Saturday, October 18, 2008

women’s razors

Women’s Razors Work Better
http://posnitubek.com/2008/1018%20Women’s%20Razors%20Work%20Better.html

Razor blades made for women work better than men’s blades for men who shave irregularly.

Razor blades made for men are oriented towards permanently clean-shaven guys who shave every day.

Women’s razors, on the other hand, have blades at a steeper angle and have more space between blades (on a three-blade Wilkinson Sword, for example).

Women’s razors are made for cutting longer bristles, since women tend to shave their legs less frequently.

For men this means that they clog less and cut a three-day growth more easily.

The only question is: are you comfortable using a pastel pink or green razor blade?

Friday, October 17, 2008

what’s quantum?

I’ve frequently been hearing the word quantum, and of course, the new James Bond just came out, Quantum of Solace.

Coincidentally, I recently bought the collected James Bond short stories by Ian Fleming (most of which I’d never suspected the existence), and one of them is also entitled Quantum of Solace.

The story has nothing to do with the film—the stories just supply the new film titles.

I realized that I had no idea what quantum means, so I looked it up.

Quantum (n, plural quanta): the smallest discrete amount of any quantity.

Quantum (adj): significant (frequently used to describe a change).

In addition, there are several meanings that apply to specific scientific theories or contexts.

sources:
members.tripod.com/l_asproni/Atom/atom_glossary.htm
www4.nau.edu/meteorite/Meteorite/Book-GlossaryQ.html
http://en.wiktionary.org/wiki/quantum

Tuesday, September 02, 2008

opportunity cost and overwhelm

Opportunity Cost & Overwhelm

I have frequently had the experience of being somewhere interesting, but mysteriously not being able to enjoy myself.

As an example, I will use the fêtes in Bayonne, in southwest France. It’s a big party, with lots of stuff going on and more than 100,000 people in the street. It’s a little like Mardi Gras.

During these fêtes, there are hundreds of private parties spilling into the streets, there are bands (rock and brass or both) playing in the streets, there are interesting people to talk to, and more.

What tends to happen to me is that I get there, and it’s obviously a great occasion. There are inifinite possibilities, but somehow I find myself being glum and not getting into the vibe.

The reason is that there is so much cool stuff going on that I am eternally convinced that something better is happening somewhere else. The opportunity cost of doing ANYTHING AT ALL is too high, and so I slump into a sort of zombie-like trance where I can’t commit to enjoying the moment.

Here’s a different example. I remember from the 70’s a situation where kids would have five minutes to take whatever they wanted from a toy store. I remember thinking that it would be a nightmare, because whatever you could take, you would regret not having taken something else.

Again, the opportunity cost of acting is so high that I would have become paralyzed.

Clearly, everyone doesn’t have the same relationship to these situations. During the fêtes, plenty of people are content to hang out at one street corner for five straight days. The kids who got to pillage the toy store seemed pretty happy.

My personal opportunity cost is frequently so high that it prevents me from choosing anything at all. Why is that? I believe that it comes from a childhood experience of a particular kind of poverty, where there were no second chances.

The minute I think “okay, I’m going to start playing guitar,” I start hearing voices saying “but you really wanted to draw, and it’s more important.”

The minute I start drawing, I hear voices saying “you’re going to play in a concert Wednesday, and you’d be better off practicing guitar.”

This sort of opportunity-cost paralysis comes from an articial belief that there is not enough time to do everything.

A basic lack of faith in “things will work out.”

This is an inconclusive post, and I have to admit that although I can see the problem, I am unable to see a solution or way forward.

Wednesday, August 20, 2008

opportunity cost and addiction

Opportunity Cost & Addiction

It is interesting to consider the concept of opportunity cost in addiction. What we are looking for is a way to describe the moment that the addict (who would like to stop using) caves in and decides to once again take his drug.

The junky shoots up when the opportunity cost of taking the drug becomes low enough.

