Debattartikel i Smedjan: Regeringen sinkar de självkörande bilarna!

Att självkörande bilar kommer introduceras på svenska vägar är inte en fråga om – utan när. Politiker och tjänstemän har dessvärre incitament att fördröja introduktionen vilket riskerar att leda till skador och dödsfall som hade kunnat förhindras.

Eftersom marknaden har en förmåga att reglera sig själv vore det bäst om staten höll sig borta från att försöka styra utvecklinen genom reglering och tillståndsprövning.

Om detta skrev jag härom dagen en debattartikel i Smedjan (länk).

I’ve written a similar text in english on the topic of autonomous cars and the issue of problematic incentives for autorities here on my blog, (link)

Debattartikel i SvD om surrogatmödraskap

I samband med Pride här i Stockholm har Moderaterna en uppmärksammad kampanj om att tillåta okompenserat (”alturistiskt”) värdmödraskap. I en debattartikel i SvD (länk) kritiserar jag och Adam Danieli kampanjen och ställningstagandet och menar att även värdmödraskap mot betalning bör vara tillåtet. Artikeln blev även publicerad i tidningen.

”Politiker och partier som står upp för kvinnors absoluta rätt till sin kropp måste också stå upp för att tillåta värdmödraskap mot betalning.”

SvD 03/08-2019

Strategic Thinking in Rupaul’s Drag Race All Stars: a game theory analysis

Rupaul’s Drag Race All Stars is an American reality competition show for drag performers. In simple terms, the format is this: a group of contestants each episode compete in different challenges related to drag, each week one gets voted of the show and when there’s only one left, that contestant is crowned the winner. A feature of the All Stars game that is different from an ordinary season of Rupaul’s Drag Race is that instead of the judge (Rupaul) deciding who’s sent home, the winners of the episode challenges decide which of the two worst-performing contestants that gets eliminated. This introduces a strategic element into the competition, and this is what will be analysed in this text.

If you are the winner of the episode challenge, should you eliminate the strongest competitor or is there an advantage to gain from acting fair and eliminate the weakest one? Is it strategic to form alliances? Why is it, that in the show, the contestants tend to establish a norm of always sending home the weakest of the bottom contestants? These are some of the questions questions I will answer by using the tools of game theory.

The full text can be read here. I’ve listed the key points fro the text down below:

  • The rules of Rupaul’s Drag Race All Stars edition introduces an element of strategy that doesn’t exist in the ordinary version of Rupaul’s Drag Race.
  • The strategy relevant decision is about which of the bottom contestants to send home when being an episode-challenge winner.
  • I construct a simple game theory-model of the allstars-game, and show what predictions it makes about how contestants will act.
  • The element of randomness is key to why there’s a strategic element in the game. If talent would determine winning and losing perfectly in the episode challenges, there would be nothing to gain from acting strategically.
  • As we will see, the basic allstars model I construct fails in predicting player behaviour, and I propose a number of modifications to explain why the real game turns out the way it does.
  • In the real game, we see a more or less explicit agreement being established to refrain from acting according to the way the model predicts (i.e. that winners eliminate the strongest competitors in order to better their own odds of winning), and instead always eliminate the weakest of the bottom contestants.
  • The conventional view of why such a pact come to be, and the reasoning given for this agreement is that they wish to “play fair.” The model however shows that noble motives are not at all needed to explain this behaviour. Agreements about strategy that benefit the most talented at the expense of weaker contestants are likely to arise, at least initially. This is because these contestants both have an incentive to advocate such an agreement and a way to enforce it through the threat of eliminating defecters.
  • Even though the standard allstars-model’s main prediction about behaviour don’t fit with the real outcome, with some modifications, we see that it can be used to explain a lot of behavioural patterns observable in the real competition.


Omnämnd i media

Sedan Jacobs och min rapport släpptes i höstas så har den omnämnts ett flertal gånger i olika ledare. Några av dem är texter från liberala nyhetsbyrån, vars ledare publiceras i ett flertal lokala tidningar runt om i landet. Här kommer länkar som jag uppmärksammats på hittills:

Uppsala Nya Tidning: Skattespökena på väg att spricka

fplus: Timbro: Jobbskatteavdrag kan skapa 90 000 nya jobb

Affärsliv: Sänkt skatt lönar sig

Motala Vadstena Tidning: Sänkt skatt lönar sig

Blekinge Läns Tidning: Sänk skatten för de fattigas skull

Smålandsposten: Frågan som borde vara på allas läppar

Kristianstadsbladet: Satsa på jobben  – sänk skatten 

Ttela: Satsa på jobben – sänk skatten 

Smålandsposten: Sänkta skatter skapar jobb

We want self-driving cars on our roads, even if they cause accidents

If we want to save as many human lives as possible in the traffic, we should start replacing our vehicle fleet to self-driving cars as soon as they are as safe as the average driver. Bureaucrats and politicians don’t have the information nor the incentive to get this right, instead they will want to avoid headlines by restricting self-driving cars, which means people who could have been saved will die. 

