I can’t believed I could have lived without knowing this site Wolfram Mathworld! That souds a bit nerdish I guess 
I found the explanations way cleaner and more precise than for instance on Wikipedia. I think this will be of particular use for my Genevoise friends struggling with their Econometrics course.
By the way. Yes, I believe Wikipedia is a good source of information! Or better, is in many cases sufficient source of information.
Where and when will be the best place and time to get fresh cheap crack and enjoy watching the sporting event of the year?
Rio 2016 of course!
While the decision who gets to host the Olympics is dirty politics (I’m sorry Barack!), the supply of “fresh, cheap, quality” drugs can be attributed to the miracle of competition!
As the Economist article on Rio “The bottom line ” says, there are three large competing drug fractions in Rio. Fierce competition among the gangs is bringing the prices (and I presume quantities) close to the perfect competition outcome.
Is this the way to go? It definitely is, if you believe that humans are truly rational and that drug addiction is in fact utility maximizing.
It might not be, if you think the drug addicts are not fully rational. Monopolistic drug dealer would increase prices and slash quantities sold, so decreasing the number of drug addicts (being drug addict is more expensive => the outside option gets more attractive). On the other hand it would create extra revenues for the drug cartel, these would likely be used in ways not consistent with the “best interest” of the majority society.
Anyway, if watching sporting events and doing crack is your thing, start shopping for a ticket!
I am working on an assignment for my Behavioral Finance class. The quantitative part of the assignment is supposed to be done in “my favorite programming language”, such as Matlab. My problem is that,
Since I am a big fan of freeware (read:don’t like spending money), I was trying to find some alternatives to Matlab. I think there are two reasonable ones. Freemat (sound a bit like Fermat – that was a big plus in my eyes) and Octave.
Freemat
Is easy to install and in my opinion relatively intuitive to use (especially if you have some prior experience with R or Stata). I did also like the interface and the manual.
The fundamental problem was that Freemat was not capable of solving what I needed to solve and I am not capable of programing it from a scratch (Simpson’s rule). In other words it is useless for my assignment…
Octave
The installation process is a bit annoying, I didn’t like the interface and Octave did not like my Windows XP (caused my Windows to crash number of times). When it comes to math, Octave is significantly more powerful than Freemat (more preprogrammed functions), and number of nerds (read:other people like me) share their programs online (I think I could download Simpson’s rule plus Octave knows other numerical integration algorithms).
Conclusion
Which one to choose? Freemat was not powerful enough to compute the exercise and Octave caused my computer to crash plus I hated the interface (maybe different installations have more user friendly one that I do not know). The best option is in my opinion to do the homework using Library computers with preinstalled Matlab or buy the $99 Student edition of Matlab…
How easily can ones brain be fooled? It turns out that pretty easily (at least when it comes to recognizing colors, distances etc…).
Look at the two squares marked A and B and compare their color. ..
Square A seems significantly darker, doesn’t it? It turns out, both are the same color…
I think the perceived color difference is even bigger in the second case: Compare the color of the little squares that are in the middle of sides of the cube. (I marked these squares with a little tick).
The one on the upper side is dark brown, the other one is orange! There seems to be no question about that. Again, both have the exact same dark brown color.
Here are the relevant squares (everything around them was deleted).
The question is, can our brain be fooled so easily in different situations? For instance when one assesses probabilities and uncertainty. I think so (I would recommend the Kahneman, Tversky:Judgement Under Uncertainty: Heuristics and Biases).
The real question is whether the “enlighten” policy maker can do anything about it (maybe he suffers from the same bias-VS comment about casinos banning Martingale strategy players on prev. post) and whether he should do anything about it (maybe people are perfectly happy thinking that the little square is orange rather than brown)…
I was taught a sure way to win money when playing roulette. You bet on color, if you lose you double your bet, if you lose again, you double your bet again. You keep on doubling bets until you win, wining back all your money plus profit equal to the original stake. You have a close to 50% chance of winning in the first round, and you are sure to recover your money later on. Sounds good, doesn’t it?
Even the gamblers admit there is a problem with it. You might not have enough money to keep on gabling.
They are partly right. In reality the strategy has a negative expected value, no matter how much money you have, you could be Rothschild, Rockefeller, Gates or owner of the entire Universe you are poised to lose money when playing the Martingale Strategy.
The probability of winning your initial bet is (1-(19/37)^n), Probability of losing your entire fortune is (19/37)^n. “n” is the number of the round in which you run out of money.It turns out that the expected value of the bet is negative for n=1 (when you can cover only round 1) and is monotonically decreasing in “n” (the more rounds you can / are determined to cover the more negative the expected value of your bet gets)… So running out of cash when playing does not hamper your strategy it saves your ass!