Here is a scenario:

Week 1: J (the junky) gets out of rehab. He is full of optimism, and has a new lease on life. He goes home and cleans his apartment, and starts his new job (thanks to a government program for helping addicts get a new start).

At this time, the opportunity cost of using is far too high, and J does not seriously consider shooting up.

Week 2: things are going a little less smoothly. His job is tiring, and J has not consistantly done the dishes or put things away.

J’s apartment is getting a little messy. It turns out that J’s new boss has a tendency to micromanage. J’s girlfriend has a lot of ideas about how he should do things differently, and although J tries to go along, it’s a lot of work and he doesn’t always agree.

J starts to think about shooting up, how nice it would be. He really wants things to work out, to stay on the wagon, but boy is it frustrating. His quality of life is significantly lower than it was during week 1, and the opportunity cost of using (losing most of what he has) has dropped significantly.

Week 3: J really wants things to work out. He’s doing his best to make his boss happy and implement all of his girfriend’s ideas. That doesn’t really leave him with a lot of energy for himself, and his apartment is slowly turning into a catastrophe. No matterwhat he does, he doesn’t feel like his boss will really like him.

J feels guilty that he’s not doing better at keeping those people around him happy.

At this point J has invested a significant amount of energy in the people around him. Everyone knows that junkies are selfish, and J is trying really hard to be selfless. It just doesn’t seem to be working out. He doesn’t have enough energy, and he can’t seem to satisfy everyone. He’s stopped taking care of himself in order to be good to other people.

You can see where we are going with this. The more that J tries to “be good” and “help others” the faster his life spirals downward. The lower his quality of life, the lower the cost of opportunity of using.

There comes a moment when J thinks: ah fuck, it’s not worth it. I tried everything, and I can’t win. My life is shit anyway, so I might as well shoot up and feel good for a few minutes.

It is obvious from this example that although he was trying to be good, everything J did lead to a decreased opportunity cost for using. When the opportunity cost was low enough, J shot up.

Imagine another scenario where J gets out of rehab, and instead of trying to “be good”, he just tries to have a good life. He takes a vacation in the caribbean, starts working out, learns to draw, learns to cook, decides not to take the advice of his girlfriend just because he doesn’t feel like it. Etc. etc.

The quality of J’s life goes up consistently. The opportunity cost of using drugs also goes up, and as time goes by J is less and less tempted (although he never was really tempted once he got out of rehab).

The important thing here is that even by trying to do right for everyone else, the junky can dig his own grave by lowering the opportunity cost of his drug by not taking care of himself.

Only by increasing his OWN quality of life can the junky increase the opportunity cost of using. Only by doing things that make HIMSELF happy.

Friday, August 15, 2008

opportunity cost and web design

One way to think of Opportunity Cost is as “losing interest”. When the Opportunity Cost of an activity becomes too high, you loses interest; you start to feel that you are wasting time.

This idea is useful in understanding web site design. A site that is beautifully designed but which is too slow or complicated to use has a high opportunity cost—the user starts to feel that he or she could be doing better elsewhere.

It is therefore extremely important in designing a web site that the user experience feel concentrated and useful, keeping the opportunity cost as low as possible.

If the reason for the user’s visit is to get something done, anything that slows him or her down raises the opportunity cost. This is true regardless of how beautiful or interesting the site is by other criteria.

Saturday, June 21, 2008

expensive plates

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/21/AR2008062100149.html

“The next time you sit down for a nice meal at your favorite dining spot, take a close look at the prices of entrees. More often than not, there are one or two really expensive items, and then there are a bunch of mid-level ones and then there are a few inexpensive ones.

“The reason those really expensive items are there—say, $50 for a seafood platter—is that they are the reference point. You will consider them, then perhaps consider them too expensive, but instead of trading all the way down for the cheapest options ($19), you will likely settle at the middle ($30), thinking you got a deal relative to the pricey entree.

