market design

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pages: 282 words: 80,907

Who Gets What — and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth

Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, Chuck Templeton: OpenTable:, commoditize, computer age, computerized markets, crowdsourcing, deferred acceptance, desegregation, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market, uber lyft, undersea cable

Many people would find it repugnant to allow money to decide who gets a kidney or a seat in a sought-after public kindergarten. When there aren’t enough kidneys to go around (and there aren’t) or seats in the best public schools (there never are), scarce resources must be allocated by some kind of matching process. Market Design Sometimes a matching process, whether formal or ad hoc, evolves over time. But sometimes, especially recently, it is designed. The new economics of market design brings science to matchmaking, and to markets generally. That’s what this book is about. Along with a handful of colleagues around the world, I’ve helped create the new discipline of market design. Market design helps solve problems that existing marketplaces haven’t been able to solve naturally. Our work gives us new insights into what really makes “free markets” free to work properly. Most markets and marketplaces operate in the substantial space between Adam Smith’s invisible hand and Chairman Mao’s five-year plans.

When we originally proposed that kidney exchange would integrate cycles and chains, we didn’t anticipate that we’d have to start with simple two-way exchanges, or that when larger cycles and chains became possible, long nonsimultaneous chains would grow to play such an important role. Each of these developments involved a modification of the market design in response to changes in the conditions of the market and the behavior of the participants. The general lesson to keep in mind as we look at more usual markets is that not only do marketplaces have to solve the problems of creating a thick market, managing congestion, and ensuring that participation is safe and simple, but they also have to keep solving and re-solving these problems as markets evolve. And just as engineers learn a lot about how to build bridges by studying those that collapse, market designers can learn a lot about what makes markets succeed by studying those that fail. A bridge will collapse if its weakest part fails, and a market design won’t succeed unless it avoids each of the ways that it could fail.

But in the absence of sufficient pressure by regulators, a brand-new market design is seldom adopted before a market becomes so dysfunctional that its users grow desperate for something new (or until an entrepreneurial market maker sees a way to compete with existing markets by offering a better design). It’s not clear whether the financial markets have reached that state of dysfunction yet. As the tale of these financial markets makes clear, a superior market design isn’t always implemented. Building a better mousetrap isn’t always rewarded when the mice have a say in the matter. Financial markets are part of an enormous industry. The current winners in the race for speed were simply responding to the extant market design. They wouldn’t be happy if their big investments in faster microwave channels were rendered useless.


pages: 350 words: 103,988

Reinventing the Bazaar: A Natural History of Markets by John McMillan

"Robert Solow", accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, Deng Xiaoping, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Ronald Coase, Ronald Reagan, sealed-bid auction, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, Xiaogang Anhui farmers, yield management

They have, however, a deeply practical content.8 Exchange is “one of the purest and most primitive forms of human socialization,” the sociologist Georg Simmel wrote in 1900; it creates “a society, in place of a mere collection of individuals.”9 A market is a social construction. If it is to work smoothly, it must be well built. The term market design refers to the methods of transacting and the devices that serve to allow transacting to proceed smoothly. Market design consists of the mechanisms that organize buying and selling; channels for the flow of information; state-set laws and regulations that define property rights and sustain contracting; and the market’s culture, its self-regulating norms, codes, and conventions governing behavior. While the design does not control what happens in the market—as already noted, free decision-making is key—it shapes and supports the process of transacting.10 A workable market design keeps in check transaction costs—the various frictions in the process of making exchanges. These costs include the time, effort, and money spent in the process of doing business—both those incurred by the buyer in addition to the actual price paid, and those incurred by the seller in making the sale.11 Transaction costs are many and varied.

Some of the pieces of a market’s design are devised by the market participants themselves; other pieces are devised by the government. It is by spontaneous change, for the most part, that the rules of the market game develop, with the market participants designing better ways to transact. (I will refer to this aspect of market design as informal or bottom-up.) However, lowering transaction costs is a task not only for entrepreneurs, but also for public policy. The government has the responsibility to establish and maintain an environment within which markets can work efficiently. (I will refer to this aspect of market design as formal or top-down.) A basic part of the government’s role in market design is the defining of property rights. The surest way to destroy a market is to undermine people’s belief in the security of their own property. But the government’s role goes far beyond just assigning property rights.

Elementary as this point is, its importance cannot be overstated. There are gains from trade, and people are relentless in finding ways to realize them. From fine art to finance, from eBay’s online auctions to the Rwandan refugee-camp commerce, new markets are continually being built from the bottom up. Entrepreneurs, restlessly thinking up more efficient ways of transacting, play the part of market designers. It is not just entrepreneurs who act as market designers. Market design also comes from the top down, with the government taking the lead—sometimes, as we will see next, driven by pressure from their constituents. THREE He Who Can’t Pay Dies A horrifying AIDS epidemic engulfed Africa toward the end of the twentieth century. Of the 33 million people infected worldwide as of 2000, 23 million were in Africa. Every single day, AIDS was killing an average of 5,500 Africans.


pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"Robert Solow", Alvin Roth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

In particular the housing bubble would have been much less, and the investment bankers would not have been able to make such clever use of the rating agencies and create tens-of-thousands of senseless securities obfuscating prices. Even a tiny bit of good market design would have averted the financial crisis by preventing its root cause: the sale of subprime mortgages as near-riskless securities.143 . . . Calls for sensible regulation and market design were met with condescension before the credit crisis, a condescension that is being reevaluated now.144 Good auction design in complex environments . . . requires exploiting the substantial advances that we have seen in market design over the last fifteen years. The recent financial crisis is another example where the principles of market design, if effectively harnessed by regulators, could have prevented or at least mitigated the crisis.145 Of course, there is no record of any market designers having actually successfully intervened to prevent the crisis, or helped anyone else to ameliorate it, but historical accuracy was never the name of the game.

Therefore, there was no reason for any market participant to generalize from information released by getting the price “right” for one security to the thousands of others available. The market designers placed in charge of implementing the auction acknowledged, “the relevant issues could not be addressed directly with economic theory.”133 So much for the bracing clarification of microeconomics. The dispute over auction forms raised a second, more serious problem: there was no good reason to believe that the auctions would do what the market designers had said they would: namely, summon a chain of events that would eventually bring the economy out of crisis by, in the first place, aggregating dispersed information. After all, no work had been done previously by market designers on how to fix a collapsing economy. Since market designers could identify no single optimal auction, the Treasury decided to set up two teams and asked them to more fully develop their proposals.

They have almost always directed the pitch at cash-strapped governments, urging them in particular to sell off public assets to private oligopolistic concerns; in the case of toxic asset auctions one need only invert the logic. Unfortunately, no one could much be bothered to scrutinize the claims of market designers. After all, there was a crisis a-brewing. Only a relatively small coterie of market designers ever got invited to participate in market design exercises, and most were partners in a small set of firms with interlocking directorates. In the case of the toxic asset auctions, the job of judging the proposals was assigned to Jeremy Bulow and Paul Milgrom, both partners with Ausubel and Cramton in Market Design, Inc. So much for Chinese Walls and plausible deniability. It doesn’t verge on the wildly conspiratorial to suggest that such arrangements create some perverse incentives when it comes to reining in some of the more fantastical claims (gaining popular acceptance for them improves the firm’s prospects), a fact that has seemed only to encourage ever more extravagant claims: The crisis was caused by mispricing: investment bankers were able to sell poor securities for full value based on misleading ratings.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

Credit cards, Facebook, your iPhone are all, each in its own way, carefully tended marketplaces that bring together various groups to transact: Visa cardholders and retail merchants, Facebook advertisers and the social network’s members, iOS app designers and iPhone users. The count of Champagne was, in his medieval way, a pioneer in market design. And the curious story of the merchant of Prato, his delinquent customer, and the count’s response illustrates some of the principles that make a market platform tick. As economists have focused their modeling efforts ever more on real world phenomena, leading researchers have turned their attention to platforms, bringing some much-needed clarity to the rules that dictate how these multisided markets work. As a result, we now have a deeper understanding of what makes a platform work and a set of guiding principles—many of which can be traced back to twelfth-century innovations in market design—that can help us build them better. Since platforms now encompass such significant parts of our lives, it’s important to understand the trade-offs that come with participating in them.

It happened to the market for slots at sororities, too, which used to be reserved for college seniors, until popular girls started getting invitations to join at the start of their junior, then sophomore, then freshman year. (According to market design guru Al Roth, one theory holds that the term “fraternity/sorority rush,” which today describes the process by which sororities and fraternities recruit new members, comes from the frenzied competition among sororities to lock in new members.4) It’s what prompted medical residency programs to develop a centralized clearinghouse in the 1940s to fend off students receiving exploding offers before they were done with their intro to anatomy course. These allocation problems all now have centralized clearinghouses, many designed with the basic deferred acceptance algorithm as their foundations. But that’s really all that Gale and Shapley provided: a conceptual framework that market designers have, for several decades now, been applying, evaluating, and refining.

Yet when high school assignments were handed out in his homeroom at the end of the year, all his students got funneled into the same low-performing neighborhood schools. When he went to work for the Department of Education’s central administration, hired by the reform-minded schools chancellor Joel Klein, he found himself part of a group tasked with resuscitating New York’s ailing school assignment process. At around the same time Dorosin and his colleagues were consulting with market design experts on fixing the situation in New York, school officials in Boston had started to look at market design as a solution to their own school-match woes—although the Boston school system only had a slight headache compared to NYC’s cardiac arrest. A mechanism design expert at Boston College, Tayfun Sönmez, had been hounding the city’s school board for years with proposals on how to improve student assignments using a match based on deferred acceptance.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alvin Roth, bank run, banking crisis, barriers to entry, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, income inequality, information asymmetry, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

There is certainly a role for those who wish to enter the field of insurance to make this happen. Chapter 8 Market Designers and Financial Engineers Market designers, sometimes called mechanism designers, start with a problem—the need for a market solution to some real human quandary—and then design a market and associated contracts to solve the problem. They are using nancial and economic theory to create “trades” that leave people better o . In so doing they are humanizing nance and making it more relevant to human welfare. Sometimes these people are called nancial engineers, since what they do seems analogous to what mechanical or electrical engineers do. At their best, market designers have the same practical common sense and drive to create, and the same grasp of basic science, that successful engineers have. Alvin Roth is a professor specializing in market design in the Economics Department at Harvard University.

The beauty of creating market solutions to problems is that the markets themselves, once they are up and functioning, steadily generate exactly the right kind of focused attention among people who can actually provide solutions. Even so, the limits of Roth’s kidney transplant market are still apparent today, for such markets have not reached most of the people in need of transplants. The slowness with which nancial developments take place again re ects a demand for conventionality and familiarity and an overreliance on tradition, both of which continue to inhibit financial innovation. The Variety of Market Design Objectives Market design is becoming a lively eld. There are now, for example, mechanisms in place to help reduce the problem of global warming in an e cient manner, internalizing (making the emitters of greenhouse gases pay for) the damage they cause by contributing to global warming. The “cap and trade” system forces producers of CO2 emissions to buy permits to emit, as measured in certi ed emission reduction (CER) units, on an open market.

Governments would promise to buy and distribute for free drugs for major diseases, thereby creating market forces to motivate private enterprise to nd drugs that would cure the diseases.2 Ronnie Horesh has proposed “social policy bonds,” issued by governments, that would pay out more if certain social policy objectives were met, thereby creating a nancial incentive for free-market participants to buy the bonds and then figure out how to meet the objectives.3 Market-Design Solutions to Even the Most Personal Problems To appreciate the importance of market design, and how it can really contribute to the good society, it is helpful to think of a very personal problem that creates untold anxiety, yet for which a mechanism can be designed. Consider nding a mate, someone to live with in a close relationship, usually as husband and wife. It is indeed a sort of market problem, in that the issue is not just nding a satisfactory person but also nding someone, confronted with the same search problem, who is willing to consider you as his or her best choice.


pages: 119 words: 10,356

Topics in Market Microstructure by Ilija I. Zovko

Brownian motion, computerized trading, continuous double auction, correlation coefficient, financial intermediation, Gini coefficient, information asymmetry, market design, market friction, market microstructure, Murray Gell-Mann, p-value, quantitative trading / quantitative finance, random walk, stochastic process, stochastic volatility, transaction costs

., almost all trade volume concentrated in one order) on the buy (bid) side, unless balanced by a similarly heterogenous sell (ask) side of the market, produces an imbalance which drives prices up, and vice versa. This effect is preset on both daily and hourly timescales. We show that a quotation market design (off-book or upstairs market), as opposed to a limit order design (on-book or downstairs market), helps limit the price impact of large orders causing the heterogeneity but does not remove it completely. In addition, the impact of a large order is limited in case the trading is done against similarly large orders, regardless of the market design. This fact seems to be at odds with the interpretation of information content of trades, and we propose it may be more liquidity that determines the impact of an order. The heterogeneity of order sizes present at the market seems to be a consequence of the fat-tailed distribution of order sizes: for the onbook market with a tail exponent equal to 3, for the off-book market equal to 3/2 (tail exponents are for the cumulative distribution). 7 Chapter 2 The power of patience: A behavioral regularity in limit order placement Published as Ilija I.