Obviously the expected utility theory can’t explain why anyone would want to play this strategy. You should be super afraid of big loses. This strategy tells you to take huge bets when things go sour. NO GOOD
Prospect theory can’t explain it either. You should be underweighting close to 50% probabilities and overweight low risk high loss events (that’s why you insure). You should never play this strategy. NO GOOD
Biases in the evaluation of disjunctive events (Put simply breaking a chain of same events). But these should be underestimated! But the gambler apparently overestimates the probability that the chain will be broken and so he wins his money back. NO GOOD
The last line of defense is the Regression to the Mean. People are stupid and think that the outcome of round X predicts the outcome in round (X+1). (Red in this round predicts black in the next round). I actually think this is it…GOOD
The problem is that “Regression to the mean” is just not rich enough, it doesn’t feel right that people should so easily disregard the huge bets they are potentially taking. People probably think that all previous outcomes predict outcome in this round (the more reds have fallen previously the more confident you feel about black falling this round), on the other hand if many reds have fallen in the previous rounds maybe people will expect more reds to fall… I NEED A PSYCHOLOGIST TO EXPLAIN THIS!!!
If you think this is fascinating, you need to read: Judgement Under Uncertainty:Heuristics and Biases, A.Tversky, D.Kahneman.; It’s one of the most fascinating Econ papers ever! (Published in the Science, authors are psuchologists)
All the computations why Martingale Strategy Doesn’t work are here. : Martingale Strategy Doesn’t Work
Hong Kong – Apartment was sold for a record price of 56.6 million $ (USD) in Hong Kong. To me this is suspicious, while the World is going through a biggest depression since The Depression, some buyer from Mainland China buys a 500 square meter apartment for 56.6 million $. It jsut doesn’t feel right!
I have three explanation (probably not too innovative, but reasonable):
1) The i-rates in China are tied to the US ones, low i-rates lower the cost of financing in China, making it cheaper to invest (in to 56 mil. $ apartments for instance). – This is kind of obvious.
2) The sentiment in China is sharply different than in the Rest of The World. Chinese are self confident and optimistic about their growth prospects! Because the economy is only going to grow, if you don’t pay 56.6 mil. $ today, you will have to pay 70 $ tomorrow and 90 $ after tomorrow.
3) We were misinformed. NyTimes don’t know what they are talking about. They’ve pointed only one specific example that is not relevant for the whole city of Hong Kong. Here is an article from WSJ, June 2009, No Recession in Hong Kong Office Space, indicating that NyTimes might be right after all…
In my opinion it’s the low interest rates and overly optimistic environment. It feels like we might see one more bubble burst in the very close future…
Bellow are data from Google Trends on how often is given term searched.
Term: Nobel Prize – People care what kind of prize Obama actualy won.
Term:Nobel Prize Money – What they care more for is how much cash he got.
Term: Obama Charity – What they care most for is what the hell is he gonna do with that money!
For the last graph: I was looking at some random combinations of the term “Obama” + “word”(for example: Obama radio, Obama car, Obama underpants) and they’ve increased as well after the Nobel Peace Prize announcement, but by a magnitude less than “Obama Charity”. The bottom line is that Obama should not contribute the prize money towards his retirement savings but use it for some charitable purpose!.
Here is an update to my earlier post: Harvard sucks and Princeton doesn’t matter. Yale came in third (second last year, damnit!) in the Times Higher Education Ranking. (Princeton came in 8th)
I have to say I have an issue with the ranking. They’ve ranked Berkeley 39th in the world bellow Brown, Northwestern, Edinburgh,University of Bristol, University of Manchester. That’s ridiculous!
I actually think that Berkeley being a public university funded by a state that can’t pay its own employees will see some substantial budget cuts, and so fall in its quality of research/teaching. I’ve heard faculty’s wages were cut by 8% and Yale (probably the whole Ivy) is trying to lure some professors from there. Maybe once in the future Berkeley is really going to fall all the way to the 39th place, but it’s going to take a lot of time! Saying that Berkeley is 39th university in the world is like giving Nobel in Peace to Obama… Surprising and premature.
On the other hand I think there is exactly same level of arbitrariness in every other ranking. Seeing the results biased in the way we are used to seeing them biased creates the false impression that everything is all right – normal. It’s not! There are probably equally ridiculous results in just every other university ranking.
PL wrote (I think he id it just for fun) working paper on Econ Dept. Rankings. I think his methodology makes sense (unlike ranking school based on the percentage of intl. students in the student body like the Times Rannking does) and his paper gives some nice insights.
Didn’t expect Obama to get the Nobel in Peace! I guess I have a chance to get a Nobel in Econ in 2009 after all! It would be for tireless efforts to write a good paper ( to be published probably, well maybe, well hopefully, but certainly in the future)…
Well, let’s hope people are going to take him and his peace efforts more seriously…
Update: I’ve learned that Mankiw is making the same point as me - Grad student winning the Nobel in Econ. – I hope I was the first one to point that out!
And the big fashion hit for the fall of 2009 is… Machine gun and a miniskirt! Guess where the following picture was taken:
(regardless of what one thinks about the Soviet-like military parades organized in China, these girls look HOT!)