Focal Points

Back to the discussion of Thomas Schelling and his Nobel Prize, one of his key game theory insights was about the use of focal points (which Merrick discussed in her comment last week). Here is the explanation of the basic concept:

Schelling again offers a framework for analysis by offering powerful evidence for the existence of focal points in social life. People who may never have met are nonetheless capable of coordinating their behavior under some circumstances. Perhaps even more surprising, certain open-ended questions can elicit a high amount of agreement. For example, in one experiment Schelling asked his subjects what they would do if they were simply told to go and meet someone in New York City on a certain day. Out of all the possibilities for when and where to meet, a majority, trying to intuit where and when other people would expect them to be, would have converged at the information booth in Grand Central Station at high noon!

Today, Tyler Cowen wrote a post that considers whether Grand Central Station is still a focal point in NYC.

What do you think would be the focal point in NYC? If you had to meet someone in New York City, but you only knew which day -- you did not know what time of day or where -- where would you go and what time would you be there? I think the fact that some of you have been to New York and others haven't makes this even more interesting to see. You also have to assume that neither of you have the use of a cell phone...

What if instead you had to meet another student (could be any student in the high school) at Walker? Where would it be and what time?

(Just posting an answer here does not count as a thoughtful post for this week. It would count if you post reasons why some places work and others don't)

Shanghai Follow-up

I just posted two days ago about the booming construction market in China. Further evidence is this article on scrap metal thieves in Shanghai:

Being bolted down is not enough in booming Shanghai where a crackdown has begun on scrap metal thieves stealing phone booths, traffic lights, manhole covers and wiring. Tempted by soaring prices for metal, thieves stripped one residential compound of two thirds of its fire extinguishers.

This is a good application of how high demand for one good (construction) affects other markets (high demand for scrap metal). My guess is that stealing scrap metal is partially a result of the inelastic supply of scrap metal, which makes the price change from an increase in demand higher. Since the supply of scrap metal in the short run cannot increase very much, thieves are stepping in by taking existing structures and turning them into scrap metal to take advantage of the high prices.

Basic Economics - Hawaiian Style

Back when we discussing price controls, I discussed with at least one of my classes the price ceiling on the wholesale price of gasoline that was being instituted in Hawaii. What is our prediction when you institute a price ceiling? Two articles show the expected result:
From the first:

Robinson said Chevron, which prides itself on keeping station tanks full, has had more than 40 "runouts" since the gas cap law went into effect. Robinson said before the gas cap one "runout" a month was considered unacceptable.

The second talks about increased activity for tow trucks:

Several tow truck companies said yesterday the number of "out-of-fuel" roadside service calls have doubled — or more — since Hawai'i's first-in-the-nation gas cap law took effect on Sept. 1.

This adds another level to the effect of a price ceiling on gasoline. If the trend of increased demand for tow truck calls continues, what do you think will happen to the price of those service calls?

As you see from the first article, even though they are seeing the result of the misguided policy, Hawaii is dropping is price ceiling even further next week.

Instant Replay in Baseball

Another question about baseball since it is the playoffs:
Some disputed calls in this year's baseball playoffs have brought up discussion of whether to incorporate instant replay into baseball (especially the third strike in the dirt play during the White Sox-Angels series).

Do you think MLB should adopt instant replay? Only in certain situations/games?
What are the benefits to having instant replay?
What are the costs to having instant replay?
Who receives these benefits and who bears these costs?
I want the answers to be reasoned out in terms of benefits and costs, not just a gut reaction because a team you root for got jobbed by an umpire.

Also, why do you think baseball has not seriously looked at the issue before?

OK, so maybe China is growing...

We will be better able to discuss this topic when we cover economic growth next semester, but this NY Times article talks about the booming housing market in China. The key interesting fact is the following:

This year alone, Shanghai will complete towers with more space for living and working than there is in all the office buildings in New York City.

That is in a city that already has 4,000 skyscrapers, almost double the number in New York. And there are designs to build 1,000 more by the end of this decade.

Below is a picture of the skyline in Shanghai. Source: Marginal Revolution