Knowing and Making

A really rather odd phenomenon on twitter the other day. I saw a tweet looking something like this: This isn't an unusual format - it comes from someone who has set up an automated retweet command, and at the end of each message is a link back to the original tweet. Normally you can click straight through to the original link, but as you can see in this case, the link itself has been truncated, so I need to first click on the bit.ly link to see what it is. Often I can't be bothered going through this two-step process - Twitter is very much the Internet equivalent of the impulse buy, and two clicks is often not worth it. But this was a story I was interested in. So I click on the link: As expected, it's another shortened link - so I click on that too, in order to read the story. Or so I thought - for some reason, it takes me to yet another landing page: Maybe @myfxdeals  is making his own landing pages for every story in order to generate more clicks? In any ...

I can't post on Felix Salmon's blog, so here's a comment I wanted to write on this amusing post about free ice cream: The answer to 65% of all thought experiments on economics blogs: selection effect. The "you" to whom Dan's question is addressed is a different set of people to the "they" who'd turn up for a free cash offer. Though of course, there is a bit of a framing effect too. The question of demographic effects in behavioural experiments is underinvestigated (though there are a few papers about cultural differences, especially in the ultimatum game).

Notes and some videos on what sounds like a brilliant course at Edge last year on behavioural economics, with Thaler, Kahneman and Mullainathan as speakers - and just look at the attendees! Thoughts from Felix Salmon (also click through to the more detailed Wine Economics article he references) about one of my favourite subjects: how cognitive biases influence our willingness-to-pay for wine. Useful comments from Charles Goodhart in the FT about the money multiplier - I suggest you read this as preparation for an article I'm writing on self-fulfilling expectations and the money supply. Mark Thoma's link  to  Paul de Grauwe's paper , " Top-down versus bottom-up macroeconomics " [PDF] which says some powerful things about limitations on knowledge and the consequences for rational expectations theory. And Steve Randy Waldman's Interfluidity blog has moved - updated link in the right-hand column and here .

I intended to mention this little tussle between Felix Salmon and John Carney a couple of weeks ago. As it happens, it's provoked an idea on a solution to the eternal problem of bankers' pay. Carney points out that we don't actually want traders to take the minimum possible risk in all circumstances. If they did, they would never make any returns at all. Instead, we want them to take the right level of risk...at the scale of the whole economy, this is the socially optimal level; at the scale of an individual company, it's the optimal level of risk for shareholder value. He says that without guaranteed bonuses, traders will take less risk than shareholders want them to, because they will need to retain some amount of guaranteed upside to pay their mortgages. Felix's argument against this is interesting, because he doesn't quibble with the theory. As various people have pointed out, because shareholders have limited liability, they have an incentive to get th...

According to this posting from Felix Salmon (if I can match Gawker's CPM) I could make about £150 a month if I sold advertising on Knowing and Making. Some way to go before I can give up the day job . Please refresh the page a few more times if you want to help. Still, it could just about pay for one of the following: all my visits to the pub my council tax dinner at Gordon Ramsay once a month a subscription to the FT, the Economist, and all the economics books I read the money I pay Google for advertising my software on their site Maybe it's worth it. That is, if I could get Gawker to sell the ads for me. Think they'd be up for it?