Somewhere else, part 113

Some writings worth reading, here and there

A good rule of thumb, though not always true, is this: Modern (“neoclassical”) economic theory has been pretty successful at describing people’s decision-making patterns in static settings, but not so good at describing how people make decisions in dynamic settings. When people have to peer into the future to make their decisions, they do stuff that we don’t really understand yet. The key way that economists model behavior is by assuming that people have preferences about things. Often, but not always, these preferences are expressed in the form of a utility function. But there are some things that could happen that could seriously mess with this model. Most frightening are “framing effects”. This is when what you want depends on how it’s presented to you. For example, suppose I asked you to choose between Skippy and Peter Pan peanut butter, and you chose Skippy. But suppose I instead asked you to choose between Skippy, Peter Pan, and Jif, and you chose Peter Pan! This is really weird, since the first choice would imply that you preferred Skippy over Peter Pan, and the second choice would imply that you preferred Peter Pan over Skippy. The only thing that changed was the fact that there was Jif sitting nearby. If this kind of thing happens often, then modeling human preferences is probably hopeless, because there’s no way we can predict all the little factors that could affect a given decision. In other words, with framing effects, preferences will tend to be unstable.” [to be continued…]

et un peu de lecture en français (en plus de plusieurs billets mentionnés par ailleurs sur mon blog)

Did I miss something interesting?


3 thoughts on “Somewhere else, part 113”

  1. Thank you Arthur.

    Lately I have been wondering about how maps are used to explain Economy…

    … Say, one wants to display how the european economy “works”, and for instance how the French, German and Italian economy are linked together. I haven’t yet come across a map of economical/sociological variables:

    * with a fine resolution (ie not country-wise nor region-wise, but rather at the scale of a city/county)
    * that doesn’t emphasize the administrative borders (like, France in red and Germany in blue)

    I’m just thinking that there must be some continuity (unemployment rate, maybe others) and also some discontinuity (like tax rate for instance). Eventually, a map of those very interconnected regions (Rhein-Rhur-Alsace for ex.) that doesn’t refer explicitly to the countries administrative borders would maybe carry some interesting information about how the Economy works. Might the case as well for other sociological variables…

    … well I was just wondering if you have ever seen on of those maps, and if you could help me figure out if they would make any sense. You may have already posted one of those maps in a “somewhere else”, but I can’t recall (i’ve been following you since no. ~70)

    🙂
    Reza

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