When should we allow self-driving cars on our roads? The intuitive answer is something along the lines of “when they are safe enough”. The question then become what we mean with “safe enough”. That depend on the goal. If our goal is to minimize the number of car crashes caused by self driving cars, then the answer is simple. Never. This is of course not an optimal policy, because if we care about saving human lives and minimizing damages, then it doesn’t matter if it’s the error of a machine or a human at fault.

If we care about road safety in general, then we must accept the fact that people will be killed by self-driving cars. If a self-driving car is e tenth as dangerous as a human driver, then for any death caused by a self-driving car, there are on net nine people who are saved from dying on the road. Because the human driver who would have killed them wasn’t steering the car they were in. If all lives are valued equally, then we would want that self driving car to be out on the road, killing that one person.

The safety of self-driving cars improve with time as technology advance, and as soon as self-driving cars as good as human drivers, we should start to replace our vehicle fleet. And when I say better than human drivers, I mean the average driver on the road, not the best human drivers. If self-driving cars are more likely to replace bad drivers than good drivers, then they should be allowed sooner. And if allowing self-driving cars can speed up the innovation in traffic safety then they should be allowed even sooner. For many people, this is not intuitive.

Unfortunately, there is a difference between what should happen and what actually will happen. There is as a matter of fact reason to suspect that the people who have power to influence the decision of when to allow self-driving cars will fail to get it right. I don’t doubt that the bureaucrats and politicians who make regulation on self-driving cars have good intentions, and wish to see fewer people killed on the road. But all deaths are not treated equally.

An accident caused by a self-driving car will get a lot of media attention. When a pedestrian was killed by an autonomous car in Arizona in march 2018, it became known across the globe. The people who are saved by self-driving cars however will not show up in any statistic and will motivate no headlines.

It’s well established in psychology research that media coverage influence our perception about the frequency of events more than statistics. The nobel laureate Daniel Kahneman referred to this as the availability heuristic. Politicians who want to be reelected, and the bureaucrats under them who wish to keep their jobs, tend to want to avoid being blamed for deaths in headlines. On the issue of deciding when self-driving cars are “safe enough”. It’s easy enough to see what direction they might err. Even if these people understand the logic I’ve written of here, they have incentive to treat accidents caused by self-driving cars as much worse than accidents caused by human drivers. As a consequence, self-driving cars will come to the market way too late.

This is not a new problem at all. The government authority in charge of regulating pharmaceuticals in the USA frequently get critique for being too strict with approving new drugs to become available to the public. It’s the same story as with the self-driving cars. Any death caused by an unsafe drug gets headlines. All the people who die because the drug that could save them isn’t available due to bureaucracy don’t get headlines. So they don’t count.

The people who have the ability to assess when self-driving cars are safe enough are the people working on developing them, and if they care about their brand, they will not make that decision lightly. They would have the good incentives to make sure their self-driving vehicles actually are “safe enough”. Instead, they now have to prioritize meeting the regulatory standards set up by the bureaucrats. If we care about traffic safety, we should allow self-driving cars on the streets right now.

Can game developers get people to play more and have a better gaming experience by restricting playing?

A while back I read the widely known book by nobel laureate Daniel Kahneman “Thinking fast and slow”. In it he describe a psychological heuristic called peak-end rule. It describes the observation that people’s perception about an activity depend heavily on how they experience its end rather than say the sum of or the average moment of the experience.

Kahneman and his associates published a study in 1993 with the titled “When More Pain Is Preferred to Less: Adding a Better End”. In a wikipedia article, the experiment they conducted is described in the following way:

Participants were subjected to two different versions of a single unpleasant experience. The first trial had subjects submerge a hand in 14 °C water for 60 seconds. The second trial had subjects submerge the other hand in 14 °C water for 60 seconds, but then keep their hand submerged for an additional 30 seconds, during which the temperature was raised to 15 °C. Subjects were then offered the option of which trial to repeat. Against the law of temporal monotonicity, subjects were more willing to repeat the second trial, despite a prolonged exposure to uncomfortable temperatures.”

