First Rule of Kidnapping Insurance

First rule of kidnapping insurance is you do not talk about kidnapping insurance. This American Life did a program on kidnapping. In some countries such business people and politicians are kidnapped for ransom. If you are kidnapped you would need someone to pay the ransom,if you buy kidnapping insurance the insurance company pays your ransom and helps negotiate your release.

So why not talk about the fact that you have kidnapping insurance, well of course you will be more likely to be a target of a kidnapping, since you probably are now able to pay a higher ransom through your insurance.

The spread of kidnapping insurance could actually increase the number of total kidnappings. Similarly a recent blog post (from a humourless lot) argues that it is a bad idea to try to buy the freedom of sex slaves, since it only increases the profits from enslaving people.

There isn't a good answer to either the problem of kidnapping or sex trafficking, but creating a market for it can make it worse.

Strasburg is so good he gets you to buy tickets to 4 games

Stephen Strasburg is making his Major League debut for the Washington Nationals tonight. For those of you who don't follow baseball he's predicted to be a great player in the future (or maybe even now). If you want to buy tickets to tonight's game at this point you have two options. You could buy off the secondary market or you can buy tickets to tonight's game as part of a 4 game package.

Surprisingly this package includes one free game. So really you just have to buy 2 more games to see Strasburg. The Nationals must think they make more money from selling tickets to three different games at 2/3 the price then they would not selling those tickets. Since other than tonight the Nationals probably won't sell out a game the rest of the year this isn't a bad bet. Unless fans who would buy tickets to future games decrease the number they would have purchased when the buy the 4 pack of games to see Strasburg tonight.

A lot of teams do this trick where in order to see a marque game they force you to buy less desirable games. I tried to see a Twins game earlier this year and they were sold out unless you bought tickets to many more games as part of a season ticket plan.

Why don't teams just raise their prices for marque games? They are starting too, many teams charge more for better opponents (Yankees, Red Sox) or weekend summer games. There is some negative reaction to this. I think there would be even more if the Nationals raised their prices just for tonight.

In short people hate it when teams or companies increase prices, but don't seem to mind so much when the increase in price is including as part of buying a larger item such as tickets to 4 games.

Bruised Mangos

Economic development isn't easy. This American Life had a great recent episode on Haiti. The first story focuses on the mango industry. The reporters talk to a local exporter named the Mango Man who is trying to earn more money and in turn help the poor farmers that sell him mangoes. He could sell a lot more mangoes to Americans if only the mangoes weren't bruised from sitting around on farms or under beds of poor mango farmers. He tries to give out plastic crates to have the farmers store the mangoes and preventing bruising. The crates aren't used for mangoes but for chairs and he looks for other help. He tries an NGO who specializes in mangoes, but it only leads to more problems stemming from NGO rules, land tenure, lack of credit access, farming knowledge, port access, and then finally the earth quake.

The story really shows that even with a bunch of smart people with good intentions with local knowledge improving economic conditions is hard because there are so many problems.

Why I don't do all you can eat or upload

For a man of about 30 I just don't eat that much. I like to say I eat like a 6 year old who just ate dinner. My wife likes to point out this is a good thing.

Because I don't eat a lot I tend to avoid all you can eat buffets (well that and food quality). I never quite feel I'm getting my money's worth, when I see the person next to me getting their 4 or 5th plate of food. Generally economic theory says that when businesses are competitive that prices should go to average cost. The people getting 4 or 5 plates are driving up the average cost and the price.

I also don't have a smartphone. If I did have one, I would probably use it for GPS and the occasional surfing. Most cell phone carriers have all you can use (eat?) data plans costing $30 a month. AT&T has just announced it will offer plans based on your data usage instead of an all you can use. For heavy users this will be bad, but for me it makes a phone with a data plan more enticing.

But I'm still a Luddite, and think I'll keep going without the smartphone even for only $15 a month.

Game Theory and Bros Icing Bros

The rules for bros icing bros are simple. Suppose two players bro 1 and bro 2

If bro 1 hands bro 2 a Smirnoff Ice bro 2 has been iced and must get on one knee and chug the bottle.Unless bro 2 also has a Smirnoff Ice on his person in which case bro 1 must drink both Smirnoff ices.If bro 2 refuses to drink when he has been iced then he is banned from future play.


First, many of you may ask why would anyone do this. It looks like the hilarity comes from making your bros drink a terrible tasting beverage. There also might be a macho element, since Smirnoff ice is considered a "girly" drink.

Bros icing bros can be modeled as a repeated game. I think three solutions are likely.

Solution #1) bro 2 refuses the first ice and the game ends
solution #2) bro 1 and bro 2 always carry a Smirnoff ice on them at all times and no one is iced
Solution #3) no one ices anyone

Bros icing bros reminds me of a recent paper on the economics of dueling by Kingston and Wright (link). In short then found that dueling may have been used to maintain honor. They argue when credit depended on honor in the 19th century it may have made sense to duel, since those refusing to defend their honor would have lost their livelihood.

Will a paper some day prove bros icing bros incentive-compatible?

I doubt it...

Economics Tattoos

I saw a group of pictures of nerdy tattoos yesterday, but I can't find the link. There were pictures of maybe 50 tattooed people with things like DNA, Darwin's drawings, physics formulas, and chemical bonds as well as a few famous lines from great books. There were no tattoos related to economics. Then I did a google search on economics tattoos no luck.

A search of Supply and Demand tattoo shows that Peter Leeson author of The Invisible Hook: The Hidden Economics of Pirates has the curves tattooed on his bicep (From Economists Do it With Models)

I'm not really into tattoos but if I had to get an economics tattoo, I think I would go with a set of indifference curves with a budget constraint.

Lucky for my family my indifference curves on the two axis of tattoos and nontattoo goods intersect at no economics tattoos.

Monopoly = 1 firm and Confusopoly = ?

Over at Economists Do it With Models (ECDIWM) a recent post attempts to explain why airline prices move around so much and why there are so many little fees (checked baggage, sodas, pillows ect.).


I need to buy airline tickets this week. We'll be traveling with my 6 month old daughter so we'll be checking luggage. I don't have time to check out each companies' luggage policy.

I agree with ECDIWM that part of the little fees is to separate types of customers and get increased profits. If I don't check bags and don't drink soda the ticket may even be cheaper for me. But I'm wondering at what point it becomes too hard to compare airlines if they have prices for several different parts of the trip.

This makes me think of a term Scott Adams the writer of the comic strip Dilbert coined a few years ago.

Confusopoly --"a group of companies with similar products who intentionally confuse customers instead of competing on price"

Luckily the Internet is on our side. Will it be long before travel search sites like kayak allow you to compute costs based on the number of bags you would check and sodas you would drink.