“The trick is to combine your waking rational abilities with the infinite possibility of dreams…if you do that, you can do anything.” —-Waking Life
Here is what you do if you have a passing interest in neuroscience, psychology, or physics but are too lazy to take science classes in college: make movies. In the last decade or so, some of the most successful movies from nearly every genre—from thrillers like Memento to sci-fi/action movies like The Matrix to art house movies like Waking Life—involve quirks of the mind: alternate realities, psychological disorders, and imaginary characters.
Inception, the latest film from Christopher Nolan (director of the aforementioned Memento as well as The Dark Knight, which means we at NPI are predisposed to like him), tackles dreaming, an area so loaded with psychological and epistemological ramifications that the movie feels ready to burst at the seams. Leonardo DiCaprio plays Cobb, a thief who enters peoples’ dreams to steal their ideas. This process, known as “extraction,” involves exploiting projections of a dreamers’ subconscious to reveal secrets. Continue reading
When 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.”