Tyler Cowen's Blog, page 167
June 9, 2014
Rats regret bad decisions, indeed they regret bad restaurant decisions
Do you ever say “Rats!” after making a mistake? It now has a whole new meaning:
They [scientists] developed a task called Restaurant Row, in which rats decided how long they were willing to wait for different foods during a 60-minute run.
“It’s like waiting in line at the restaurant,” Prof Redish. “If the line is too long at the Chinese restaurant, then you give up and go to the Indian restaurant across the street.”
The rats waited longer for their preferred flavours, meaning the researchers could determine good and bad food options.
Occasionally the rats decided not to wait for a good option and moved on, only to find themselves facing a bad option – the scientists called this a regret-inducing situation.
In these cases the rats often paused and looked back at the reward they had passed over.
They also made changes in their subsequent decisions, being more likely to wait at the next zone and rushing to eat the reward that followed. The scientists say such behaviour is consistent with the expression of regret.
When experiments were carried out where the rats encountered bad options without making incorrect decisions, such behaviour was not present.
The article is here, the paper is here, all via Michelle Dawson.
Assorted links
2. Reihan Salam defends work requirements.
3. Halting drunk driving with Polish lasers (there is no great stagnation).
4. Liberalism Unrelinquished, an interview with Daniel Klein.
6. Dating through Facebook and Twitter?
Non Compete Clauses Reduce Innovation
The NYTimes has a good piece today on the increasing use of noncompete clauses, clauses that say that if you leave a firm you cannot work for a competitor typically for a period of 1 or more years.
Noncompete clauses are now appearing in far-ranging fields beyond the worlds of technology, sales and corporations with tightly held secrets, where the curbs have traditionally been used. From event planners to chefs to investment fund managers to yoga instructors, employees are increasingly required to sign agreements that prohibit them from working for a company’s rivals.
Non competes agreements (NCAs) are dangerous in my view because they put firms into a prisoner’s dilemma: Non competes benefit firms but harm industries by reducing innovation.
Today we all know about Silicon Valley but in the 1950s and 1960s the place for technology was Route 128 in Massachusetts which Business Week called “the Magic Semicircle”. The magic semicircle contained technological leaders like DEC and Raytheon and intellectual powerhouses like Harvard and MIT – this was at a time when Silicon Valley was mostly fruit trees.
When William Shockley left Bell Labs for the Valley it was not considered a promising move. And indeed something strange happened. Shockley wasn’t a very nice person, he couldn’t get any of his former colleagues to come work for him, and within a year of starting his firm in Mountain View, eight of Shockley’s researchers, who called themselves the “traitorous eight,” resigned. The traitorous eight, started Fairchild Semiconductor. Two of them, Robert Noyce and Gordon E. Moore, later left Fairchild to form Intel Corporation. Other people leaving Fairchild Semiconductor started National Semiconductor and Advanced Micro Devices. So it was in this branching off process of new firm creation that Silicon Valley was born.
Now here is the point, if Shockley had started his firm in Massachusetts or in pretty much any other state, the traitorous eight probably would not have left to start their own firm because they would have signed a standard non-compete agreement prohibiting them from competing with their former employer for 18 to 24 months. In California, however, the courts have consistently refused to enforce non-compete agreements. An employee who leaves one company can join a new company and start work the next day and they can do so regardless of any agreement.
Silicon Valley could not operate if non-compete agreements were enforced. Silicon Valley is a hyper-mobile workforce. Moreover, it’s precisely in the circulation of workers that Silicon Valley has one of its advantages the diffusion of new ideas. The key to Silicon Valley and much innovation today is the diffusion, the combination, the integration of different sorts of knowledge and worker mobility has been a big part of this. Not just worker mobility between firms in Silicon Valley but also immigrants, circulation between different countries, university-firm partnerships and so forth.
Firms who come to Silicon Valley know that they cannot use NCA to protect their innovations but they come anyway because the opportunity to learn from other people exceeds the costs of other people learning from you. Thus, worker mobility and the inability to protect IP by restricting mobility is bad for an individual firm but good for the industry as a whole, good for innovation, good for workers and good for consumers.
(Drawn from a talk I gave at a Google Big Tent event in Korea.) Hat tip to Loweeel in comments for some edits.
Is there a paradox of low market volatility?
Wall Street’s “fear gauge” has fallen to a seven-year low, helping propel US stocks to a record peak but suggesting investor complacency reigns over financial markets.
The CBOE Vix equity volatility index, a barometer of investor sentiment, slipped below 11 on Friday, nearly half the long-term average and its lowest level since February 2007. The Vix has fallen in recent years in conjunction with a robust recovery in equity prices from crisis levels as central banks pumped money into the financial system.
Now, it seems the Fed would be less afraid if it saw investors being more afraid, or at least that is the new conventional wisdom. That is a coherent view if the Fed knows that it doesn’t know what it is doing with the unwind of the taper and the like. The Fed has private information that things may be screwy, but private investors don’t have that same information. The Fed then thinks that investors might thus be overextending themselves and then the Fed gets worried all the more.
