Archive for July 9th, 2009

Predictably Paternalistic

arielyWhen I had a class with Dan Ariely—author of the highly acclaimed Predictably Irrational—last semester he performed a dollar auction, where students could bid on a $20 bill. The highest bidder got the $20, but the second-highest bidder had to pay the second-highest bid. What generally results is a bidding war that goes above $20, causing both the highest and the second-highest bidder to lose money. Predictably, then, this led to an irrational escalation of the bids up to $30, at which point the two remaining bidders agreed to split the cost.

Now, the Freakonomics blog directs us to Swoopo, an auction website that takes full advantage of this behavioral economics insight:

“How can Swoopo, the online auction site, rake in $2,151 selling a laptop for $35.86? Easy: set an opening price of $0.01 (almost free!), then let each new bidder top the last by only a penny, and extend the auction each time someone places a bid in the final seconds. Oh, and collect $0.60 from each player for each bid they place. The winner of the auction might walk away with a good deal, but the losers will have racked up big fees chasing their sunk costs. The house always wins. Writer Mark Gimein calls the site “the evil bastard child of game theory and behavioral economics.”
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In Defense of… Barenaked Ladies

“I could hide out under there / I just made you say, ‘Underwear.’”

It’s kind of an embarrassing confession: Barenaked Ladies are my favorite band.

You see, my relationship to music has been a very simple and static one. I grew up listening to non-threatening, easy-on-the-ears ‘90s rock. I never really stopped. I never had an emo phase, a classic rock phase, or a synth phase. Hearing Dylan or Pearl Jam or Eminem didn’t change the way I thought about music, let alone in a profound way.

Because of all this, I’ve been told I don’t really “get” music.

But I don’t think a lot of people “get” Barenaked Ladies, either.

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