The important part here the idea of anchoring—establishing a high reference price (the original iPhone) and then offering reduced price choices.

Without the initial high-priced offering (that may never be bought), the reduced-price choice would have seemed expensive.

Since many people will intentionally choose the middle of a given price range in order to be “reasonable”, we can push this middle range up considerably by artifically offering higher-priced merchandise.

Monday, April 28, 2008

the economic naturalist

Notes on “The Economic Naturalist” by Robert H. Frank
ISBN 978-0-465-00217-7

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page 4: opportunity cost

The opportunity cost of something is the value of what you have to give up to get it.

An example is the opportunity cost of seeing Eric Clapton in concert:

1. You have a free ticket to see Eric Clapton.

2. Bob Dylan is performing tonight.

3. Dylan costs $40, but you’d be willing to pay up to $50 to see him.

For the sake of simplicity, there are no other costs, and nothing else you’re considering doing, you can’t resell the Clapton ticket, etc.

The opportunity cost is calculated as follows:

  $50.00 (you miss seeing Dylan, worth $50 to you)
- $40.00 (you save $40 that you would have paid to see Dylan)
————-
  $10.00 is the opportunity cost of going to the Clapton concert

If the Clapton concert is worth $10 to you, you should go.

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page 9: narrative theory of learning

If we learn something in story form, we remember it much better. In teaching a subject, use stories as examples.

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page 10: cost-benefit principle

“You should take an action if and only if the extra benefit from taking it is greater than the extra cost.”

We have a tendency to think that it’s better to save $10 on a $15 item than on a more expensive item. Consequently, we tend to make unwise choices.

Specifically, when I am driving on the highway, I buy sandwiches and other food at the rest areas, even though it costs me twice as much as it would if I purchased it at the grocery store before leaving.

I rationalize: I am already spending 75€ on the trip, so spending 10€ on lunch instead of 5€ doesn’t matter.

Saving 10€ is saving 10€, whether it is on a 15€ steak or a 5000€ car.

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page 15: added features

Don’t add a feature unless customers woud pay at least the cost of implementing it. The example given is six-speed transmissions, which were not implemented until people were willing to pay more for cars.

Note: in web design, this principal may help to decide which features are worth adding to a site, versus which features are better abandoned.

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page 29: no cash on the table

“Freely available money seldom sits unclaimed for long.” This means that if you see what looks like freely available money, there is probably a hidden factor making it less available.

The real consequence is simply that making money requires a combintion of talent, thrift, hard work, and luck.

“People who think they can spot cash on the table offer confident explanations for why the usual constraints do not apply.”

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page 30: productivity gains lead to windfall profits followed by low prices

The first few companies that can increase productivity can continue to charge old (higher) prices, resulting in windfall profits.

However, it will be relatively easy for competing companies to undercut these higher prices, leading to lower prices long term.

This principle provides a concrete and simple way to understand the current situation confronting record companies.

Record companies are faced with a situation where they have realized massive productivity gains through selling zero cost MP3’s, while trying to continue to charge the higher prices associated with their previous production costs.

The result is a struggle to prevent the market from becoming competitive. The record companies have fiercely pursued all alternative routes to music distribution in their quest to keep their prices from being undercut.

In principle, the record companies cannot win without artifically enforcing monopoly conditions.

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page 31: the price of a product can not exceed costs of production in long run or rivals will enter the market

This is another way of describing the previous point, and continues to apply to the situation faced by record companies.

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page 31: the law of one price

The price in City A = the price in City B + costs of transportation.

Otherwise, there would be cash on the table in the form of products that could simply be resold elsewhere.

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page 32: marginal cost

The cost of producing the last unit supplied

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-the low-hanging fruit principle

It is always best to exploit one’s best opportunities first.

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-supply and demand

Supply and demand explain the forces which decide how many of which products get produced at what price.

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-demand

Demand is a summary of the benefits people feel they are receiving from a product.

