- Behavioural Economics, Hyperbolic Discounting and Environmental Policy
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Unable to display preview. Download preview PDF. Skip to main content. Advertisement Hide. Article First Online: 22 April This is a preview of subscription content, log in to check access. Ainslie G Picoeconomics. Cambridge University Press Google Scholar. Akerlof GA Procrastination and Obedience. Am Econ Rev 81 2 : 1—19 Google Scholar. Andreoni J, Bernheim BD Social image and the 50—50 norm: a theoretical and experimental analysis of audience effects. Econometrica 77 5 : — CrossRef Google Scholar. Ariely D Predictably irrational: the hidden forces that shape our decisions.
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Behavioural Economics, Hyperbolic Discounting and Environmental Policy
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Research: Dissertations | Department of Economics | University of Washington
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Karp L Global warming and hyperbolic discounting. They have every incentive to evaluate talent correctly. So why do they blunder? In an intriguing passage, Lewis offers three clues. Third, people were biased by what they saw, or thought they saw, with their own eyes. Well, maybe. Thaler and Sunstein explain inefficiencies before Billy Beane. They do not explain the emergence of a Billy Beane, and they do not explain the effect of Billy Beane had in wringing out precisely those earlier inefficiencies they identify in the pre-Moneyball market.
While we can certainly ask why it took the baseball market so long to produce a Billy Beane. We can also turn the question back around and ask Thaler and Sunstein to explain why, in their account, would they expect a Beane ever to emerge at all?
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Back to the question of the timing of the rise of Moneyball in baseball. There seem to be two factors. First, the acquisition and use of information is costly. Secondly, Moneyball arose just at the time technology made accessible the acquisition and use of hitherto inaccessible information. First, learning, information acquisition and manipulation, and the search for information can be costly. In the case of Moneyball, it was the manipulation of information that was the pivotal issue.
All the information existed in raw form. What changed, though, was the dramatic downward shift in the cost of manipulating the data that existed so that it could be used systematically.
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And, to be sure, there is a part of the story that behavioral economics can continue to tell. To wit, explaining the resistance Beane received initially, and the resistance to the approach among other teams.
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I expect the above sounds like unalloyed cheer leading for the efficiency of markets and the rejection of behavioral economics in toto. I do neither. This story, however, the Moneyball story, illustrates what can happen when an imaginative entrepreneur sees what others do not. Beane saw the existence of systematic misperceptions in the market for baseball players, baseballs players being underpriced relative to their true potential, and exploited that misperception to the benefit, if temporarily which also reflects the efficient work of the market , of himself, the otherwise underpriced players, and the fans of the Oakland As.
He served as editor of the Journal of Theoretical Politics from through About the Author. I think that Moneyball makes a basic error. Which may not be as major as I originally thought, given that the effect has been arbitraged away. The basic error is that of the objective function, goal of the baseball-team manager. Moneyball assumes that the goal is to maximize wins, whereas the actual goal is to maximize revenues. The two goals conflict if the fans are coming to games to see highly-paid sluggers battling it out. The statistical prescription for winning is to fill a team with players who hit lots of singles and generate lots of walks, which might seem boring to a spectator.
So, following the Moneyball strategy might actually reduce attendance and revenues. Parenthetically, I wonder if the focus on winning with singles and walks has contributed to the issue with slow play that baseball is currently contending with. The point was that my guys made the other team EARN their victory. They executed plays to the best of their ability.
And they fought to the end, even long after the outcome was clear. But over time, Fox is tempted by the prospect of career advancement into taking steps to promote victory even at the expense of virtue.