At the LSE, the on-book session is called the SETS (Stock Exchange Electronic Trading System), and the off-book session the SEAQ (Stock Exchange Automated Quotation System). The papers contained in the first two chapters of the thesis focus only on the limit order trade process and use only the on-book data. The last two chapters use also the off-book data and provide a comparison in some aspects of the two market designs. 1.1.1 Trading day For the FTSE 100 stocks, the on-book trading session starts at 8:50 with a 10 minute opening auction. During the auction traders place orders to buy and sell but no execution takes place. Orders are differentiated by their execution priority. For example, limit orders are executed depending on their distance from the resulting clearing price while market orders take priority in execution.

We also find that the time series of relative limit prices show interesting temporal structure, characterized by an autocorrelation function that asymptotically decays as C(τ ) ∼ τ −0.4 . Furthermore, relative limit price levels are positively correlated with and are led by price volatility. We speculate that this feedback may potentially contribute to clustered volatility. In Chapter 3 (Farmer et al., 2005) we turn our attention to market design and investigate a situation where the constraints imposed by market institutions may dominate strategic behavior of agents. We use the LSE limit order book data to test a simple model in which minimally intelligent agents place orders to trade at random. The model treats the statistical mechanics of order placement, price formation, and the accumulation of revealed supply and demand within the context of the continuous double auction, and yields simple laws relating order arrival rates to statistical properties of the market.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, business cycle, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

A pilot CCT program was even instituted in New York City under Mayor Michael Bloomberg. Three sets of economic ideas in three different areas: the world economy, urban transport, and the fight against poverty. In each case, economists remade part of our world by applying simple economic frameworks to public problems. These examples represent economics at its best. There are many others: Game theory has been used to set up auctions of airwaves for telecommunications; market design models have helped the medical profession assign residents to hospitals; industrial organization models underpin competition and antitrust policies; and recent developments in macroeconomic theory have led to the widespread adoption of inflation targeting policies by central banks around the world.1 When economists get it right, the world gets better. Yet economists often fail, as many examples in this book will illustrate.

The abstract of one paper in the field opens with this sentence: “We establish new characterizations of Walrasian expectations equilibria based on the veto mechanism in the framework of differential information economies with a complete finite measure space of agents.”16 One of the profession’s leading, and most mathematically oriented, journals (Econometrica) imposed a moratorium at one point on “social choice” theory—abstract models of voting mechanisms—because papers in the field had become mathematically so esoteric and divorced from actual politics.17 Before we judge such work too harshly, it is worth noting that some of the most useful applications in economics have come out of highly mathematical, and what to outsiders would surely seem abstruse, models. The theory of auctions, drawing on abstract game theory, is virtually impenetrable even to many economists.†† Yet it produced the principles used by the Federal Communications Commission to allocate the nation’s telecommunications spectrum to phone companies and broadcasters as efficiently as possible, while raising more than $60 billion for the federal government.18 Models of matching and market design, equally mathematical, are used today to assign residents to hospitals and students to public schools. In each case, models that seemed to be highly abstract and to have few connections with the real world turned out to have useful applications many years later. The good news is that, contrary to common perception, math for its own sake does not get you far in the economics profession. What’s valued is “smarts”: the ability to shed new light on an old topic, make an intractable problem soluble, or devise an ingenious new empirical approach to a substantive question.

Arthur, 32–33 “Life among the Econ” (Leijonhufvud), 9–10 Lincoln, Abraham, 52 Lipsey, Richard, 59 liquidity, 134–35, 155, 185 liquidity traps, 130 locational advantages, 108 London, England, congestion pricing and, 3 Lucas, Robert, 130, 131–32, 134–36 “Machiavelli’s Mistake: Why Good Laws Are No Substitute for Good Citizens” (Bowles), 71n macroeconomics, 39–40, 87, 102, 107, 143, 157n, 181 business cycles and, 125–37 capital flow and, 165–66 classical questions of, 101 demand-side view of, 128–30, 136–37 globalization and, 165–66 Madison, James, 187 Mäki, Uskali, 22n malaria, randomized testing and, 106, 204 Malthus, Thomas, 118 Manchester University, 197 Mankiw, Greg, 149, 150, 171n, 197 manufacturing: economic growth and, 163–64 exchange rate and, 100, 163 income inequality and, 141 marginal costs, 121, 122 marginalist economics, 119–22 marginal productivity, 120–21, 122–25 marginal utility, 121, 122 Mariel boatlift (1980), 57 market design models, 5 “Market for ‘Lemons’, The” (Akerlof), 69n market fundamentalism, 160, 178 markets: asymmetric information in, 68–69, 70, 71 behavioral economics and, 69–71, 104–7, 202–4 economic models and, see models economics courses and, 198 economists’ bias toward, 169–71, 182–83 efficiency in, xiii, 14, 21, 34, 48, 50, 51, 67, 98, 125, 147, 148, 150, 156–58, 161, 165, 170, 192–95, 196 general-equilibrium interactions in, 41, 56–58, 69n, 91, 120 in Great Recession, 156–59 imperfectly competitive types of, 67–69, 70, 136, 150, 162 incentives in, 7, 170, 172, 188–92 institutions and, 98, 161, 202 likely outcomes in, 17–18 multiple equilibria in, 16–17 perfectly competitive types of, 21, 27, 28, 47, 69n, 71, 122, 180 prisoners’ dilemma in, 14–15, 20, 21, 61–62, 187, 200 self-interest in, 21, 104, 158, 186–88, 190 social cooperation in, 195–96 supply and demand in, 13–14, 20, 99, 119, 122, 128–30, 136–37, 170 values in, 186–96 Washington Consensus and, 159–67, 169 Marshall, Alfred, 13n, 32, 119 “Marshallian Cross Diagrams and Their Uses before Alfred Marshall: The Origins of Supply and Demand Geometry” (Humphrey), 13n Marx, Groucho, 26 Marx, Karl, xi, 31, 116, 118 Massachusetts, University of (Amherst), 77 Massachusetts Institute of Technology (MIT), 107, 108, 165, 206 mathematical economics, 35 mathematical optimization, 30, 101, 202–3 mathematics: economic models and, 29–37, 47 social sciences and, 33–34 Maxwell’s equations, 66n Meade, James, 58 methodological individualism, 181 Mexico: antipoverty programs in, 3–4, 105–6 globalization and, 141, 166 microeconomics, 125–26, 131 microfounded models, 101 Miguel, Ted, 106–7 Milan, Italy, congestion pricing and, 3 Milgrom, Paul, 36n minimum wages, employment and, 17–18, 28n, 114, 115, 124, 143, 150, 151 Minnesota, University of, 131 Mishel, Lawrence, 124n models: authority and criticism of, 76–80 big data and, 38–39, 40 causal factors and, 40–41, 85–86, 99–100, 114–15, 179, 184, 200, 201, 204 coherent argument and clarity in, 80–81 common sense in, 11 comparative advantage principle and, 52–55, 58n, 59–60, 139, 170 compensation for risk and, 110 computers and, 38, 41 contextual truth in, 20, 174 contingency and, 25, 145, 173–74, 185 coordination and, 16–17, 42, 200 critical assumptions in, 18, 26–29, 94–98, 150–51, 180, 183–84, 202 criticisms of, 10–11, 178, 179–85 decision trees and, 89–90, 90 diagnostic analysis and, 86–93, 90, 97, 110–11 direct implications and, 100–109 dual economy forms of, 88 efficient-markets hypothesis and, 156–58 empirical method and, xii, 7, 46, 65, 72–76, 77–78, 137, 173–74, 183, 199–206 endogenous growth types of, 88 experiments compared with, 21–25 fables compared with, 18–21 field experiments and, 23–24, 105–8, 173, 202–5 general-equilibrium interactions and, 41, 56–58, 69n, 91, 120 goods and services and, 12 Great Recession and, 155–59 horizontal vs. vertical development and, 64n, 67, 71 hypotheses and, 46, 47–56 imperfectly competitive markets and, 67–69, 70, 136, 150, 162 incidental implications and, 109–11 institutions and, 12, 98, 202 intuition and, 46, 56–63 Keynesian types of, 40, 88, 101, 102, 127–30, 131, 133–34, 136–37 knowledge and, 46, 47, 63–72 main elements of, 31 mathematics and, 29–37, 47 neoclassical types of, 40, 88, 90–91, 121, 122 new classical approach to, 130–34, 136–37 parables and, 20 partial-equilibrium analysis and, 56, 58, 91 perfectly competitive markets and, 21, 27, 28, 47, 69n, 71, 122, 180 predictability and, 26–28, 38, 40–41, 85, 104, 105, 108, 115, 132, 133, 139–40, 184–85, 202 principle-agent types of, 155 questions and, 114–16 rationality postulate and, 202–3 real world application of, 171–72 rules of formulation in, 199–202 scale economy vs. local advantage in, 108 scientific advances by progressive formulations of, 63–72 scientific character of, 45–81 second-best theory and, 58–61, 163–64, 166 selection of, 83–112, 136–37, 178, 183–84, 208 simplicity and specificity of, 11, 179–80, 210 simplicity vs. complexity of, 37–44 social reality of, 65–67, 179 static vs. dynamic types of, 68 strategic interactions and, 61–62, 63 of supply and demand, 3, 13–14, 20, 99, 119, 122, 128–30, 136–37 theories and, 113–45 time-inconsistent preferences in, 62–63 tipping points arising from, 42 in trade agreements, 41 unrealistic assumptions in, 25–29, 180–81 validity of, 23–24, 66–67, 112 variety of, 11, 12–18, 26, 68, 72, 73, 114, 130, 198, 202, 208, 210 verbal vs. mathematical types of, 34 verification in selection of, 93–112 see also economics; macroeconomics; markets “Models Are Experiments, Experiments are Models” (Mäki), 22n monetary policies, 87 monopolies, 161 in imperfectly competitive markets, 67–68 in perfectly competitive markets, 122 price controls and, 28, 94–97, 150 Montesquieu, Charles-Louis de Secondat, Baron de La Brède et de, 196 mortality rates, 206 mortgage-backed securities, 155 mortgage finance, 39, 155 mosquito nets, randomized testing of, 106, 204 “Mr.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, bitcoin, blockchain, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, lone genius, low cost airline, low cost carrier, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta analysis, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Network effects, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Sam Altman, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, William Langewiesche, Y Combinator

Of course, the cost of not always achieving maximum overall welfare is a small price to pay in return for the vast relative improvement that we get through the individual matching processes, thanks to the shift to data-richness. However, for some very specific types of transactions, especially those that have huge consequences beyond the immediate transaction partners (economists call this “externalities”), we may want to apply lessons from existing markets that must function without price. They work through clever market design combined with a different type of matching algorithm. Think, for example, of choosing which patient gets a donor kidney. Donor kidneys aren’t sold (at least legally, although some economists have suggested they should be), so preferences can’t be condensed and simplified into a stated price. In such markets, a central clearinghouse often collects preference information from all market participants and uses advanced matching algorithms to connect suitable market participants to transact.

And preference-matching algorithms can not only assist us in finding the optimal transaction partners, they can also help us identify the most appropriate set of external preferences against which to benchmark our own. We foresee a time when one marketplace after another will reinvent itself using the advances in technology and the concepts we have outlined. The change is already under way. But it won’t be a simple, swift, or linear transition. As marketplaces are innovating, they will have to experiment to discover the right combination of technology and market design that suits the needs of their participants. But once a money-based marketplace has turned itself into a data-rich one, a marketplace built on multidimensional information streams, enhanced by preference-matching algorithms and machine learning, there will be no turning back. We can already see such a development unfold in a market that serves as a guinea pig for reinvention—the market for love.

., Yash Kanoria and Daniela Saban, “Facilitating the Search for Partners on Matching Platforms: Restricting Agents’ Actions” (July 5, 2017), available at SSRN: https://ssrn.com/abstract=3004814. clearinghouse often collects preference information: Alvin E. Roth and Elliott Peranson, “The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design,” American Economic Review 89, no. 4 (September 1999), 748–780. two of the world’s leading experts in matching: Alvin E. Roth, Who Gets What—and Why: The New Economics of Matchmaking and Market Design (New York: Houghton Mifflin Harcourt, 2015); see also David S. Evans and Richard Schmalensee, Matchmakers: The New Economics of Multisided Platforms (Cambridge: Harvard Business Review Press, 2016). algorithm predicted which team would win: Tim Adams, “Job Hunting Is a Matter of Big Data, Not How You Perform at an Interview,” Observer, May 10, 2014, https://www.theguardian.com/technology/2014/may/10/job-hunting-big-data-interview-algorithms-employees; Sue Tabbitt, “Forget Myers-Briggs: Algorithms Can Better Predict Team Chemistry,” Guardian, May 27, 2016, https://www.theguardian.com/small-business-network/2016/may/27/forget-myers-briggs-algorithms-predict-team-chemistry.


pages: 272 words: 83,798

A Little History of Economics by Niall Kishtainy

"Robert Solow", Alvin Roth, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, central bank independence, clean water, Corn Laws, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Eugene Fama: efficient market hypothesis, first-price auction, floating exchange rates, follow your passion, full employment, George Akerlof, greed is good, Hyman Minsky, inflation targeting, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, loss aversion, market clearing, market design, means of production, moral hazard, Nash equilibrium, new economy, Occupy movement, Pareto efficiency, Paul Samuelson, prisoner's dilemma, RAND corporation, rent-seeking, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, sealed-bid auction, second-price auction, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, Vickrey auction, Vilfredo Pareto, washing machines reduced drudgery, wealth creators, Winter of Discontent

Economists like Roth go further: they use economic theories to create new parts of the economy out there in the real world. Even though it doesn’t involve buying and selling, kidney exchange is like a market in the sense that it allows people to swap things with each other. When Roth set up his database and computer programmes he created something similar to a market where none existed before. It’s an example of a new field of economics known as ‘market design’. Most of us will never need to get hold of a kidney, of course. A really famous example of market design – one to do with the mobile phones in our pockets – affects many more of us, and in contrast to kidney exchange it involved buyers paying huge sums of money to sellers. In the 1990s and 2000s, governments hired economists to help sell licences to companies who wanted to use the radio spectrum to set up mobile phone networks. When you’re selling apples it’s easy: you look at how much apples sell for and sell yours for that amount.