But is that, taken alone, a coherent equilibrium of beliefs? Not yet, because it seems someone’s beliefs should have to budge.
So how does all this hang together? The Fed doesn’t want to crush the market, it just wants to test whether investors might in fact have some private information of their own. By “leaking” that it is worried about low volatility in the market, the Fed can see whether investors suddenly panic or whether they have a relatively firm basis for not feeling so worried.
And so far investors have not panicked, quite the contrary. The relatively sanguine beliefs of private investors thus seem to have a fair amount of depth. The Fed has nudged investors, to learn something about the shape of the response curve, and those investors have held their place or warmed to the data all the more.
So if you believe in rational actor models (a big if, admittedly), you should be bullish about asset prices looking forward. Maybe about the real economy too. We’re seeing lots of good numbers about credit for the United States and that is a significant leading indicator.
Those new service sector jobs, and how many people can actually be good butlers?
A new butler willing to go east, to Shanghai or Dubai or anywhere else suffering an Anglo-servant shortage, can start at $60,000 a year and run his employer’s estate from the start. In the West, where standards are higher and the competition more fierce, a rookie typically apprentices for a few years and earns a starting salary of maybe $40,000. A butler in either market should hit six figures within five to six years—sooner if he learns a few dirty secrets or gets poached by one of his boss’s billionaire friends.
Here is some of what you learn at…butler school:
Ford’s lessons cover practical matters like getting red-wine stains out of a decanter (use denture cleaner) and proper placement of the salad fork (nodded off during that one). But the bedrock of his instruction is deportment, especially the stuff a butler doesn’t do. It’ s not a short list. A butler never offers his hand to be shaken. He never sits down in front of his boss. He never says “You’re welcome” to a guest. “If you have to say anything at all,’” Ford tells us, “say ‘My pleasure, ‘because “You’ re welcome” is very hotel.” And if something is “very hotel” or “very restaurant,” it’s too lax for a butler. If a butler screws up, apologies should be succinct—or not made at all. Once, when Ford served at a royal banquet, a VIP female guest abruptly turned into him, forcing his hand down her blouse. He said nothing: “Who do you think would be more embarrassed if I did?”
There is more here.
June 8, 2014
Has the Turing test now been passed?
A programme that convinced humans that it was a 13-year-old boy has become the first computer ever to pass the Turing Test. The test — which requires that computers are indistinguishable from humans — is considered a landmark in the development of artificial intelligence, but academics have warned that the technology could be used for cybercrime.
…Eugene Goostman, a computer programme made by a team based in Russia, succeeded in a test conducted at the Royal Society in London. It convinced 33 per cent of the judges that it was human, said academics at the University of Reading, which organised the test.
It is thought to be the first computer to pass the iconic test. Though there have claims other programmes have successes, those included set topics or question in advance.
A version of the computer programme, which was created in 2001, is hosted online for anyone talk to. (“I feel about beating the turing test in quite convenient way. Nothing original,” said Goostman, when asked how he felt after his success.)
The computer programme claims to be a 13-year-old boy from Odessa in Ukraine.
So far I am withholding judgment. There is more here, lots of Twitter commentary here. By the way, here is my 2009 paper with Michelle Dawson on what the Turing test really means (pdf).
What do CEOs do on vacation?
Not that much in economic terms, or so it seems according to a new paper by David Yarmack:
This paper shows connections between chief executive officers’ (CEOs’) absences from headquarters and corporate news disclosures. I identify CEO absences by merging records of corporate jet flights and CEOs’ property ownership near leisure destinations. CEOs travel to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news releases. When CEOs are away, companies announce less news, mandatory disclosures occur later, and stock volatility falls sharply. Volatility increases when CEOs return to work. CEOs spend fewer days out of the office when ownership is high and when weather is bad at their vacation homes.
The published version is here, other versions are here. Hat tip goes to the excellent Kevin Lewis.
Donald N. Michael on our future cybernation
He wrote:
[When] computers acquire the necessary capabilities…speeded-up data processing and interpretation will be necessary if professional services are to be rendered with any adequacy. Once the computers are in operation, the need for additional professional people may be only moderate…
There will be a small, almost separate, society of people in rapport with the advanced computers. These cyberneticians will have established a relationship with their machines that cannot be shared with the average man any more than the average man today can understand the problems of molecular biology, nuclear physics, or neuropsychiatry. Indeed, many scholars will not have the capacity to share their knowledge or feeling about this new man-machine relationship. Those with the talent for the work probably will have to develop it from childhood and will be trained as intensively as the classical ballerina.
Michael then discusses what will happen to those people who cannot work productively with the machines. Some will still work in person-to-person interactions, but the others will end up in government-designed public tasks and work short hours and subsist on the public dole. He also considers the possibility of sending some of these individuals to poorer countries where automation is not so far advanced.
Michael wrote all of that and more in his book Cybernation: The Silent Conquest in…1962.
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