 

The participant’s remembered the second trial more favourably even though they experienced unpleasing temperatures for a longer period. This finding have very practical applications in many areas such as business, health care and even dating. The ending of a customer interaction will be highly influential for whether or not the customer will come back to your business in the future. By making the ending of a painful medical treatment slightly less painful, patients will have a better experience, and perhaps have an easier recovery. If you want to maximise your chances of getting that second date, don’t argue over whether or not you should split the bill after the restaurant visit on the first date.

Applied to game economics, this means player’s opinion of a video game will be highly influenced by the ending of the gaming sessions, rather than the overall playing experience. Now what makes someone stop playing a certain game? The economists way of thinking about this is to think about decision making at the margin.

Suppose we are talking about a game that isn’t continuous but consists of subgames such as battlefield, or dota where players play matches. After each match, the player will make an inner calculation whether to play another game or not. As long the marginal benefit is higher than the marginal cost, they will continue playing. This means there’s a great chance that the last match that they play each session is the one that gives least satisfaction (if there’s decreasing marginal utility from playing video games). Considering the peak-end rule, this is not at all optimal.

If a gaming session is disrupted by an exogenous factor (for example because the player’s parent demands they go to bed because it’s weekday and they have school tomorrow), the player might get a more positive view of the game than if the player is (a grown up and) allowed to play however much they want and so play until they grow tired or bored.

If game developers deliberately create game session disrupting elements in the game, it’s possible that total amount played will increase. In other words, even though each session is cut down before the player themselves chooses to stop playing, increased number of gaming sessions may lead to a larger total playing time – and a better playing experience.

Creating session disruption elements in a game might be a sensitive thing to do however, and different individuals may respond differently to such mechanisms. In freemium games, only allowing players to play for a limited time (for free) can be one way of doing this. Including natural waiting periodsis another way (in Simcity BuildIt, players have to follow specified time schedules to harvest/farm/cash in on resources and so continue playing).

This is a hypothesis still. But a testable one! As I’ve written before, video games are the perfect environment for social science randomized controlled trial experiments. Here’s one thing that would be cool to test.

Why Black Friday benefits the poor, and why stores are happy about Black Friday boycotts

[Swedish]

Black Friday handlar om prisdiskriminering, inte främst om att boosta försäljning, i motsats till gängse uppfattning. Det är en shoppinghögtid som gynnar de fattiga på bekostnad av de rika då det är ett sätt för företag att ta olika pris av olika konsumentgrupper.

De fattiga är de som gynnas, tack vare att de rika är mindre priskänsliga och därför inte tar sig upp dagen efter thanksgiving för att leta efter billiga fynd.

Anti-konsumptionsrörelsen som uppmanar till bojkott av Black Friday skadar inte företagen, tvärt om. Genom att få de opriskänsliga konsumenter att inte ta del av de låga priserna får de Black Friday att fungera än mer effektivt som mekanism för prisdiskriminering.

Läs hela texten här!


[English]

Black Friday is about price discrimination, not primarily boosting sales contrary to popular perception. The shopping holiday benefit the poor at the expense of the rich as it is a way for firms to charge different prices for different groups of customers.

The poor are the ones who benefit from the low prices, thanks to the rich not being as price sensitive to get up the day after thanksgiving to scavenge for bargains.

The anti-consumption movement that boycott black friday doesn’t hurt black friday. No, rather the opposite. By motivating the not-so-price sensitive to boycott the event, it makes black friday even more effective as a mechanism for price discrimination.

Read the full text here!

My research on labour supply responses to changes in tax and benefit systems published

[For english, scroll down]

I morgondagens SvD skriver Jacob Lundberg och jag om våra slutsatser från den forskningsöversikt som vi skrev i under sommaren då jag jobbade som forskningsassistent på Ratio forskningsinstitut. Debattartikeln kan också läsas på nätet från och med ikväll (länk). Forskningsöversikten publicerades idag som ett working paper för Ratio (länk). Vi skrev också en rapport på svenska där vi tittar närmare på fallet Sverige, de svenska studier som finns på ämnet och uppskattar effekten av det svenska jobbskatteavdraget som infördes under alliansregeringen. Även den publiceras idag, hos den marknadsliberala tankesmedjan Timbro där Jacob är chefsekonom (länk).