(i), (ii) Kerala (India) (i) Keynes, John Maynard (i), (ii), (iii), (iv), (v), (vi) Keynesian theory (i), (ii), (iii) Klemperer, Paul (i) Krugman, Paul (i), (ii) Kydland, Finn (i), (ii) labour (i) in ancient Greece (i) and market clearing (i) women as unpaid (i) labour theory of value (i), (ii) laissez-faire (i) landowners (i), (ii), (iii) Lange, Oskar (i) law of demand (i), (ii) leakage of spending (i) Lehman Brothers (i) leisure class (i) leisured, women as (i) Lenin, Vladimir Ilyich (i), (ii) Lerner, Abba (i) Lewis, Arthur (i) Lincoln, Abraham (i) List, Friedrich (i) loss aversion (i) Lucas, Robert (i), (ii) MacKay, Charles (i) Macmillan, Harold (i) macro/microeconomics (i) Malaysia, and speculators (i) Malthus, Thomas (i), (ii), (iii) Malynes, Gerard de (i), (ii) manufacturing (i), (ii) division of labour (i) see also Industrial Revolution margin (i) marginal costs (i), (ii) marginal principle (i), (ii), (iii) marginal revenue (i) marginal utility (i), (ii) market, the (i) market clearing (i) market design (i) market failure (i), (ii), (iii), (iv) ‘Market for Lemons, The’ (Akerlof) (i) market power (i) markets, currency (i), (ii) Marshall, Alfred (i), (ii), (iii), (iv), (v) Marx, Karl (i), (ii), (iii), (iv), (v), (vi), (vii) Marxism (i) mathematics (i), (ii), (iii) means of production (i) mercantilism (i), (ii) Mesopotamia (i) Mexico, pegged currency (i) micro/macroeconomics (i) Microsoft (i) Midas fallacy (i) minimum wage (i) Minsky, Hyman (i) Minsky moment (i), (ii) Mirabeau, Marquis de (i), (ii), (iii) Mises, Ludwig von (i), (ii), (iii), (iv) mixed economies (i), (ii) Mobutu Sese Seko (i) model villages (i) models (economic) (i), (ii), (iii), (iv) modern and traditional economies (i), (ii) monetarism (i) monetary policy (i), (ii) money (i), (ii), (iii), (iv), (v), (vi) see also coins; currency money illusion (i) money wages (i) moneylending see usury monopolies (i), (ii) monopolistic competition (i), (ii) monopoly, theory of (i) monopoly capitalism (i), (ii), (iii) monopsony (i) moral hazard (i), (ii) multiplier (i) Mun, Thomas (i), (ii), (iii) Muth, John (i) Nash, John (i), (ii) Nash equilibrium (i) national income (i), (ii), (iii), (iv), (v) National System of Political Economy (List) (i) Nelson, Julie (i) neoclassical economics (i) net product (i) Neumann, John von (i) New Christianity, The (Saint-Simon) (i) new classical economics (i) New Harmony (Indiana) (i) New Lanark (Scotland) (i) Nkrumah, Kwame (i), (ii) non-rival good (i) Nordhaus, William (i), (ii) normative economics (i), (ii) Obstfeld, Maurice (i) Occupy movement (i) oligopolies (i) opportunity cost (i), (ii) organ transplant (i) output per person (i) Owen, Robert (i) paper money (i), (ii) Pareto, Vilfredo (i) pareto efficiency (i), (ii) pareto improvement (i) Park Chung-hee (i) partial equilibrium (i) pegged exchange rate (i) perfect competition (i), (ii), (iii), (iv), (v) perfect information (i) periphery (i) phalansteries (i) Phillips, Bill (i) Phillips curve (i), (ii), (iii), (iv), (v), (vi), (vii) physiocracy (i), (ii) Pigou, Arthur Cecil (i), (ii), (iii) Piketty, Thomas (i), (ii), (iii) Plato (i), (ii), (iii) policy discretion (i) Ponzi, Charles (i) Ponzi finance (i) population and food supply (i), (ii), (iii) of women (i) positive economics (i) poverty (i), (ii), (iii), (iv), (v) in Cuba (i) Sen on (i) and utopian thinkers (i) Prebisch, Raúl (i) predicting (i) Prescott, Edward (i), (ii) price wars (i), (ii) primary products (i) prisoners’ dilemma (i) private costs and benefits (i) privatisation (i) productivity (i), (ii), (iii) profit (i), (ii), (iii), (iv) and capitalism (i), (ii) proletariat (i), (ii) property (private) (i), (ii), (iii), (iv), (v) and communism (i), (ii), (iii), (iv) protection (i), (ii), (iii) provisioning (i) public choice theory (i) public goods (i) quantity theory of money (i) Quesnay, François (i) Quincey, Thomas de (i), (ii) racism (i) Rand, Ayn (i) RAND Corporation (i), (ii) rate of return (i), (ii) rational economic man (i), (ii), (iii), (iv), (v) rational expectations (i), (ii), (iii), (iv), (v) real wages (i), (ii), (iii) recession (i) and governments (i), (ii), (iii) Great Recession (i) Keynes on (i), (ii) Mexican (i) redistribution of wealth (i) reference points (i) relative poverty (i) rent on land (i), (ii), (iii) rents/rent-seeking (i) resources (i), (ii) revolution (i), (ii), (iii), (iv) Cuban (i) French (i), (ii), (iii), (iv) Russian (i), (ii) Ricardo, David (i), (ii), (iii) risk aversion (i) Road to Serfdom, The (Hayek) (i) robber barons (i) Robbins, Lionel (i) Robinson, Joan (i) Roman Empire (i) Romer, Paul (i) Rosenstein-Rodan, Paul (i) Roth, Alvin (i), (ii) rule by nature (i) rules of the game (i) Sachs, Jeffrey (i) Saint-Simon, Henri de (i) Samuelson, Paul (i), (ii) savings (i), (ii) and Say’s Law (i) Say’s Law (i) scarcity (i), (ii), (iii), (iv), (v), (vi) Schumpeter, Joseph (i), (ii) sealed bid auction (i) second price auction (i) Second World War (i) securitisation (i) self-fulfilling crises (i) self-interest (i) Sen, Amartya (i), (ii) missing women (i), (ii), (iii) services (i) shading bids (i), (ii) shares (i), (ii), (iii), (iv), (v), (vi) see also stock market Shiller, Robert (i), (ii) signalling (i) in auctions (i) Smith, Adam (i), (ii), (iii), (iv), (v) social costs and benefits (i) Social Insurance and Allied Services (Beveridge) (i) social security (i), (ii) socialism (i), (ii), (iii), (iv), (v) socialist commonwealth (i) Socrates (i) Solow, Robert (i) Soros, George (i), (ii), (iii) South Africa, war with Britain (i) South Korea, and the big push (i) Soviet Union and America (i) and communism (i), (ii) speculation (i) speculative lending (i) Spence, Michael (i) spending government (fiscal policy) (i), (ii), (iii), (iv), (v), (vi), (vii) and recessions (i), (ii) and Say’s Law (i) see also investment stagflation (i), (ii) Stalin, Joseph (i) standard economics (i), (ii), (iii), (iv) Standard Oil (i) Stiglitz, Joseph (i) stock (i) stock market (i), (ii), (iii), (iv), (v) stockbrokers (i) Strassmann, Diana (i), (ii) strategic interaction (i), (ii) strikes (i) subprime loans (i) subsidies (i), (ii) subsistence (i) sumptuary laws (i) supply curve (i) supply and demand (i), (ii), (iii), (iv) and currencies (i) and equilibrium (i), (ii) in recession (i), (ii), (iii) supply-side economics (i) surplus value (i), (ii) Swan, Trevor (i) tariff (i) taxes/taxation (i) and budget deficit (i) carbon (i) and carbon emissions (i) and France (i) and public goods (i) redistribution of wealth (i) and rent-seeking (i) technology as endogenous/exogenous (i) and growth (i) and living standards (i) terms of trade (i) Thailand (i) Thaler, Richard (i) theory (i) Theory of the Leisure Class, The (Veblen) (i) Theory of Monopolistic Competition (Chamberlain) (i) Thompson, William Hale ‘Big Bill’ (i) threat (i) time inconsistency (i), (ii) time intensity (i) Tocqueville, Alexis de (i) totalitarianism (i) trade (i), (ii), (iii) and dependency theory (i) free (i), (ii), (iii) trading permit, carbon (i) traditional and modern economies (i), (ii) transplant, organ (i) Treatise of the Canker of England’s Common Wealth, A (Malynes) (i) Tversky, Amos (i), (ii) underdeveloped countries (i) unemployment in Britain (i) and the government (i) and the Great Depression (i) and information economics (i) and Keynes (i) and market clearing (i) and recession (i) unions (i), (ii) United States of America and free trade (i) and growth of government (i) industrialisation (i) and Latin America (i) Microsoft (i) recession (i), (ii) and the Soviet Union (i) and Standard Oil (i) stock market (i) wealth in (i) women in the labour force (i) unpaid labour, and women (i) usury (i), (ii), (iii) utility (i), (ii), (iii), (iv) utopian thinkers (i), (ii) Vanderbilt, Cornelius (i), (ii) Veblen, Thorstein (i), (ii), (iii) velocity of circulation (i), (ii) Vickrey, William (i) wage, minimum (i) Walras, Léon (i) Waring, Marilyn (i) wealth (i) and Aristotle (i), (ii) and Christianity (i) Piketty on (i) and Plato (i) Smith on (i) Wealth of Nations, The (Smith) (i), (ii) welfare benefits (i), (ii), (iii), (iv) welfare economics (i) Who Pays for the Kids?


Mastering Prezi for Business Presentations by Russell Anderson-Williams

business process, call centre, market design, Skype

Again link each point back to its heading with arrows or lines. My business Marketing Design Social Media Corporate logo Style Twitter FB LinkedIn 4. Keep repeating these steps until you have either ran out of things to write, or you've found the key points to explain in your Prezi. Try to avoid using ruled paper as it may encourage you to start writing a list instead of a Mind Map. 5. Once you identify the key points that need to be presented in your Prezi, underline them or highlight them in some way so that they stand out from everything else. 6. For each of the key points, try to think of an image that will help visualize it and do a quick sketch of the image. It doesn't have to be a work of art! My business Marketing Design Social Media LinkedIn [ 75 ] Corporate logo Approaching Your Prezi Design If you aren't familiar with the Mind Mapping technique, then try to go through the preceding steps as many times as you can, and for as many subjects as you can think of.


pages: 289 words: 113,211

A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation by Richard Bookstaber

"Robert Solow", affirmative action, Albert Einstein, asset allocation, backtesting, beat the dealer, Black Swan, Black-Scholes formula, Bonfire of the Vanities, butterfly effect, commoditize, commodity trading advisor, computer age, computerized trading, disintermediation, diversification, double entry bookkeeping, Edward Lorenz: Chaos theory, Edward Thorp, family office, financial innovation, fixed income, frictionless, frictionless market, George Akerlof, implied volatility, index arbitrage, intangible asset, Jeff Bezos, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, loose coupling, margin call, market bubble, market design, merger arbitrage, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, oil shock, Paul Samuelson, Pierre-Simon Laplace, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk tolerance, risk/return, Robert Shiller, Robert Shiller, rolodex, Saturday Night Live, selection bias, shareholder value, short selling, Silicon Valley, statistical arbitrage, The Market for Lemons, time value of money, too big to fail, transaction costs, tulip mania, uranium enrichment, William Langewiesche, yield curve, zero-coupon bond, zero-sum game

From the structural design of buildings and bridges, to the operation of oil refineries or power plants, to the safety of automobiles and airplanes, we learned our lessons. In contrast, financial markets have seen a tremendous amount of engineering in the past 30 years but the result has been more frequent and severe breakdowns. These breakdowns come about not in spite of our efforts at improving market design, but because of them. The structural risk in the financial markets is a direct result of our attempts to improve the state of the financial markets; its origins are in what we would generally chalk up as progress. The steps that we have taken to make the markets more attuned to our investment desires—the ability to trade quickly, the integration of the financial markets into a global whole, ubiquitous and timely market information, the array of options and other derivative instruments—have exaggerated the pace of activity and the complexity of financial instruments that makes crises inevitable.

