Mathias Brandewinder on .NET, F#, VSTO and Excel development, and quantitative analysis / machine learning.
by Mathias 24. July 2010 17:35

When I moved to California a few years back, I soon realized that to get anything done in the Silicon Valley, you pretty much have to have a car. So, I purchased my first car. Fast forward today: I live in San Francisco now, and noticed that I am driving less and less. Bicycle is very convenient in my neighborhood, and I don’t have to commute to work on a daily basis. Which got me thinking – do I really need a car? Public transportation only is not an option, because coverage is too spotty, but what about using a car sharing service?

The 2 major services available in my area are ZipCar and CityCarShare; their pricing system is largely similar: they both:

  • charge by the hour of usage,
  • charge a higher cost over the week-end,
  • offer a discount for full-day rental,
  • have a pay-as-you-go option, and better rates with minimum commitment plans.

Both include gas, with one difference: ZipCar charges by the hour, whereas CityCarShare has a hybrid pricing, with a lower per-hour cost, and a per-mile cost.

By contrast, when you own a car, you

  • pay a large upfront investment (buying the car),
  • recoup some of the upfront cost if you resell eventually.
  • pay regular fixed costs (insurance, registration taxes, garage),
  • pay by the mile (gas),
  • pay some additional costs, like maintenance, which are somewhat linked to mileage.

In addition to that, you bear the risk that your car gets damaged or totaled in an accident.

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by Mathias 8. December 2009 13:58

How to value life is a thorny issue for economists and non-economists, but I hadn’t expected the question to be also a matter of lively discussion among dinosaurs. And considering the state of decision theory at the time, they do a pretty good job at it.

 comic2-1631

by Mathias 14. June 2009 16:44

While travelling to Seattle, I went shopping to the bookstore and purchased “Sway – the irresistible pull of irrational behavior”, by Ori and Rom Brafman. Each of the book’s chapter illustrates a specific bias which leads individuals to make poor decisions, through multiple experiments or real-life stories.

If you are familiar with decision theory, and specifically with decision biases – the way our brain plays tricks with us and processes information poorly, misleading our judgment – you will probably not learn much from the book. Even then, it’s a pretty entertaining read; the style is light, and the anecdotes and cases funny and very clearly explained. If you are not familiar with the topic, I recommend the book: it is a good primer to recognize traps and make better decisions!

The part which was new to me was the chapter “Compensation and Cocaine”. It seems that monetary decisions and altruism are processed in completely different parts of the brain (no surprise so far), but also that when one is active, it shuts down the other. Furthermore, the monetary decision brain is processed in the same place as the center of pleasure derived from sex, drugs or gambling (not sure what this says about the financial sector…), which has very practical implication in designing incentives. From what I gather, altruism provides a stronger motivation than money – but surprisingly, mixing both doesn’t add up: the pleasure center will completely override altruistic motivation, which is then ignored – and reduces overall motivation.

Overall, fun read – recommended!

by Mathias 13. December 2008 19:24

Dilbert is one of my favorite comic strips ever. Besides being consistently very funny, it is also surprisingly insightful. Today's strip is an excellent illustrations of why diversification alone is not necessarily sufficient to reduce risk: one has to account for correlation between the assets.  

 

Dilbert.com
by Mathias 19. October 2008 07:41

In its October issue, Wired has a short interview of the economist Jagdish Bhagwati, on free trade. I enjoyed his point that most of the free-trade discourse focuses on free-trade agreements which are ultimately large protectionist blocks, and ignores the idea of IP free-trade.

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