The Bathrobe Economist

This is a guest post from friend of the blog, Abraham Othman. Check out his webpage: www.cs.cmu.edu/~aothman/

John Kenneth Galbraith's brilliant book on the Great Depression features an extended and seemingly out-of-place discussion of "the bezzle". A fraudster using the cover of the wealth, good sentiment, and naked greed that froths during heady times can steal a lot of money. But for an extended period of time, until the fraud is revealed, society suffers no apparent loss whatsoever (Galbraith describes this as a "net increase in psychic wealth").*  Bezzles are those frauds. 

With the downfall of Hampton Creek and Theranos, it appears the bezzle of "Science Unicorns" is shrinking precipitously. But the bezzle's subtlety is best expressed as a dual role: First, that the collapse of the bezzle is a marker of a significant shift in investor sentiment, from good times to bad. The bezzle relies on a general buoyancy of feeling, and the ventures it supports wobble and co...

A few weeks ago the New York Times published an article about the nature of how we read the news on Facebook. Facebook tries to learn about your preferences – as you click on different links, what's displayed on your news feed is affected.  The whole article is worth a read, as it sheds light on just how easy it is – how, perhaps, inevitable it is – for a Facebook user to get drawn into reading non-traditional and sub-standard news sources for information.

The thing that interested me the most about the article, however, was the possibility that a user, by clicking certain links, could end up in an echo chamber. She could be shown articles and videos from increasingly biased (but possibly less reliable) sources, which in turn would further perpetuate any biases in her beliefs. In fact, one could see the entire process of news consumption on Facebook as a new way to think about economic phenomena – Confirmation Bias (that people tend to seek out information that agrees with what they alr...

Scalping tickets. It seems shady! I started thinking about scalping recently, when a friend of mine told me he had bought dozens of tickets to Hamilton, and had been reselling them online for many multiples of the purchase price. This revelation irritated me. Most of the people I've talked to view scalpers' existence with a mixture of resignation and disgust (basically, "Ugh, fine.") because scalpers drive prices up, making events unaffordable for many fans.

The literature in economics has a much more indulgent view of scalpers, pointing to the fact that scalpers clear the market, letting people who are willing to pay more for the good do so. It seems that the economics literature fails the smell test on this issue, so I wanted to spend this inaugural post trying to understand whether I have the right to heap judgement on my friend. My prior is that I do - at least one scalper heaped judgment on himself.

WHY...