We are faced with more pernicious problems, however, in attaining these goals. When the market ideals collide with the real world, with individuals who are not in control of full information, with institutions that do not act quickly or necessarily in anyone’s best interest, the result is like taking a race car for a spin off-road. In the face of progress and technological advances that have resulted in stability on many fronts, financial markets, designed to provide a mechanism for managing and addressing economic risk, have developed a structure that has made them inherently more risky. The irony is that this structure has features that at face value are desirable, in some cases approaching the essential elements of the ideal. As with many ideals, its origin is in academia, in this case a theoretical framework that underpins a half-century of work in financial economics called the perfect market paradigm.

The more closely we try to follow the ideal, thereby adding complexity and more tightly coupling the actions of the market, the more frequently crises will occur. Attempts at that point to add safety features, to layer on regulations and safeguards, will only add to the complexity of the system and make the accidents more frequent. And when blowups happen in the future I can guarantee that the focus will be directed improperly: not at the issues of market design but at hedge funds where the events are observed. They will be implicated for the simple reason that they are engulfing more and more of the risk-taking landscape. The perception of hedge funds being what it is, they will take the blame and become subject to increased regulation. But blaming hedge funds is a little bit like The Simpsons episode in which a meteorite hits Springfield and the townspeople gather, shouting, “Let’s burn down the observatory so this never happens again!”


pages: 52 words: 14,333

Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising by Ryan Holiday

Airbnb, iterative process, Kickstarter, Lean Startup, Marc Andreessen, market design, minimum viable product, Paul Graham, pets.com, post-work, Silicon Valley, slashdot, Steve Wozniak, Travis Kalanick

And by steadily increasing the number of invites allowed to its existing user base, Gmail spread from person to person until it became the most popular, and in many ways the best, free e-mail service. Enormous services launched from tiny, but incredibly explosive, ideas. That’s what we’re going to study in this book. The Rise of the Growth Hacker Since Hotmail, many others—particularly in the tech space—have begun to push and break through the limits of marketing. With a mind for data and a scrappy disregard for the “rules,” they have pioneered a new model of marketing designed to utilize the many new tools that the Internet has made available: E-mail. Data. Social media. Lean methodology. Almost overnight, this breed has become the new rock stars of the Silicon Valley. You see them on the pages of TechCrunch, Fast Company, Mashable, Entrepreneur, and countless other publications. LinkedIn and Hacker News abound with job postings: Growth Hacker Needed. Their job isn’t to “do” marketing as I had always known it; it’s to grow companies really fast—to take something from nothing and make it something enormous within an incredibly tight window.


pages: 209 words: 13,138

Empirical Market Microstructure: The Institutions, Economics and Econometrics of Securities Trading by Joel Hasbrouck

Alvin Roth, barriers to entry, business cycle, conceptual framework, correlation coefficient, discrete time, disintermediation, distributed generation, experimental economics, financial intermediation, index arbitrage, information asymmetry, interest rate swap, inventory management, market clearing, market design, market friction, market microstructure, martingale, price discovery process, price discrimination, quantitative trading / quantitative finance, random walk, Richard Thaler, second-price auction, selection bias, short selling, statistical model, stochastic process, stochastic volatility, transaction costs, two-sided market, ultimatum game, zero-sum game

The liquidity externality is a network externality. The attributes of liquidity just discussed are generally enhanced, and individual agents can trade at lower cost, when the number of participants increases. This force favors market consolidation, the concentration of trading activity in a single mechanism or venue. Differences in market participants (e.g., retail versus institutional investors), however, and innovations by market designers militate in favor of market segmentation (in this context, usually called fragmentation). The number of participants in a security market obviously depends on features of the security, in addition to the trading mechanism. If the aggregate value of the underlying assets is high; if value-relevant information is comprehensive, uniform, and credible; or if the security is a component of an important index, there will be high interest in trading the security.

Suppose that when the informed trader in the basic model puts in an order x, her broker simultaneously puts in an order x, with γx, with γ > 0. Solve for the model parameters (α, β, µ, λ) in terms of the inputs, σu2 , 0 , and γ. It turned out that the Bank Leu orders originated from a New York investment banker, Dennis Levine, who subsequently pleaded guilty to insider trading (see Stewart (1992)). 7.2 Multiple Rounds of Trading A practical issue in market design is the determination of when trading should occur. Some firms on the Paris Bourse, for example, trade in twice-per-day call auctions, others continuously within a trading session. What happens in the Kyle model as we increase the number of auctions, ultimately converging to continuous trading? We will consider the case of N auctions that are equally spaced over a unit interval of time. The time between auctions is t = 1/N .


Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein

affirmative action, Andrei Shleifer, availability heuristic, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, slashdot, stem cell, The Wisdom of Crowds, winner-take-all economy

It is important both for government and for outside observers to know the size of federal budget deficits. Government projections are greatly disputed, and some of them might well be self-serving. Prediction markets might provide more reliable estimates.54 3. Regulators might be concerned about the likely risks of a new disease, or of an old disease that seems to be growing in magnitude. To assess the risks, they might create a prediction market designed to project the 132 / Infotopia 4. 5. 6. 7. number of deaths that will be attributed to, for example, flu or mad cow disease over a specified period. Federal and state agencies monitor a range of institutions to ensure that they are solvent.55 One problem is that such agencies do not know whether insolvencies are likely to be many or few in a particular year; another is that the solvency of particular institutions can be difficult to predict in advance.

A prediction market might be used to make forecasts about the future progress of the disease.57 Such markets might generally be used to make forecasts about the likely effects of development projects, such as those involving vaccinations and mortality reductions.58 The Central Intelligence Agency might want to know about the outcome of elections in Iraq, or the likelihood of a feared event in the Middle East. The CIA might create an internal prediction market, designed to aggregate the information held by its own employees. The White House might seek to predict the likelihood and magnitude of damage from natural disasters, including tornadoes and earthquakes. Accurate information could greatly assist in advance planning. Prediction markets could easily be created to help in that task. Some of these examples involve private behavior. Others involve the judgments of public institutions.


pages: 117 words: 30,538

It Doesn't Have to Be Crazy at Work by Jason Fried, David Heinemeier Hansson

8-hour work day, Airbnb, Atul Gawande, Community Supported Agriculture, David Heinemeier Hansson, Jeff Bezos, market design, remote working, Ruby on Rails, Silicon Valley, Stephen Hawking, web application

Everything got better. Customers remained thrilled with our fast service—which was a bit slower than before but still way ahead of the industry—and our team chilled out and did better work. Win-win. Not only was it enough, it was plenty. Worst Practices Every mature industry is drowning in best practices. There are best practices about how to price a product, conduct employee reviews, do content marketing, design a website, or make an app scalable to millions of users. There’s no end to advice claiming to be the best. Yet so much of it is not merely bullshit but quite possibly the worst thing you could do. What counts as the best practice for a company of 10,000 is very rarely so for a company of 10. Hell, even our own internal best practices at Basecamp that were set when we only had 7 people at the company failed or held us back when we grew to 30.


pages: 130 words: 32,279

Beyond the 4% Rule: The Science of Retirement Portfolios That Last a Lifetime by Abraham Okusanya

asset allocation, diversification, diversified portfolio, high net worth, longitudinal study, market design, mental accounting, Paul Samuelson, quantitative easing, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, transaction costs

Annuities and other retirement income products with contractual guarantees sit at the safety-first end of the spectrum. Drawdown, managed using safe withdrawal rate strategies, sits at the other end in the probability-based camp. There’s a range of products and strategies sitting in between – some with features of both schools. A small number of hybrid or blended retirement income products are available in the market, designed to give clients the best of both worlds. This is achieved by combining two or more products, (eg annuities) to provide essential income and drawdown for discretionary income. Decisions, Decisions Now you understand the two main retirement income philosophies, which one chimes with you the most? Do you trust the guarantee of an insurance company or will you take your chances with the capital markets?


pages: 421 words: 110,406

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, digital map, discounted cash flows, disintermediation, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Haber-Bosch Process, High speed trading, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Metcalfe’s law, multi-sided market, Network effects, new economy, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, winner-take-all economy, zero-sum game, Zipcar

At the time of the sale, 70 percent of all eBay auctions accepted PayPal, and roughly 25 percent of closed auction purchases were transacted using the payment service. Today, PayPal produces a major portion of eBay’s revenues and profits while enabling hundreds of thousands of small merchants to conduct business online more easily, efficiently, and profitably than ever before. THE HEART OF PLATFORM MARKETING: DESIGNING FOR VIRAL GROWTH As the PayPal story suggests, building a platform business differs from traditional product or pipeline marketing in a number of ways. For starters, in the world of platform marketing, pull strategies rather than push strategies are most effective and important. The industrial world of pipelines relies heavily on push. Consumers are accessed through specific marketing and communication channels that the business owns or pays for.

The single most heavily cited article on corporate governance is a literature survey that considers only “the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.”17 The focus here is on the information asymmetry arising from the separation of ownership and control—a critical element of governance design, but far from sufficient.18 Information asymmetry between the community of users and the firm also matters, and their interests too must be aligned. Additionally, platform governance rules must pay special heed to externalities. These are endemic in network markets, since, as we’ve seen when examining network effects, the spillover benefits users generate are a source of platform value. Understanding this forces a shift in corporate governance from a narrow focus on shareholder value to a broader view of stakeholder value. Market designer and Nobel Prize-winning economist Alvin Roth described a model of governance that uses four broad levers to address market failures.19 According to Roth, a well-designed market increases the safety of the market via transparency, quality, or insurance, thereby enabling good interactions to occur. It provides thickness, which enables participants from different sides of a multisided market to find one another more easily.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

"Robert Solow", accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, business cycle, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, different worldview, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game

Smith and others have demonstrated that markets frequently do deliver the efficient outcomes predicted by the theory, in effect through a process of trial and error.4 Participants do not consciously think of themselves as solving a theoretical economic model but nevertheless act as if they are following the laws of demand and supply—just as their physical movements show them acting as if they’re following Newton’s laws. The experimental research has also shed much light on the way the rules of engagement in markets affect the prices and quantities. This literature has led to the creation of a discipline of market design. Governments have been able to sell assets for which it would once have been hard to conceive of a market—radio spectrum, for example, or permission to emit pollutants like sulphur dioxide or carbon. Market design can also improve the way government licenses are issued and sold, the way regulations are imposed, or even the way trading can occur on financial markets. In short, it acknowledges that markets are designed, and this can either be accidental or more deliberate. Given that government rules and laws set the framework in which all markets operate, how much better it is to think explicitly about their impact.


pages: 504 words: 126,835

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

"Robert Solow", Airbnb, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, Clayton Christensen, Colonization of Mars, commoditize, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Elon Musk, Erik Brynjolfsson, fear of failure, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, high net worth, hiring and firing, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, technological singularity, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra

Companies exposed to competition are always vulnerable to change, and when they become focused on finance rather than market contestability, they need to find other ways of protecting the boundaries of the firm and their market positions. That protection is increasingly about playing zone or company-to-company defense of markets. Those that have been around in corporate life know that, aside from specialization, there are several ways to do that. They include lobbying, branding, marketing, design, and incremental changes in products that give the pretense of development. Corporate social responsibility (CSR) and general public relations campaigns emerged later but are today part of the same toolbox. Together they all help to create customer loyalty and political protection. What used to be the icing on the cake – activities to support innovations and real business competition – have become more important than innovation itself to combat competitors.

In the production of a typical German car, for example, foreign value added increased from 21 percent in 1995 to 34 percent in 2008.44 A more famous example, from the really fragmented electronics sector, is Apple’s music player, the iPod.45 While an iPod – just like an iPhone – is “made in China,” only about 2 percent of the value added of an iPod is captured by China. In other words, 98 percent of the value of this particular export is generated abroad. The United States – where Apple has its headquarters and invests in marketing, design, R&D, and more – takes between one-third and one-half of the iPod value added. This is a familiar situation for many countries. East Asia’s magnificent rise in trade, for example, is closely tied to trade in global production networks, but the richer they have grown, the more important it has become to capture a larger part of the value-added content of traded goods.46 In Europe, too, the rise of cross-border production networks has transformed production and trade.


pages: 469 words: 132,438

Taming the Sun: Innovations to Harness Solar Energy and Power the Planet by Varun Sivaram

addicted to oil, Albert Einstein, asset-backed security, autonomous vehicles, bitcoin, blockchain, carbon footprint, cleantech, collateralized debt obligation, Colonization of Mars, decarbonisation, demand response, disruptive innovation, distributed generation, diversified portfolio, Donald Trump, Elon Musk, energy security, energy transition, financial innovation, fixed income, global supply chain, global village, Google Earth, hive mind, hydrogen economy, index fund, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), Internet of things, M-Pesa, market clearing, market design, mass immigration, megacity, mobile money, Negawatt, off grid, oil shock, peer-to-peer lending, performance metric, renewable energy transition, Richard Feynman, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, Silicon Valley startup, smart grid, smart meter, sovereign wealth fund, Tesla Model S, time value of money, undersea cable, wikimedia commons

The other market would be for variable power from unpredictable generators, such as solar and wind, which cannot guarantee their output.50 Prominent energy analyst Michael Liebreich argues that the difference in prices between the two markets, which he dubs the “Firm Spread,” will rise as value deflation accompanies the rise of variable solar and wind power. And that spread will attract reliable sources of firm generation capacity, as well as innovation to develop such new, flexible resources as virtual power plants or storage technologies.51 Ideas like that one are still very much on the drawing board. But that is the sort of innovative market design that might be required to ensure that a diverse mix of zero-carbon power resources coexists. Indeed, the power sector is supposed to be the easy one to decarbonize. The rest of the economy, starting with transportation, presents even thornier challenges. Batteries on the Go The most obvious way to extend decarbonization from the power sector to the transportation sector is through vehicle electrification.