Generally, as price rises, demand falls because the percentage of people who feel that the benefits are worth the price falls.

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-supply

Producers will continue to produce a product as long as they can sell it for at least the marginal cost.

In the short run, marginal cost tends to rise with the number of units produced, because of the low-hanging fruit principle.

generally: as the price of a good keeps rising, sellers are willing to sell more units.

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-market clearing price

The price at which consumers want to buy exactly as much as suppliers wish to sell.

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page 41: the more competitive a market is, the less likely it is to discriminate against customers

If there is a real price difference, there is probably a cost difference. If dry cleaners charge more for women’s shirts, there is a reason.

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page 44: the best use of a resource is not necessarily profitable

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page 45: hallmark—train clients to new uses

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page 48: (my client) use most popular items to draw customers, then present them with the higher-margin items

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page 50: Harvard needs students as much as they need it

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page 51: workers are paid by how much they contribute to the bottom line.

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page 53: models must be recognizable, not just beautiful

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page 55: ceo’s earn more beacuse the markets are broader

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page 55 bottom: wages higher for risk, arduousness, smell or ugly

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page 57: ceo’s are highly paid to lie

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page 59: better employees are paid less because they get satisfaction. necessary to pay worse employees more so they’ll stay (in a range between best-worse employees)

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page 62: workers are paid less than they are worth in the beginning to discourage theft and laziness.

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page 66: taxis working shorter hours when it’s raining becuase they make their goals faster—something to avoid, better to strike while the iron is hot.

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page 72: hurdles

Why would you want to charge different prices for the same product?

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page 73: a hurdle is effective if potential buyers who are price sensitive (and would not have bought) find the hurdle easy to jump but others find it hard or not worth it (scratching washing machines on purpose)

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page 73: hotel minibar=indirect discount on room price

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page 74: to offer discount, hotel must find other revenues from other guests
for my client—offer expensive fast shipping to make revenue? other higher margin offers?

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page 75: waiting for a check to clear is a hurdle to avoid paying wire fees.

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page 75: a producer can increase profit with every sale at more than marginal cost, as long as that doesn’t require cutting prices to other buyers.

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page 75-76: hurdles are indispensable or economies of scale

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page 78: the true goal of (need to re-read this)

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page 80: below average cost, above marginal cost

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page 80-81: bundled concert tickets—like kits?

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page 86-87: resto charges $2 for soda, but the cost is effectively zero. If only a small number of people order drink because of free refill, it’s worth it.

Offer some thing free at a price, with free refills!

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page 88: In a perfectly competitive market, the no cash on the table principle predits that customers who get extra services will pay for them.

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page 89 top: the more competitive a market is, the closer the price will be to marginal cost. Obviously the recording industry is NOT competitive.

What happens if marginal cost is zero?

Lxury hotel not price sensitive can offer extras.

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page 90: economists do not expect regular long lines like at Disney’s Space Mountain. When you see regular lines there must be mitigating factors.

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page 95: Smart for one, dumb for all.

Individual actions that generate benefits or costs to others. (means that when laws are good, regulation is good)

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page 96: tragedy of the commons

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page 99: a small extra benefit can create regular customers—open 1 hour more etc. my client, find extras same as competitors, but +help, +choice, +service, for example.

“the only stable outcome is to be open 24 hours a day”, or to eat ALL the fish.

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page 102: check splitting results in higher prices. This has the same results for taxes/redistribution of wealth, and is a good argument for not redistributing wealth.

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page 103: Slow down for an accident. Pay the cost BEFORE you make the choice to slow down. It’s just a type of situation to recognize, a useful metaphor.

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more to come; I haven’t yet finished…

Friday, April 11, 2008

monty hall and monkeys

The Monty Hall Problem and Monkeys

The question here is if you have a group of monkeys who like red, blue and green M&M’s about equally, experiments have shown that:

1. if you give the monkey a choice of two M&M’s of two colors at first

2. then give him a choice of two M&M’s not the same color as he chose

3. he will reject the same color twice

For example, you give a monkey a red M&M and a blue M&M, and he picks the red one. Then you give him a blue M&M and a green one.