Trevlig läsning!


This summer I worked as a research assistant at ratio research institute and together with Dr. Jacob Lundberg conducted a research overview/meta study that is published as a working paper today (link). We also wrote a report focusing on the case of Sweden for the free market think tank Timbro, which is also published today in swedish (link). In addition, we are writing about the findings in a debate article in tomorrows edition of SvD, on of the biggest daily newspapers in sweden. The text can be found online at this link. I’m super excited to finally share the work with everyone, pleasant reading!

Är det fel att anta att ekonomisk tillväxt leder till ökad välmående?

[English below]

Under våren skrev jag min kandidatuppsats i nationalekonomi vid handelshögskolan vid Göteborgs Universitet. I och med detta blev jag klar med min ekonomie kandidat.  Den som är intresserad av att läsa uppsatsen så finns den tillgänglig gratis på nätet (länk). Titeln på detta inlägg avslöjar frågeställningen för uppsatsen, och jag tänkte lite kort skriva om uppsatsen i detta inlägg för den som är nyfiken men inte orkar med att läsa igenom hela uppsatsen (den är skriven på engelska).

Sedan några årtionden tillbaka har intresset för vad som leder till lycka/välmående i samhället ökat bland ekonomer. 1974 publicerades en särskilt inflytelserik artikel som presenterade statistik som visade att trots att människor i rika länder är lyckligare än människor i fattiga länder, så verkar det inte som att ekonomisk tillväxt leder till en motsvarande ökning i välmående i samhället. Denna iaktagelse – kallad the easterlin paradox efter forskaren Richard Easterlin – har sedan dess flitigt diskuterats inom forskningen. Eftersom mått på ekonomisk tillväxt såsom BNP ofta används som en proxy för välmåendet i samhället så är det absolut en frågeställning värd att forska kring. (en genomgång av forskning om välmående relaterad till inkomst, ekonomisk tillväxt, samt ojämlikhet finns från sida 6 i uppsatsen).

I vår studie använder vi data från European Social Survey (ESS), som sedan 2002 utfört intervjuer i europeiska länder där intervjuobjekten bland många andra frågor ombetts uppskatta sin upplevda ”life satisfaction” samt ”happiness” på en skala mellan 0 till 10. Totalt har vi svar från nästan 400 000 människor från 36 olika länder, mellan åren 2002 och 2016. Det är ett enormt datamaterial vi har kunnat använda, som vi sedan använt en ekonometrisk metod kallad fixed effekt regression (mer om metoden finns i uppsatsen) för att undersöka kopplingen mellan ekonomisk tillväxt och samhälleligt välmående.

Huvudresultatet kan kort  sammanfattas med att det finns ett tydligt positivt (och statistiskt signifikant) samband mellan ekonomisk tillväxt och välbefinnande. Med andra ord tyder vår undersökning på att den kritik mot att ekonomisk tillväxt bör vara ett mål med politiken med argumentet att det inte leder till högre lycka i samhället inte har grund i statistiken. I uppsatsen diskuterar vi resultaten i mer detalj och presenterar även data på effekten av ojämlikhet på lycka.

För att ladda ner uppsatsen gratis eller läsa online, gå in på länken här. Trevlig läsning!


This spring, I did my last semester for my Bachelor of science in economic sciences at Gothenburg University. That meant writing my bachelor thesis, which is published online for free for anyone to read (link). The titel of the thesis is ”Is it wrong to assume economic growth promotes well-being in society?” and it’s written in english. Spoiler warning, we found strong empirical evidence that economic growth indeed is correlated with increases in subjective well-being. More information about our essay can be read in the abstract. Or why not download the essay and have a look!

Pleasant reading!

Why Trump is wrong on trade

A while back, I wrote a text explaining why trade wars isn’t a game of winning or loosing but rather, that both sides of such a conflict are more or less losers. It’s published in swedish on the web magasine Smedjan owned by the think tank Timbro, linked here.

One of the key examples I touch on comes from the book the armchair economist by Steven E Landsburg: on how cars can be grown in the fields of Iowa, english link here. It’s a simple methaphor, but a brilliant way to illustrate who wins and looses on trade, why it deserves to be read by many more. As I couldn’t find a swedish version I wrote one myself.