., “Merit-Order Effects of Renewable Energy and Price Divergence in California’s Day-Ahead and Real-Time Electricity Markets,” Energy Policy 92 (2016): 299–312, doi:10.1016/j.enpol.2016.02.023. 43.  Andre Gensler et al., “Deep Learning for Solar Power Forecasting—An Approach Using AutoEncoder and LSTM Neural Networks,” IEEE International Conference on Systems, Man, and Cybernetics, 2016, http://ieeexplore.ieee.org/document/7844673/. 44.  E. Ela et al., “Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations,” The Electricity Journal 29, no. 4 (2016): 51–60, doi:10.1016/j.tej.2016.05.001. 45.  Jenny Riesz and Michael Milligan, “Designing Electricity Markets for a High Penetration of Variable Renewables,” Wiley Interdisciplinary Reviews: Energy and Environment 4, no. 3 (2014): 279–289, doi:10.1002/wene.137. 46.  


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, beat the dealer, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, Edward Thorp, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

These weren’t the questionnaires and what-if scenarios used by other social scientists, but actual markets—albeit artificial ones populated almost exclusively by college students. The study of finance was replete with experimental possibilities. When one designs a market experiment, it’s possible to know with certainty the intrinsic, fundamental value of the securities being traded. More often than not, in the markets designed by Smith, Plott, and others, prices converged toward that value—but not always. Bubbles developed; markets failed. Much depended on the rules that governed the market, and the greatest impact of experimental economics has been on market design. Plott had even grander ambitions. During an academic year spent at the University of Chicago in the late 1970s, he asked Eugene Fama for advice on testing his efficient market hypothesis in an experimental setting. “He said his theory has nothing to do with experiments; it has to do with the U.S. stock market,” Plott recalled.


pages: 208 words: 51,277

Chicken: The Dangerous Transformation of America's Favorite Food by Steve Striffler

clean water, collective bargaining, corporate raider, illegal immigration, immigration reform, longitudinal study, market design, place-making, Ronald Reagan, Upton Sinclair, upwardly mobile

The early rise of chicken was driven by a combination of, on the one hand, consumer demand for a cheap, healthy source of animal protein and, on the other, an agroscientific revolution carried out by farmers, workers, scientists, and others that delivered large quantities of affordable chicken to consumers by the end of the s. By contrast, the more recent rise of processed chicken has been only partially about consumer demand for “convenience foods.” Engineering and Marketing Chicken Processed chicken is a product of food engineering and clever marketing, designed to combat a problem that has plagued the industry from its inception: Chicken in its most basic form is simply not that profitable. Historically, profit margins within the meat industry have been not only slim, but also unstable A New Bird 20 [To view this image, refer to the print version of this title.] Chicken Today (Photo by Kelley O’Callaghan) or, at best, cyclical. The key costs in producing chicken are feed and labor.


pages: 169 words: 52,744

Big Capital: Who Is London For? by Anna Minton

Airbnb, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, eurozone crisis, Fall of the Berlin Wall, Frank Gehry, high net worth, housing crisis, illegal immigration, Kickstarter, land value tax, market design, new economy, New Urbanism, offshore financial centre, payday loans, quantitative easing, rent control, Right to Buy, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, urban renewal, working poor

But the speed of capital flows into places between the 1960s and the early 2000s bears no comparison to what is happening today. The rate of return on London property, even in a market slowed by economic uncertainty, far exceeds growth, let alone wages, which are among the lowest in Europe. It is these rates of return on property that are driving the reconfiguration of London, boosted by policy decisions carried out by local authorities, which are in tune with deliberate changes in housing policy and the property market, designed to take maximum advantage of the attraction of London real estate to global investors. This has little to do with the process that Glass or even Lees describe, which saw capital invested in gentrifying parts of the city at a much slower rate, over generations rather than a few years: as such, it is crucial that the impact of global capital and foreign investment is scrutinized for its local effects.


pages: 565 words: 151,129

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

"Robert Solow", 3D printing, active measures, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, big-box store, bioinformatics, bitcoin, business process, Chris Urmson, clean water, cleantech, cloud computing, collaborative consumption, collaborative economy, Community Supported Agriculture, Computer Numeric Control, computer vision, crowdsourcing, demographic transition, distributed generation, en.wikipedia.org, Frederick Winslow Taylor, global supply chain, global village, Hacker Ethic, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, longitudinal study, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, mass immigration, means of production, meta analysis, meta-analysis, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, off grid, oil shale / tar sands, pattern recognition, peer-to-peer, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, QR code, RAND corporation, randomized controlled trial, Ray Kurzweil, RFID, Richard Stallman, risk/return, Ronald Coase, search inside the book, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social web, software as a service, spectrum auction, Steve Jobs, Stewart Brand, the built environment, The Nature of the Firm, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, transaction costs, urban planning, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, zero-sum game, Zipcar

,” Renewable Energy World, November 21, 2012, http://www.renewableenergyworld.com/rea/blog /post/2012/11/ppriorities-germanys-grid-and-the-market (November 1, 2013); Jeevan Vasagar, “German Farmers Reap Benefits of Harvesting Renewable Energy,” Financial Times, December 2, 2013, http://www.ft.com/intl/cms/s/0/f2bc3958-58f4-11e3-9798-00144feabdc0.html#axzz2nMj6ILk2 (accessed December 13, 2013). 41. Josiah Neeley, “Texas Windpower: Will Negative Pricing Blow Out the Lights? (PTC vs. Reliable New Capacity),” MasterResource, November 27, 2012, http://www.masterresource .org/2012/11/texas-negative-pricing-ptc/ (accessed August 2, 2013). 42. Rachel Morison, “Renewables Make German Power Market Design Defunct, Utility Says,” Bloomberg, June 26, 2012, http://www.bloomberg.com/news/2012-06-26/renewables-make -german-power-market-design-defunct-utility-says.html (accessed April 29, 2013). 43. Nic Brisbourne, “Solar Power—A Case Study in Exponential Growth,” The Equity Kicker, September 25, 2012, http://www.theequitykicker.com/2012/09/25/solar-powera-case-study-in -exponential-growth/ (accessed May 27, 2013). 44. Max Miller, “Ray Kurzweil: Solar Will Power the World in 16 Years,” Big Think, March 17, 2011, http://bigthink.com/think-tank/ray-kurzweil-solar-will-power-the-world-in-16-years (accessed June 1, 2013). 45.


pages: 589 words: 147,053

The Age of Em: Work, Love and Life When Robots Rule the Earth by Robin Hanson

8-hour work day, artificial general intelligence, augmented reality, Berlin Wall, bitcoin, blockchain, brain emulation, business cycle, business process, Clayton Christensen, cloud computing, correlation does not imply causation, creative destruction, demographic transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, experimental subject, fault tolerance, financial intermediation, Flynn Effect, hindsight bias, information asymmetry, job automation, job satisfaction, John Markoff, Just-in-time delivery, lone genius, Machinery of Freedom by David Friedman, market design, meta analysis, meta-analysis, Nash equilibrium, new economy, prediction markets, rent control, rent-seeking, reversible computing, risk tolerance, Silicon Valley, smart contracts, statistical model, stem cell, Thomas Malthus, trade route, Turing test, Vernor Vinge

This reverses the trend in recent decades away from mass production and toward mass customization and flexible manufacturing. A return to mass production should result in more long-term growth, simpler and more standardized products, larger factories that achieve more economies of scale and scope, and better but more expensive tools. A return to mass production should also encourage organizational divisions centered less on types of customers and products and more on functions such as sales, marketing, design, production, and shipping (Salvador et al. 2009; Piller 2008). All these changes might be reduced, however, if parasites such as computer viruses can exploit mass-produced products, and so discourage them relative to other products. A shift toward mass production should modestly increase the value of automation and software tools, as for mass products the fixed cost of developing such tools is spread out over a larger scope of use of such tools.

Extropy 7(1): 30–31. Hanson, Robin. 1998. “Economic Growth Given Machine Intelligence.” October. http://hanson.gmu.edu/aigrow.pdf. Hanson, Robin. 2000. “Long-Term Growth as a Sequence of Exponential Modes.” October. http://hanson.gmu.edu/longgrow.pdf. Hanson, Robin. 2001. “How to Live in a Simulation.” Journal of Evolution and Technology 7(September). Hanson, Robin. 2003. “Combinatorial Information Market Design.” Information Systems Frontiers 5(1): 105–119. Hanson, Robin. 2005. “He Who Pays The Piper Must Know The Tune.” April. http://hanson.gmu.edu/expert.pdf. Hanson, Robin. 2006a. “Decision Markets for Policy Advice.” In Promoting the General Welfare: American Democracy and the Political Economy of Government Performance, edited by Eric Patashnik and Alan Gerber, 151–173. Washington D.C.: Brookings Institution Press, November.


Fodor's Barcelona by Fodor's

Albert Einstein, call centre, Frank Gehry, Guggenheim Bilbao, haute couture, haute cuisine, low cost airline, low cost carrier, market design, urban renewal, urban sprawl, young professional

After their victory, the Bourbon forces obliged residents of the Barri de la Ribera (Waterfront District) to tear down nearly a thousand of their own houses, some 20% of Barcelona at that time, to create fields of fire so that the occupying army of Felipe V could better train its batteries of cannon on the conquered populace in order to repress nationalist uprisings. Walk down to the Born itself—a great iron hangar, once a produce market designed by Josep Fontseré. The initial stages of the construction of a public library in the Born uncovered the perfectly preserved lost city of 1714, complete with blackened fireplaces, taverns, wells, and the canal that brought water into the city. The Museu d’Història de la Ciutat offers free visits overlooking the ruins of the 14th- to 18th-century Barri de la Ribera on weekends 10–3. | Born-Ribera | Station: Jaume I.

Although the 30-foot floor-to-ceiling wooden shutters are already a visual feast, the carefully prepared interpretations of old standards such as the carpaccio de toro de lidia (carpaccio of fighting bull) with basil sauce and pine nuts, awaken the palate brilliantly. The separate dining room, for anywhere from a dozen to two dozen diners, is a perfect place for a private party. | Carrer Cometa 5, Barri Gòtic | 08002 | 93/310–1558 | AE, DC, MC, V | Closed Tues. | Station: Jaume I Cuines Santa Caterina. $$–$$$ | ECLECTIC | A lovingly restored market designed by the late Enric Miralles and completed by his widow Benedetta Tagliabue provides a spectacular setting for one of the city’s most original dining operations. Under the undulating wooden superstructure of the market, the breakfast and tapas bar, open from dawn to midnight, offers a variety of culinary specialties cross-referenced by cultures (Mediterranean, Asian) and products (pasta, rice, fish, meat), all served on sleek counters and long wooden tables. | Av.


Smart Grid Standards by Takuro Sato

business cycle, business process, carbon footprint, clean water, cloud computing, data acquisition, decarbonisation, demand response, distributed generation, energy security, factory automation, information retrieval, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Iridium satellite, iterative process, knowledge economy, life extension, linear programming, low earth orbit, market design, MITM: man-in-the-middle, off grid, oil shale / tar sands, packet switching, performance metric, RFC: Request For Comment, RFID, smart cities, smart grid, smart meter, smart transportation, Thomas Davenport

In addition, easy maintenance and accessibility from offshore vessels and appropriate sea transport are also required To minimize the foundation costs via standardization and design refinement Wind resource assessment To develop a network of resource assessment facilities to better characterize the wind resource. In addition, it requires concurrent efforts to develop and implement improved wind plant-modeling and forecasting capabilities (continued overleaf) Smart Grid Standards 58 Table 2.8 (continued) Research and development area Barrier Responses Market and regulatory Barrier Responses Market design and structure The small operations areas are the barrier, which increase the cost of integrating wind energy into the grid To rectify this issue, it requires a policy and market design that allow smaller operating areas to function in a consolidated manner To resolve the limit on long-distance power transfer, including cost allocation for new transmission projects To ensure grid market access to plants with operational characteristics of renewable energy To develop techniques and methods for accurately valuing the additional costs as well as the value of grid services, which can determine issues of wind energy evaluation To facilitate worker training and encourage committed interest in the industry, including the establishment of a strong university/industry linkage Operational value Transmitting wind energy to population centers requires simple transfer of power over long distances Restriction with low marginal costs might become an issue with high renewable electricity penetration Instead of being recognized for grid service capabilities of wind energy, it is criticized for its variable output due to the nature of the wind Workforce development Skilled manpower is required to support a rapid expansion of the wind industry Environmental and siting Barrier Responses Wildlife impacts Rare birds can restrain the deployment of wind energy It needs regular monitoring of wildlife impacts, development of impact mitigation strategies, and standardization Intensive study is required to identify the impacts to habitat and resulting wildlife displacement, which can result in policy solutions to constant industry challenges In both cases a proper awareness program about wind energy is required, which can help policymakers in weighing the trade-offs of wind energy.