Two-thirds of the time, he will reject the blue M&M the second time as well.

Psychologists have made a big deal about this, claiming that having rejected the blue M&M the first time, the monkey will reject it the second time, “rationalizing” that he doesn’t like blue M&M’s anyway, to avoid the thought that maybe he made the wrong choice.

This is a mis-reading of statistical evidence. Even the smallest difference in the monkey’s preferences will account perfectly for the statistical results found in these experiments.

To see how this works, let’s take a more obvious example:

There are three items:

1. a sugar cube

2. a lettuce leaf

3. a pepper corn

Let’s assume that the monkey loves sugar, will eat lettuce, and hates pepper.

We try the three possible scenarios with the monkeys countless times, and statistically we see that if he rejected something the first time, he rejected it the second time exactly 67% of the time.

Here’s why. There are three possible pairs of articles offered as a first choice:

1. sugar & lettuce

2. sugar & pepper

3. pepper & lettuce

The guiding principle is that the monkey will NOT eat the pepper. For the three cases above, here are the first two choices made by the monkey:

  round 1   round 2

1. sugar / lettuce (doesn’t reject the same thing twice)

2. sugar / lettuce (rejects pepper both times)

3. lettuce / sugar (rejects pepper both times)

Two-thirds of the time, the monkey will reject the same thing the second round that he rejected the first round.

Is it because he’s trying to rationalize his choice? Or just that he doesn’t want to burn his tongue?

It is obvious from this example that there is no deep psychological phenomenon at work. It’s just simple preference for one thing over another.

In order for such an experiment to have psychological implications, it would be necessary to proove that the monkey has an absolutely equal preference for the three articles.

This would be the case if the element he chose first varied randomly.

For example, if the same monkey, when tested on separate occasions, chose the lettuce, the sugar, and the pepper with equal frequency, then we would be closer to some sort of psychological discovery.

Thursday, April 10, 2008

the monty hall problem

The Monty Hall Problem

The situation is like a classic cups problem. There are three cups, and under one of them is a nut.

You pick a cup, and the presenter then proceeds to turn over one of the “wrong” cups, under which there is nothing.

At this point, you can either stay with your choice, or pick the third cup.

Question: are you better off staying with your choice or switching to the third cup, that neither of you has chosen?

Intuitively, you might think that you’re better off staying with your choice: there’s a 50/50 chance you’re right,isn’t there?

The answer is no. There’s only a 33% chance that you’ve picked the right cup, and there’s a 67% chance that the third cup is the right one.

So you’re much better off choosing the third cup.

You don’t believe me.

To see how it works, here are two ways to visualize the problem differently:

1. When you make your first choice, there is a 67% chance you picked the wrong cup.

Nothing changes that. So, when you are in the second round, with two cups to choose from, you know that STILL, there is a 67% chance your first choice was wrong.

It follows logically that there is a 67% chance that the other cup is the right one.

2. A good way to deal with problems of this nature is to change the scale to make things more obvious.

Let’s say that there are 1000 cups.

You choose a cup, then the presenter takes away 998 other cups.

That leaves the cup you chose, and one other one. Do you still think that there’s a 50/50 chance your choice is right, just because there are two cups?

Isn’t it obvious that although you chose at random, the presenter will usually be certain that of the 1000 cups, only that one he left is the right one?

So you can see that choosing one out of two cups doesn’t at all imply that you have a 50/50 chance of being right.

The fact that the presenter left you a cup implies that there is a good chance that it’s the right one.

For more information, hit the back button, and look at “The Monty Hall Problem and Monkeys.”

Saturday, January 01, 2000

a missing page

Whoops, the page is gone. Want some coffee?