Posts Tagged econ

Dylan Mayo

I met Dylan during a Thursday night Draft Club draft, which is to say during an evening where we played Magic after working on Magic.  Dylan was quite forward and friendly – introducing himself and claiming he had in fact spent all week on introductions.  He was exactly the right combination of interested in what you had to say, and interesting things to say, and I later discovered also has a razor sharp instrument of sarcasm on him.  Even now, despite my conscious awareness of his legendary sarcasm, I get taken by it when we are conversing.  Dylan is also one of the few friends who just “get” me when I’m geeking out on gaming references, possibly because he’s more of a geek than me. :)

Dylan and I have a lot in common – we are both devastatingly handsome, we both think too much, we both loooove games and playing games with friends, we both enjoy teasing Bill Stark (we kid because we love!) and we both care a lot about our friends.  Dylan also has more experience in the games industry than me, and cares more about the “real world” than me (as in, he’s formally studied economics and such).  We still have really interesting conversations all over the place, though, as good friends with varied interests should.  It is Dylan’s model of a manager – the kind that holds his people up to others when they accomplish something great, and protects them from outside influences while they are doing their work – that I admire most of the friends I have seen as managers.

Although it was a sad day for all at Wizards when a bunch of excellent people were let go with the dying breaths of the Gleemax initiative, I don’t think I miss anyone’s company quite as much as Dylan’s at Wizards.  We just clicked so well, and also had enough to argue and disagree about, that I was always interested in spending more time chilling with him, and I am sad I don’t see him every day anymore!

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Friends had recommended the book Freakonomics by Levitt and Dubner to me multiple times, but as I much prefer to read fiction than non-fiction, I had avoided purchasing or borrowing it and kept my regular sci-fi/fantasy flavors.  Then, on the way out of Maui from vacation, I was suddenly out of reading material and at a bookstore.  So I picked up a copy and read it, and was very impressed.  This kind of economics, the common sense and investigative/scientific approach, was impressive.

The sequel, Superfreakonomics, came out recently and I picked up a copy on the way down to San Diego for reading.  Since I was stuck in airports for about half the day, I finished it on the trip, and was once again impressed by the authors’ writing and the partially hand-holding walk through human response to incentives.  The Super version has a bit more edgy economic situations than the original – e.g. prostitutes, terrorists, unclean doctors – but overall it was exactly what I was expecting and wanted out of it.

The two major themes of the sequel are “no really, people respond to incentives” and “people innovate technology to solve problems that common wisdom thinks are unsolvable.”  As the first work covered the former, and I have other blog posts on Economics to cover that core idea, I wanted to talk a little about the latter.

I am a big proponent of technology solutions: they are the ultimate expression of human ingenuity over the universe.  We use our brains to create tools for ourselves, building upon foundations until we can achieve something nearly unimaginable from the get-go.  Think about spacecraft, cellular phones, the Internet.  These technologies have had such an enormous impact on humanity, and they happened because a person (or more commonly a group of people) set their minds to overcoming the supposed-impossible with their intellects.

I think there is no limit to what humans can achieve, except perhaps limits inherent to the Universe (maybe), given enough time and belief in accomplishing the impossible.  I guess that makes me an idealist.

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Rational Action

Does it make sense to consider people rational actors, in the economic sense?  Rational action, as I understand it, is defined as a person taking into account the costs and benefits and making decisions based on a comparison of the two that doesn’t put them at negative value.  People make “smart” decisions in that they choose things that benefit them given the costs.

However, I have also heard it stated that even people “being irrational” – as in, doing things for others at no apparent benefit to themselves – is still covered under the rational action premise.  Those people are gaining internalized benefit – happiness at helping others – that necessarily outweighs the costs of their action.

The issue I have with this latter philosophy is that it seems rather circular.  Here is an example: I am interested in a girl, but she is not interested in me but wants to be friends.  She comes to me for advice about another guy she likes, and I help get them together.  Is it rational in the sense above, that I am gaining benefit by helping my friends?  I believe so, but often not that outweighs the anguish of the moment.  People make decisions like these, putting themselves in a negative benefit situation now for some potential happiness down the line.  Does economics claim to be predictive in cases like this?  It seems foolish to think that without a detailed psychological analysis of the individuals in question, one can predict this apparently self-detrimental behavior.

I think humans are capable of being irrational locally (in the moment) to be rational in the extended sense.  By this, I mean that you can consciously (and sometimes unconsciously) take a local hit  – costs outweighing benefits – for a global increase in your happiness.  The best example of this in my experience is making oneself moderately unhappy (spending time ignoring one’s own needs and wants) to make a friend much happier.  One could imagine an even more extreme example, like asceticism – giving up worldly benefits for some potential intangible mental/spiritual benefit later.  For economics to be predictive, I believe it needs to incorporate the nature of extended rational action.

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