Order Without Design: How Markets Shape Cities by Alain Bertaud

autonomous vehicles, call centre, colonial rule, congestion charging, creative destruction, cross-subsidies, Deng Xiaoping, discounted cash flows, Donald Trump, Edward Glaeser, en.wikipedia.org, extreme commuting, garden city movement, Google Earth, Jane Jacobs, job satisfaction, Joseph Schumpeter, land tenure, manufacturing employment, market design, market fragmentation, megacity, new economy, New Urbanism, openstreetmap, Pearl River Delta, price mechanism, rent control, Right to Buy, Ronald Coase, self-driving car, Silicon Valley, special economic zone, the built environment, trade route, transaction costs, transit-oriented development, trickle-down economics, urban planning, urban sprawl, zero-sum game

I particularly thank Nicolas Galarza, Eric Goldwyn, Achilles Kallergis, Patrick Lamson-Hall, and Jonathan Stewart for the time they spent with me clarifying many of the topics found in the following chapters. In addition, Jonathan played a particularly important role in reviewing the early chapters of the book and providing his insights as an economist. Eventually, when the writing of this book was sufficiently advanced, I was asked to teach a course to New York University students. The course, called “Markets, Design, and the City,” followed the sequence of the book’s chapters. It was a good way to test its content on the critical minds of NYU graduate students. It became an occasion for further exchanges of ideas and perspectives, as the students came from many different countries. We still meet regularly with some of them, who by now are pursuing careers in urban planning: Eduard Cabré-Romans, Javier Garciadiego Ruiz, Hannah Kates, Simon Lim, Jwanah Qudsi, and Amalia Toro Restrepo.

By contrast, a design solution to increase the average consumption of floor space might establish a minimum regulatory house size to prevent developers from building small houses, or it would require the government to subsidize and build a sufficient number of large apartments for low-income households every year. As the consumption of floor space is a market outcome, design solutions, which aim to increase consumption, never work in the long run. I will discuss this design failure in detail in chapter 7. Links between Markets, Design, and Urban Indicators A simple schematic flowchart (figure 3.11), whose inputs and outputs can be calculated in a simple spreadsheet, could help differentiate the role of markets and design in the development of cities. The flowchart should be helpful for understanding the mathematical relationships among people, jobs, floor space, land, and road infrastructure in the framework that I have been using: differentiating between markets and design.


pages: 252 words: 70,424

The Self-Made Billionaire Effect: How Extreme Producers Create Massive Value by John Sviokla, Mitch Cohen

business cycle, Cass Sunstein, Colonization of Mars, corporate raider, Daniel Kahneman / Amos Tversky, Elon Musk, Frederick Winslow Taylor, game design, global supply chain, James Dyson, Jeff Bezos, John Harrison: Longitude, Jony Ive, loss aversion, Mark Zuckerberg, market design, old-boy network, paper trading, RAND corporation, randomized controlled trial, Richard Thaler, risk tolerance, self-driving car, Silicon Valley, smart meter, Steve Ballmer, Steve Jobs, Steve Wozniak, Tony Hsieh, Toyota Production System, young professional

The steps Jaharis took to save Key Pharmaceuticals reveal how a true Producer will reinvent seemingly small, fixed, and immovable aspects of the business design to extract the most value. Producers can think small—in Jaharis’s case by concentrating on how a medication is delivered—in order to capture something large—demand for a continuous-release nitroglycerin. We use the verb “design” in this context to describe the solutions to the problem of producing a new offering, and making the necessary deals to bring it to the market. Design takes into account multiple factors: the strategy and tactics, the terms of the sale and the deal, the ownership and distribution, the customer experience, and so forth. Producers alter or redesign any and every aspect of bringing a product to market. They will tackle physical product design, product delivery, pricing, the business model, and the sales pitch. Perhaps just as important is the fact that they will design the ownership and deal structure to best fit the opportunity.


pages: 247 words: 63,208

The Open Organization: Igniting Passion and Performance by Jim Whitehurst

Airbnb, cloud computing, crowdsourcing, en.wikipedia.org, Google Hangouts, Infrastructure as a Service, job satisfaction, market design, Network effects, new economy, place-making, platform as a service, post-materialism, profit motive, risk tolerance, shareholder value, side project, Silicon Valley, Skype, Snapchat, Steve Jobs, subscription business, The Wisdom of Crowds, Tony Hsieh

In other words, an open source community like Linux works because its members both directly and indirectly benefit from the work that they contribute. People invest their time in making Linux a better operating system because, by virtue of making computing safer, faster, and more open, they feel as if they make the world a better place. It’s that compelling purpose that brings so many people together to work on Linux and other open source projects. Not just programmers, but also writers, testers, marketers, designers, and administrators contribute their combined efforts to create something no one traditional organization could do on its own. One study estimated, for instance, that if you started from scratch, it would take about eight thousand years of development time to recreate Linux, at a reported cost of more than $10 billion.1 That’s powerful stuff. Harnessing the Power of Community The Linux story helps explain why we at Red Hat have come to appreciate that the open source development model is incredibly powerful at delivering innovation at a faster and less costly rate than the traditional software development model.


pages: 202 words: 64,725

Designing Your Life: How to Build a Well-Lived, Joyful Life by Bill Burnett, Dave Evans

David Brooks, fear of failure, financial independence, game design, Haight Ashbury, invention of the printing press, iterative process, knowledge worker, market design, science of happiness, Silicon Valley, Silicon Valley startup, Skype, social intelligence, Steve Jobs

Vicky, you had us at “Hello darlings…”—and it was one of the best things that ever happened to us. Thank you, thank you, Vicky. Notes Introduction: Life by Design 1. Jon Krakower, inventor of the Apple notebook configuration, see European Patent EP 0515664 B1, Laptop Computer Having Integrated Keyboard, Cursor Control Device and Palm Rest, and Artemis March, Apple PowerBook (A): Design Quality and Time to Market, Design Management Institute Case Study 9-994-023 (Boston: Design Management Institute Press, 1994). 2. Lindsay Oishi, “Enhancing Career Development Agency in Emerging Adulthood: An Intervention Using Design Thinking,” doctoral dissertation, Graduate School of Education, Stanford University, 2012. T. S. Reilly, “Designing Life: Studies of Emerging Adult Development,” doctoral dissertation, Graduate School of Education, Stanford University, 2013. 3.


pages: 1,164 words: 309,327

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, asset allocation, automated trading system, barriers to entry, Bernie Madoff, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, fault tolerance, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, interest rate swap, invention of the telegraph, job automation, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, Nick Leeson, open economy, passive investing, pattern recognition, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, race to the bottom, random walk, rent-seeking, risk tolerance, risk-adjusted returns, selection bias, shareholder value, short selling, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

An audit trail records the submission and disposition of every order. Good audit trails include detailed information about everything that happens to each order. Regulators use audit trails to determine whether traders have violated trading rules. An accurate audit trail helps keep brokers honest. Floor-based markets have extensive rules that govern how traders process orders and record trades. Markets design these rules to make the audit trail complete, reliable, and accurate. These rules require traders to time-stamp their orders when they receive them and when they fill them, to record trades sequentially, and to report trades immediately. * * * ▶ What Would You Think? Eli needed to roll a 10-contract short futures position in the Dow Jones Industrial Average Index futures from June to September contracts.

The number of traders who can effectively communicate with each other simultaneously limits the size of an oral auction. When too many traders try to participate in the same oral auction, they exceed its capacity to process information in an orderly fashion. When the number of traders bidding and offering is large, traders in an oral auction cannot easily keep track of who is quoting the best prices. They then may arrange trades that violate time precedence or even price priority. Futures and options markets designate such disorderly markets as fast trading markets. The designation tells brokerage customers that they cannot expect their brokers to fill their orders at the best available prices when the market is trading fast. In the confusion of a fast market, the brokers may be unaware of the best trading opportunities. Great numbers of traders can simultaneously interact in automated trading systems because these systems process order messages much faster than people can.

Why did the Fed not act when the other agencies did? • In the United States, the margins required to obtain equivalent-sized risk exposure in equities, equity options, and equity futures are quite unequal. Should margin rates be standardized across similar instruments? What accounts for the differences in margin rates in these markets? • During crashes, volume often rises to very extremely high levels. How much excess capacity should markets design into their systems to ensure that they are not overwhelmed in a crash? How would you balance the very high costs of building system capacity with the very high costs of failing to meet demands for that capacity which may never occur? • Can circuit breakers lower the optimal design capacity of a trading system? • Immediately following the terrorist atrocities on Tuesday morning, September 11, 2001, all trading in U.S. financial markets was halted.


pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

active measures, affirmative action, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, disruptive innovation, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, manufacturing employment, market bubble, market design, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shared worldview, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, winner-take-all economy, working poor, zero-sum game

Except it needed a greater degree of oversight and more in-house resources.”4 It is for these reasons that some companies, especially those based in South Korea and Japan, continue to keep a broad range of activities in house, although they were not immune from the consequences of global recession. Today, a key issue for all companies is how to connect profit centers, business units, product markets, design teams, suppliers, Managing in the Global Auction 103 franchisees, research centers, universities, licensees, business start-ups, and strategic alliances with competitor companies wanting to share the costs of research or business processes. The calculation of the costs and benefits associated with building these linkages, whether within the core business, through alliances, or through outsourcing or offshoring, is now an integral part of the corporate drive to competitive advantage.


pages: 273 words: 21,102

Branding Your Business: Promoting Your Business, Attracting Customers and Standing Out in the Market Place by James Hammond

Albert Einstein, call centre, Donald Trump, intangible asset, James Dyson, Jeff Bezos, market design, Nelson Mandela, Ralph Waldo Emerson, Steve Jobs, the market place

Last, but by no means least, a very special thank you must go to my wife, Mary, herself a successful marketing and public relations consultant, for putting up with a grumpy old man for months on end as he struggled to complete the manuscript within the deadline. (I would have mentioned my cats, Mr George and Tibbles, but they’re too busy eating or sleeping to care either way.) THIS PAGE INTENTIONALLY LEFT BLANK x About the author James Hammond has spent almost 30 years in advertising, marketing, design and branding. From his initial time as a graphic designer and copywriter, he progressed to heading up brand consultancies responsible for the brand management, sales and marketing, corporate identity and advertising for Top 100 companies including Yellow Pages, Virgin, Norwich Union, EMI and British Telecom. James has also worked with numerous blue-chip organisations as an independent brand consultant, as well as helping smaller businesses and notfor-profits to strengthen their branding and profitability.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

Airbnb, barriers to entry, Bernie Madoff, bike sharing scheme, Buckminster Fuller, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, Ponzi scheme, pre–internet, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, Zipcar

It designed its rankings system, then recommendations, and peer-to-peer support, and finally an easy way to download movies straight to the user’s computer. This gradual evolution of experience was managed in a way that didn’t lose or frustrate the user. To work within ever-changing sectors (and every business operates in one), the designer needs a holistic understanding of technology, behavioral science, and marketing. Designers can and must play a critical role in uncovering what people need and want from systems of Collaborative Consumption, ensuring that they gain enough critical mass to continue to improve and scale. Ezio Manzini is a professor of industrial design at Politecnico di Milano and a thought leader on strategic design for sustainability. He breaks down the process of designing what he calls collaborative service systems into four critical design components: fluidity of use, replication, diversified access, and enhanced communications support.8 Manzini is passionate about strategic design—finding solutions that work for consumers and can achieve widespread levels of use.


pages: 288 words: 81,253

Thinking in Bets by Annie Duke

banking crisis, Bernie Madoff, Cass Sunstein, cognitive bias, cognitive dissonance, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, en.wikipedia.org, endowment effect, Estimating the Reproducibility of Psychological Science, Filter Bubble, hindsight bias, Jean Tirole, John Nash: game theory, John von Neumann, loss aversion, market design, mutually assured destruction, Nate Silver, p-value, phenotype, prediction markets, Richard Feynman, ride hailing / ride sharing, Stanford marshmallow experiment, Stephen Hawking, Steven Pinker, the scientific method, The Signal and the Noise by Nate Silver, urban planning, Walter Mischel, Yogi Berra, zero-sum game

Schelling (2005, game theory, “for having enhanced our understanding of conflict and cooperation through game theory analysis”); (6) Leonid Hurwicz, (7) Eric S. Maskin, and (8) Roger B. Myerson (2007, microeconomics, “for having laid the foundations of mechanism design theory”); (9) Alvin E. Roth and (10) Lloyd S. Shapley (2012, applied game theory, “for the theory of stable allocations and the practice of market design”); and (11) Jean Tirole (2014, industrial organization, microeconomics, “for his analysis of market power and regulation”). Poker vs. chess: My brother Howard came from a chess background, but the movement of players from chess into poker is relatively rare. In my opinion, the lack of uncertainty in chess compared with the great uncertainty in poker is a barrier to transitioning from one to the other.


pages: 292 words: 85,151

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Ben Horowitz, bioinformatics, bitcoin, Black Swan, blockchain, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, Dean Kamen, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, means of production, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, prediction markets, profit motive, publish or perish, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, subscription business, supply-chain management, TaskRabbit, telepresence, telepresence robot, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen: Great Stagnation, uber lyft, urban planning, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

