voluntaryXchange

Rules vs. Discretion in Blackjack

I spent some time in Las Vegas over the holiday, and it occurred to me that casino blackjack is an interesting application of the rules vs. discretion debate in economics. This is part of the time consistency problem rewarded with a Nobel prize this year: discretionary policies are likely to be capricious and therefore more likely to be ignored than rules based policies.

But I digress. In blackjack as offered at casinos, dealers must follow strict rules about how to play their hands. Players are free to pursue strategies at their own discretion.

Why do casinos require dealers to follow rules? Some answers might be that dealers are not that bright, or can't be trusted. I think these are naive: dealers perform a repetitive task that practice makes close to perfect, and they do this under constant surveillance. In fact, most dealers are far more intimately connected to the game than the casual players that fill casinos - if they were given profit sharing and the discretion to play as they wished, I think they'd easily surpass the current rate of separation of gamblers from their money.

So, the reason for rules must be deeper. Here's my guess: dealers' rules implicitly invite the players to pursue their best discretion. People gamble for thrills; even if they could find an optimal rule to oppose the dealers' rules, the mechanistic application of that rule would remove some of the vicarious thrill of the turn of the next card. Rather, they prefer to optimize subject to their imperfect recollection of the cards that have already been played.

This story gets worse for players. Casinos can actually pursue riskier rules than players can - since the players go first, if they bust they lose whether the dealer busts of not. This puts players in the unenviable position of choosing between low risk (and boring) rules, or discretionary actions subject to imperfect information.
 

Takfiri and Theo Van Gogh

Theo Van Gogh's murder on an Amsterdam street has been related to Salafists, who deny this link. I'm willing to take them at their word, which makes it perhaps better to think of his murderer and accomplices as Takfiri/Qutbists "stealth" terrorists. These are moslem residents of western Europe, primarily of North African background, who believe in living seemlessly inside the societies they hope to destroy.

See my earlier posts on this entitled "Takfiri" and "Takfiri Links".

Making Fun of Marxists

I know I shouldn't post this, but everyone I tell this to snickers.

I recently spent some time in the current periodicals section of the libary of a flagship state university known for its Marxist economics department (yes, Virginia, they exist). And there it was on the shelves: The Journal of Peasant Studies.

I suppose there has to be an outlet for studies of peasants, and the existence of this journal would tend to indicate that this stuff can't be published easily in other journals, but within economics I wonder if this is the journal least likely to be read by anyone outside the field.

Awesome Example

Alex Tabarrok at Marginal Revolution has come up with the giant killer of the health/medical/cost/insurance/government debate: Lasik. Go read it for yourself.

Guide to the Perfect Latin American Idiot

I recommend reading A Guide to the Perfect Latin American Idiot by Plinio Apuleyo Mendoza, Carlos Alberto Montaner, and Alvaro Vargas Llosa if you are interested in why there are so many bad ideas floating to the surface in Latin America.

Here's what I liked best:

Is Blogging Scholarly Activity?

Great post, comments, and links on this question at Crooked Timber.

I tried to post a long and (hopefully) great comment there and the server failed on the other end, and my comment sailed off into the ether never to be seen again.

So, here's my short answer: yes.

A little bit longer answer is that (at least for business schools) the wording of the intellectual contributions section of the AACSB accreditation guidelines would not put someone on strong grounds denying that blogging is a valid element of the tenure decision.

Google Scholar

It ain't perfect, but Google Scholar seems like a great addition to the practice of scholarly research. Certainly a whole lot better than the old citation indexes, or the bizarrely priced Web of Science.

P.S. Yes ... I did an ego search ... and was not saddened by the results.

Monday AM Time Waster

Take the Dante's Inferno Test. A simple 5 minute online test to tell which of the nine levels of Hell you're going to (or purgatory if you're lucky). I ended up in the third level ... that's a good thing, right?

Via Flit (TM).

Harry Reid, SUU Alumnus

Just thought I'd let you know that the new leader of the Democrats in the Senate is an alumnus of Southern Utah University - this wonderful school in Utah's color country where I am lucky enough to work.

Marginal Cost of Space Travel

Rick Searfoss, chief judge of the Ansari X Prize competition, was here on campus for two days. Being an economist I asked him about marginal costs of X Prize contestants. He placed the marginal cost of the winner, SpaceShipOne, at a few hundred thousand dollars (and under half a million). More importantly, he told me about XCOR Aerospace, whose Xerus rocket is expected to cost under $10,000 for each suborbital launch.

The importance of this is that competition tends to drive price towards marginal cost (and actually to marginal cost in this case, since a trip into space is likely to be an undifferentiated product). Tack on some money for insurance and other expenses, and you have a price that is substantially lower than that planned by Virgin Galactic.

Check out my other posts about the pricing of space tourism: Richard Branson - Profit Maximizer, and Governments Don't Price Well.