (the Sheriff David Clarke bobblehead was a particularly hot item this year).
Since the middle of last year, a group of Filipino reporters, photographers, and cameramen have been at the frontline of Philippine President Rodrigo Duterte’s war on drugs. They are a different type of war correspondent, and the drug war, a different type of war.
The correspondents work what they call the “night shift,” the unholy hours between 10 p.m. and 5 a.m., when the dead bodies are found. They wait at Manila’s main police station and rush from there to the site of the most recent kill. They keep count of the corpses, talk to witnesses and families, interview the police, attend wakes and funerals. A lot of what the world learned about the carnage, especially in the early months, is due largely to the night shift reporters.
18-30 grams of protein and a lot of internalized ideas about masculinity per serving
Starting around the time I was 10, my brother took me with him on runs I could barely complete—off our street, across the Brooklyn Bridge, and back. I hated every minute of it. Each time my chest filled with a cold-metal ache that reinforced that this was not for me—to this day I run on treadmills, never outside. After one of the first times I remember eating a slice of bread with cheese—“Really?” he said, “We just went for a run, and you’re going to eat that?” If this is what it was to exercise, I would not, I promised myself, exercise again.
That was easy enough for a while—I went to a math and science high school full of kids taught to treat our bodies as meat casings for our brains. But then I found myself at a private university where some of the meat casings were taller, stronger, and belonged to people who sprinted up hills, did yoga, and rowed boats down rivers. A girl I met bemoaned how she only got to the gym three days a week now, and it left her feeling stressed. Having only ever associated the gym with stress, I was confused.
Yet another failed drug trial has prompted soul-searching about the “amyloid hypothesis.”
Last week, the pharmaceutical company Merck pulled the plug on a closely watched Alzheimer’s drug trial. The drug verubecestat, an outside committee concluded, had “virtually no chance” of benefit for patients with the disease.
The failure of one drugis of course disappointing, but verubecestat is only the latest in a string of failed trials all attempting the same strategy to battle Alzheimer’s. That pattern of failure has provoked some rather public soul-searching about the basic hypothesis that has guided Alzheimer’s research for the past quarter century.
The “amyloid hypothesis” began with a simple observation: Alzheimer’s patients have an unusual buildup of the protein amyloid in their brains. Thus, drugs that prevent or remove the amyloid should slow the onset of dementia. Yet all drugs targeting amyloid—including solanezumab from Eli Lilly and bapineuzumab from Pfizer and Johnson & Johnson, to add a few more high-profile flameouts to the fail pile—have not worked so far.
Priming kids to expect rewards for good behavior can harm their social skills in the long term.
After working with thousands of families over my years as a family psychologist, I’ve found that one of the most common predicaments parents face is how to get kids to do what they’re asked. And one of the most common questions parents ask is about tools they can use to help them achieve this goal.
One such tool is the sticker chart, a type of behavior-modification system in which children receive stickers in exchange for desired behaviors like brushing their teeth, cleaning their room, or doing their homework. Kids can later “spend” their accrued stickers on prizes, outings, and treats.
Though data on how widely sticker charts are used (and when and why they became so popular) is difficult to find, anecdotal evidence suggests that these charts have become fairly commonplace in American parenting. Google searches for “sticker chart,” “chore chart,” and “reward chart” collectively return more than 1 million results. Amazon has more than 1,300 combined product results for the same searches. Reddit, too, is teeming with forums for parents asking each other about the merits of the charts and discussing specific strategies.
“No… it’s a magic potty,” my daughter used to lament, age 3 or so, before refusing to use a public restroom stall with an automatic-flush toilet. As a small person, she was accustomed to the infrared sensor detecting erratic motion at the top of her head and violently flushing beneath her. Better, in her mind, just to delay relief than to subject herself to the magic potty’s dark dealings.
It’s hardly just a problem for small people. What adult hasn’t suffered the pneumatic public toilet’s whirlwind underneath them? Or again when attempting to exit the stall? So many ordinary objects and experiences have become technologized—made dependent on computers, sensors, and other apparatuses meant to improve them—that they have also ceased to work in their usual manner. It’s common to think of such defects as matters of bad design. That’s true, in part. But technology is also more precarious than it once was. Unstable, and unpredictable. At least from the perspective of human users. From the vantage point of technology, if it can be said to have a vantage point, it's evolving separately from human use.