Each employee crafts a Colleague Letter of Understanding (CLOU), which outlines how worker will meet the personal mission statement. Associates most affected by this person’s work must accept the CLOU before it goes into effect. What is the financial impact? The company has funded virtually all its growth from internal sources, which suggests it is robustly profitable. On the basis of its own benchmarking data, Morning Star believes it is the world’s most efficient tomato processor. FAVI (1960) – 440 employees Market: Designer and manufacturer of copper alloy automotive components How is the company organized? FAVI has no hierarchy or personnel department, and there is no middle management or formal procedures. Teams are organized around customers. Each team is responsible not only for the customer, but for its own human resources, purchasing and product development. What is the financial impact? In 2010 FAVI generated a turnover of €75 million, 80 percent of it automotive. 38 percent of personnel have been with the company for over 15 years.


pages: 302 words: 83,116

SuperFreakonomics by Steven D. Levitt, Stephen J. Dubner

agricultural Revolution, airport security, Andrei Shleifer, Atul Gawande, barriers to entry, Bernie Madoff, Boris Johnson, call centre, clean water, cognitive bias, collateralized debt obligation, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, deliberate practice, Did the Death of Australian Inheritance Taxes Affect Deaths, disintermediation, endowment effect, experimental economics, food miles, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), John Nash: game theory, Joseph Schumpeter, Joshua Gans and Andrew Leigh, longitudinal study, loss aversion, Louis Pasteur, market design, microcredit, Milgram experiment, oil shale / tar sands, patent troll, presumed consent, price discrimination, principal–agent problem, profit motive, randomized controlled trial, Richard Feynman, Richard Thaler, selection bias, South China Sea, Stanford prison experiment, Stephen Hawking, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, ultimatum game, urban planning, William Langewiesche, women in the workforce, young professional

Crutzen, “Albedo Enhancement by Stratospheric Sulfur Injections: A Contribution to Resolve a Policy Dilemma?” Climatic Change, 2006. / 198 There is no regulatory framework: for further reading, see “The Sun Blotted Out from the Sky,” Elizabeth Svoboda, Salon.com, April 2, 2008. / 199 Certain new ideas…are invariably seen as repugnant: the dean of repugnance studies is the Harvard economist Alvin E. Roth, whose work can be see at the Market Design blog. See also: Stephen J. Dubner and Steven D. Levitt, “Flesh Trade,” The New York Times Magazine, July 9, 2006; and Viviana A. Zelizer, “Human Values and the Market: The Case of Life Insurance and Death in 19th Century America,” American Journal of Sociology 84, no. 3 (November 1978). / 200 Al Gore is quoted here and elsewhere in Leonard David, “Al Gore: Earth Is in ‘Full-Scale Planetary Emergency,’” Space.com, October 26, 2006. / 201–202 The “soggy mirrors” plan: see John Latham, “Amelioration of Global Warming by Controlled Enhancement of the Albedo and Longevity of Low-Level Maritime Clouds,” Atmospheric Science Letters 3, no. 2 (2002). / 201 Contrail clouds: see David J.


pages: 247 words: 81,135

The Great Fragmentation: And Why the Future of All Business Is Small by Steve Sammartino

3D printing, additive manufacturing, Airbnb, augmented reality, barriers to entry, Bill Gates: Altair 8800, bitcoin, BRICs, Buckminster Fuller, citizen journalism, collaborative consumption, cryptocurrency, David Heinemeier Hansson, disruptive innovation, Elon Musk, fiat currency, Frederick Winslow Taylor, game design, Google X / Alphabet X, haute couture, helicopter parent, illegal immigration, index fund, Jeff Bezos, jimmy wales, Kickstarter, knowledge economy, Law of Accelerating Returns, lifelogging, market design, Metcalfe's law, Minecraft, minimum viable product, Network effects, new economy, peer-to-peer, post scarcity, prediction markets, pre–internet, profit motive, race to the bottom, random walk, Ray Kurzweil, recommendation engine, remote working, RFID, Rubik’s Cube, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, social graph, social web, software is eating the world, Steve Jobs, survivorship bias, too big to fail, US Airways Flight 1549, web application, zero-sum game

Of course we wanted them. We wanted to express our human emotions and this was what was available at the time. We had to have the latest widget of desire, see the show and participate in the fad. Fads were rad. They formed part of the lore that made our so-called community, a community that was a substitute for natural human inclinations. The selfish era Mass marketing was a selfish modality of marketing designed by and for the owners of capital, and not only financial capital, but mind capital. The average suburban dweller became everyone and no one. We had all loved and believed in average products with the edges rounded off. There are a lot of examples of selfish marketing occurring on a repetitive and formulaic level beyond that of the fads mentioned above. Some selfish industries are still getting away with it — for now.


pages: 300 words: 85,043

Extreme Ownership: How U.S. Navy SEALs Lead and Win by Jocko Willink, Leif Babin

friendly fire, market design, urban sprawl

When that one is done, then move on to the next, and so on down the line until you have knocked them all out.” “Makes sense,” the CEO replied. “I’ll give it a try.” He was eager to turn the company’s performance around. For the next several months the CEO focused the efforts of the entire company on supporting the frontline sales force, making it clear that this was the company’s highest priority. The labs set up tours for customers. The marketing designers helped create new, informative pamphlets for products. Sales managers set minimum marks for the number of introductory meetings with doctors and medical administrators that the sales force had to achieve each week. The company’s marketing team created online videos interviewing their top salespeople on the most successful techniques so that others could watch and learn. It was a full focus of effort on the highest priority initiative to increasing the company’s business.


pages: 321

Finding Alphas: A Quantitative Approach to Building Trading Strategies by Igor Tulchinsky

algorithmic trading, asset allocation, automated trading system, backtesting, barriers to entry, business cycle, buy and hold, capital asset pricing model, constrained optimization, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, discounted cash flows, discrete time, diversification, diversified portfolio, Eugene Fama: efficient market hypothesis, financial intermediation, Flash crash, implied volatility, index arbitrage, index fund, intangible asset, iterative process, Long Term Capital Management, loss aversion, market design, market microstructure, merger arbitrage, natural language processing, passive investing, pattern recognition, performance metric, popular capitalism, prediction markets, price discovery process, profit motive, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk tolerance, risk-adjusted returns, risk/return, selection bias, sentiment analysis, shareholder value, Sharpe ratio, short selling, Silicon Valley, speech recognition, statistical arbitrage, statistical model, stochastic process, survivorship bias, systematic trading, text mining, transaction costs, Vanguard fund, yield curve

Published 2020 by John Wiley & Sons, Ltd. 4 Finding Alphas be executed in the financial securities markets. We develop, test, and trade alphas in large numbers because even if markets are operating efficiently, something has to drive prices toward equilibrium, and that means opportunity should always exist. To use a common metaphor, an alpha is an attempt to capture a signal in an always noisy market. DESIGNING ALPHAS BASED ON DATA We design alphas based on data, which we are constantly seeking to augment and diversify. Securities prices generally change in response to some event; that event should be reflected in the data. If the data never changes, then there is no alpha. Changes in the data convey information. A change in information should in turn produce a change in the alpha. These changes may be expressed in a variety of alpha expressions.


pages: 268 words: 81,811

Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History by Liam Vaughan

algorithmic trading, backtesting, bank run, barriers to entry, Bernie Madoff, Black Swan, Bob Geldof, centre right, collapse of Lehman Brothers, Donald Trump, Elliott wave, eurozone crisis, family office, Flash crash, high net worth, High speed trading, information asymmetry, Jeff Bezos, Kickstarter, margin call, market design, market microstructure, Nick Leeson, offshore financial centre, pattern recognition, Ponzi scheme, Ralph Nelson Elliott, Ronald Reagan, sovereign wealth fund, spectrum auction, Stephen Hawking, the market place, Tobin tax, tulip mania, yield curve, zero-sum game

The small number of researchers: One example of such research is “High Frequency Trading—Measurement, Detection and Response,” a research note by Credit Suisse analysts Jonathan Tse, Xiang Lin, and Drew Vincent, December 6, 2012. “What happens if a major event causes turmoil”: Joe Saluzzi, “HFT Roundtable,” Themis Trading blog, June 17, 2009, https://blog.themistrading.com. “never-ending socially-wasteful arms race for speed”: Eric Budish, Peter Cramton, and John Shim, “The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response,” Quarterly Journal of Economics 130 (November 2015). HFT firms largely eradicated losses: Although that didn’t necessarily mean they were profitable, since the cost of technology and data were high and rising. They also helped create a situation: I was unable to source figures for cancelation rates in 2010, but by 2015, as many as 95 percent of orders on the CME were canceled before they were executed, according to University of Southern California professor Larry Harris’s testimony during Nav’s extradition hearing.


pages: 406 words: 88,820

Television disrupted: the transition from network to networked TV by Shelly Palmer

barriers to entry, call centre, commoditize, disintermediation, en.wikipedia.org, hypertext link, interchangeable parts, invention of movable type, Irwin Jacobs: Qualcomm, James Watt: steam engine, Leonard Kleinrock, linear programming, Marc Andreessen, market design, Metcalfe’s law, pattern recognition, peer-to-peer, recommendation engine, Saturday Night Live, shareholder value, Skype, spectrum auction, Steve Jobs, subscription business, Telecommunications Act of 1996, There's no reason for any individual to have a computer in his home - Ken Olsen, Vickrey auction, Vilfredo Pareto, yield management

Convergence The coming together of two or more disparate disciplines or technologies Coverage area A geographical area which defines the transmission coverage of a particular system. CRT Cathode Ray Tube. In this context it is referring to the picture tube of a traditional NTSC television set. DA Digital to Analog Converter (also DAC) Delphi One of the original online services. Demographics Classifications of populations according to sex, age, race, ethnicity, income, etc. Designated Market Areas A C. Nielsen’s geographic market designation which defines each television market exclusive of others based on measurable viewing patterns. Every county or split county in the United States is assigned exclusively to one DMA. Destination Television A marketing term that usually refers to scheduled, linear broadcast programming that people must watch at a certain time. Digital a method of storing, processing and transmitting information through the use of distinct electronic or optical pulses that represent the binary digits 0 and 1.


High-Frequency Trading by David Easley, Marcos López de Prado, Maureen O'Hara

algorithmic trading, asset allocation, backtesting, Brownian motion, capital asset pricing model, computer vision, continuous double auction, dark matter, discrete time, finite state, fixed income, Flash crash, High speed trading, index arbitrage, information asymmetry, interest rate swap, latency arbitrage, margin call, market design, market fragmentation, market fundamentalism, market microstructure, martingale, natural language processing, offshore financial centre, pattern recognition, price discovery process, price discrimination, price stability, quantitative trading / quantitative finance, random walk, Sharpe ratio, statistical arbitrage, statistical model, stochastic process, Tobin tax, transaction costs, two-sided market, yield curve

Be it in equities, foreign exchange, futures or commodities, high-frequency traders provide not only the bulk of volume in these markets, but also most liquidity provision. In so doing, high-frequency trading has changed how individual markets operate and how markets dynamically interact. In this book, we give a comprehensive overview of high-frequency trading, and its implications for investors, market designers, researchers and regulators. Our view is that HFT is not technology run amok, but rather a natural evolution of markets towards greater technological sophistication. Because markets have changed, so, too, must the way that traders behave, and the way that regulators operate. Low-frequency traders (shorthand for everyone who does not have their own highperformance computers and co-located servers) need to understand how high-speed markets work in order to get effective execution, minimise trade slippage and manage risk.


pages: 357 words: 95,986

Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams

3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, back-to-the-land, banking crisis, basic income, battle of ideas, blockchain, Boris Johnson, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, housing crisis, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, late capitalism, liberation theology, Live Aid, low skilled workers, manufacturing employment, market design, Martin Wolf, mass immigration, mass incarceration, means of production, minimum wage unemployment, Mont Pelerin Society, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, patent troll, pattern recognition, Paul Samuelson, Philip Mirowski, post scarcity, post-work, postnationalism / post nation state, precariat, price stability, profit motive, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, the built environment, The Chicago School, The Future of Employment, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, We are the 99%, women in the workforce, working poor, working-age population

One of the most serious (and intrinsically collective) crises of our times is thus effectively privatised. This personalised environmental ethic is exemplified in localist food politics – in particular, in the moral (and price) premium placed on locally grown food. Here we find ecologically motivated arguments (for reducing energy expenditure by reducing the distances over which food is transported, for example) combined with class differentiation (in the form of marketing designed to promote identification with organic food). Similarly, complex problems are condensed into poorly formulated shorthand. For instance, the idea of ‘food miles’ – identifying the distances that food products have travelled, so as to reduce carbon outputs – appears a reasonable one. The problem is that it is all too often taken to be sufficient on its own as a guide to ethical action. As a 2005 report by the UK’s Department of Agriculture and Food found, while the environmental impacts of transporting food were indeed considerable, a single indicator based on total food miles was inadequate as a measure of sustainability.79 Most notably, the food-miles metric emphasises an aspect of food production that contributes a relatively small amount to overall carbon outputs.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Instead of allowing for replacement based on failure or innovation, products were designed with a limited useful life so as to increase consumption. With the US car market approaching saturation, GM chairman Alfred Sloan initiated annual design changes to encourage drivers to replace their vehicles frequently. In his 1960 book The Waste Makers, Vance Packard coined the term “obsolescence of desirability”: marketing designed to wear out a product in the owner's mind. New technologies were promoted as superior or modern, creating demand. Gramophone records were replaced successively by cassette tapes, CDs, MP3s, and digital media such as iTunes and live streaming. Some thirty years after it was displaced, analog vinyl re-emerged as an expensive, fashionable niche product, completing the cycle. Although it made minimal difference to their enjoyment, people owned the same music in several different media, together with the associated paraphernalia, creating a peculiar form of economic activity.


pages: 372 words: 89,876

The Connected Company by Dave Gray, Thomas Vander Wal

A Pattern Language, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, Atul Gawande, Berlin Wall, business cycle, business process, call centre, Clayton Christensen, commoditize, complexity theory, creative destruction, David Heinemeier Hansson, disruptive innovation, en.wikipedia.org, factory automation, Googley, index card, industrial cluster, interchangeable parts, inventory management, Jeff Bezos, John Markoff, Kevin Kelly, loose coupling, low cost airline, market design, minimum viable product, more computing power than Apollo, profit maximization, Richard Florida, Ruby on Rails, self-driving car, shareholder value, side project, Silicon Valley, skunkworks, software as a service, South of Market, San Francisco, Steve Jobs, Steven Levy, Stewart Brand, The Wealth of Nations by Adam Smith, Tony Hsieh, Toyota Production System, Vanguard fund, web application, WikiLeaks, Zipcar

As the number of employees grows, the profit per employee shrinks. It’s a game of diminishing returns. Efficiencies of scale are balanced by the burdens of bureaucracy. Divisions become silos, disconnected from each other. Overhead costs increase with size. Eventually, the company reaches a point where the costs of control exceed the benefits of further growth, or the company becomes too internally focused and loses touch with the market. Design for Connection A connected company is a complex, adaptive system that functions more like an organism than a machine. To design connected companies, we must think of the company as a complex set of connections and potential connections: a distributed organism with brains, eyes, and ears everywhere, whether they are employees, partners, customers, or suppliers. Design for connection is design for companies that are made out of people.


pages: 321 words: 90,247

Lights Out in Wonderland by Dbc Pierre

Berlin Wall, carbon footprint, dark matter, haute cuisine, market design, stem cell

Catheters slid into his accounts and his money trickled, flowed, or flooded out depending how the faucets of the economy were turned. He grew troubled, I watched him change. His sense of himself came to rely wholly on the flow of goods and credit. Profit smashed me through that glass, not him. And the infection soon laid him waste. I confirmed it years later when he saw the book of Frederick and sneered. The pointless mouse found a niche in the market, designed a product to fill it—then gave it away for free. A loser’s guidebook, Dad called it. My father had embraced capitalism. It was the system that said he didn’t have to grow up. That said he could just be his child’s best friend. The same system that’s now asking what have things come to.* What things came to is that for thirty years there were no parents. Only casual friends you couldn’t trust.


pages: 304 words: 90,084

Net Zero: How We Stop Causing Climate Change by Dieter Helm

3D printing, autonomous vehicles, Berlin Wall, blockchain, Boris Johnson, carbon footprint, clean water, congestion charging, coronavirus, COVID-19, Covid-19, decarbonisation, deindustrialization, demand response, Deng Xiaoping, Donald Trump, fixed income, food miles, Francis Fukuyama: the end of history, Haber-Bosch Process, hydrogen economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, market design, means of production, North Sea oil, off grid, oil shale / tar sands, oil shock, peak oil, planetary scale, price mechanism, quantitative easing, remote working, reshoring, Ronald Reagan, smart meter, South China Sea, sovereign wealth fund, statistical model, Thomas Malthus

There would be a single central capacity market, based on firm power. The bidders would offer what they can guarantee to supply when called upon. They would be paid the clearing price in the auction for their capacity offered to the system. It is a fixed income, against a fixed cost, and therefore properly backs the financing of the new investments. The way this integrates the intermittent renewables is critical to the market design. Renewables bidders would offer equivalent firm power (EFP). This would be less than 100 per cent firm power because they cannot always guarantee to deliver. The wind might not blow, or it might blow too much. The value of the renewables capacity would be adjusted to take account of their smaller contribution to the system. An offshore wind farm adds security, but not as much as a nuclear power station, which is always on.


pages: 269 words: 104,430

Carjacked: The Culture of the Automobile and Its Effect on Our Lives by Catherine Lutz, Anne Lutz Fernandez

barriers to entry, car-free, carbon footprint, collateralized debt obligation, failed state, feminist movement, fudge factor, Gordon Gekko, housing crisis, illegal immigration, income inequality, inventory management, market design, market fundamentalism, mortgage tax deduction, Naomi Klein, Nate Silver, New Urbanism, oil shock, peak oil, Ralph Nader, Ralph Waldo Emerson, ride hailing / ride sharing, Thorstein Veblen, traffic fines, Unsafe at Any Speed, urban planning, white flight, women in the workforce, working poor, Zipcar

On one blue-skied day in June 2008, the “Lake” was dotted with orange cones delineating courses for acceleration, turning, and braking tests as GM employees prepared for the busload of journalists to whom they were about to introduce Chevy’s newest vehicle, the Traverse. Along with roughly a dozen automotive journalists, most from regional newspaper chains, we hopped off the courtesy bus, looped “All Access VIP” 178 Carjacked passes around our necks, and entered a hall where our group was greeted by at least as many members of Chevrolet’s marketing, design, and engineering staff before settling in for a PowerPoint presentation. Chevy executives enthusiastically touted the innovations and attractions of this, GM’s latest “crossover utility” (crossover being the marketing term invented to avoid calling a vehicle an SUV or a station wagon, even as consumers often cannot tell them apart). The Chevy team compared the Traverse continually and favorably to the Toyota Highlander, the category market leader.


pages: 389 words: 98,487

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor, and Why You Can Never Buy a Decent Used Car by Tim Harford

Albert Einstein, barriers to entry, Berlin Wall, business cycle, collective bargaining, congestion charging, Corn Laws, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Fall of the Berlin Wall, George Akerlof, information asymmetry, invention of movable type, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, market design, Martin Wolf, moral hazard, new economy, Pearl River Delta, price discrimination, Productivity paradox, race to the bottom, random walk, rent-seeking, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, sealed-bid auction, second-price auction, second-price sealed-bid, Shenzhen was a fishing village, special economic zone, spectrum auction, The Market for Lemons, Thomas Malthus, trade liberalization, Vickrey auction

Joskow, Richard Schmalensee, and Elizabeth Bailey, “The Market for Sulfur Dioxide Emissions,” American Economic Review 8, no. 4 (Sept. 1998): 669–85. The Chinese program is explained in “A Great Leap Forward,” The Economist, May 9, 2002. For a design intended to work on a global level see Peter Cramton and Suzi Kerr, “Tradeable Carbon Permit Auctions” (working paper, University of Maryland, 1998), http:// www.market-design.com/files/98wp-tradeable-carbon-permit-auctions.pdf. Paul Klemperer, the auction designer who features in chapter 7, helped to design an auction for the United Kingdom government to kick-start their program of tradable emission permits. Anyone doubting my statement that “economists have long been in the forefront of analyzing environmental problems” will be surprised to hear that one of the first environmentalists was also one of the first and most famous economists, Thomas Malthus, whose study of overpopulation was published in 1798.


pages: 335 words: 96,002

WEconomy: You Can Find Meaning, Make a Living, and Change the World by Craig Kielburger, Holly Branson, Marc Kielburger, Sir Richard Branson, Sheryl Sandberg

Airbnb, Albert Einstein, barriers to entry, blood diamonds, business intelligence, business process, carbon footprint, clean water, cleantech, Colonization of Mars, corporate social responsibility, Downton Abbey, Elon Musk, energy transition, family office, future of work, global village, inventory management, James Dyson, job satisfaction, Kickstarter, market design, meta analysis, meta-analysis, microcredit, Nelson Mandela, Occupy movement, pre–internet, shareholder value, sharing economy, Silicon Valley, Snapchat, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, working poor, Y Combinator

This is a common philosophy for many companies who want to keep purpose projects out of the spotlight. With skeptical consumers wary of the kind of cause washing we talked about earlier—those less altruistic companies looking to fake it—I don't blame them. Together we realized that Fossil's greatest asset isn't money; it's people. In fact, this is true of most every company. Fossil offered us its marketing, design, and e-commerce experts to consult with our artisan teams in Kenya and Ecuador. They hosted workshops for our teams at Fossil headquarters in Dallas to show us how artisans could add leatherwork to their handbags. Glass beads from the Maasai Mara could adorn Fossil's watch straps. Artisans design collaborations now sit in Fossil's storefront windows, another asset leveraged. Thanks to this partnership and the prime marketing real estate of a front display, our co-branded products are a top seller.


pages: 344 words: 96,020

Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success by Sean Ellis, Morgan Brown

Airbnb, Amazon Web Services, barriers to entry, Ben Horowitz, bounce rate, business intelligence, business process, correlation does not imply causation, crowdsourcing, DevOps, disruptive innovation, Elon Musk, game design, Google Glasses, Internet of things, inventory management, iterative process, Jeff Bezos, Khan Academy, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, market design, minimum viable product, Network effects, Paul Graham, Peter Thiel, Ponzi scheme, recommendation engine, ride hailing / ride sharing, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, software as a service, Steve Jobs, subscription business, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, working poor, Y Combinator, young professional

It also leads the acquisition of promising digital start-ups, such as mobile fashion search app Stylr, and social recipe aggregator Yumprint, and works to integrate their technology and talent into Walmart’s digital offerings. It’s important to emphasize that even when teams are given independent authority, they need the strong backing of top management in order to navigate the internal sensitivities and frictions that can arise between product, marketing, design, and engineering specialists who have their own notions of what’s important and the “right way” to do things. MELDING MINDS AND DISMISSING LORE It’s not unusual for someone setting up a growth team for the first time within a company to encounter some initial resistance. For most companies—the exception being the earliest stage start-ups where organizational silos and norms have yet to crystallize—setting up a growth team, or set of teams, will involve either a significant realignment of personnel and reporting structures or a rededication of some of people’s time and shifting of their responsibilities, either in an ongoing capacity or for the duration of a specific growth mission.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, Plutocrats, pre–internet, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Rory Sutherland, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, women in the workforce, Zipcar

The housing markets that come closest to being perfectly competitive are those in large cities where houses frequently become available and many people are looking to buy. Yet as anyone who has bought or sold a house in such a place knows, the system is far from perfect. Houses differ in location, amenities, views, light, and so forth. They are far from homogenous, nothing like grain (whose homogeneity is itself the result of careful market design).31 The failure to reach a deal can mean months of delay while buyers look for other houses that might meet their needs. This means that buyers and sellers both have significant bargaining power. Each party works hard to ascertain what the other would be willing to pay or accept and jockeys for the best price possible. Such strategic behavior often causes trades to fail. Even when they succeed, huge amounts of time and effort have been wasted in the process.


pages: 240 words: 109,474

Masters of Doom: How Two Guys Created an Empire and Transformed Pop Culture by David Kushner

Apple's 1984 Super Bowl advert, book scanning, Columbine, corporate governance, game design, glass ceiling, Hacker Ethic, informal economy, Marc Andreessen, market design, Marshall McLuhan, Saturday Night Live, side project, Silicon Valley, slashdot, software patent, Steve Jobs, Steven Levy, X Prize

Just doing this one thing will make me and Tom really happy with the design. This is really simple design-wise.” “Forget about it,” Carmack snapped. More new tensions began to surface. With the extra levels ordered by Scott, the id guys were putting in sixteen-hour days, seven days a week. Kevin and Jay did ease the burden somewhat. Kevin was able to assist Adrian with the character work, as well as help out with some packaging and marketing designs. As CEO, Jay’s main asset wasn’t so much strategizing the company as being the office “biz guy.” He made sure there was enough computer paper, enough disks, enough toilet paper, enough pizza. He made sure bills got paid. One of the reasons he got the job was he was the only one who balanced his checkbook. Despite the help of Kevin and Jay, though, nothing could dissipate the reaction everyone was having to the shenanigans of Romero and Tom.


pages: 387 words: 110,820

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

barriers to entry, Berlin Wall, big-box store, business cycle, cognitive dissonance, computer age, creative destruction, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, loss aversion, market design, means of production, mental accounting, Monkeys Reject Unequal Pay, Pearl River Delta, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management, zero-sum game

It seemed that almost all consumer good were cheap, like the Chinese boots, or extravagant, like the Italian boots. Where, I wondered, was the solid middle ground that offered safe footing not so very long ago? Ferreting out the answer to these seemingly simple questions led to a fascinating journey, from the hinterlands of Sweden to the back alleys of Shanghai to the shipyards of Los Angeles. I met with psychologists, economists, farmers, marketers, designers, historians, cultural theorists, mathematicians, and retailers large and small. I spent a couple of years wandering a world of consumer choices driven by a system that creates the desire it claims to sate. This book explores that world and what role we—as consumers and citizens—play in it. LIKE ALL sensible journeys, this one begins with a look backward to history. Retail giant John Wanamaker’s inventions from the white sale to the price tag changed forever the way we shop.


pages: 356 words: 105,533

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson

algorithmic trading, automated trading system, banking crisis, bash_history, Bernie Madoff, butterfly effect, buttonwood tree, buy and hold, Chuck Templeton: OpenTable:, cloud computing, collapse of Lehman Brothers, computerized trading, creative destruction, Donald Trump, fixed income, Flash crash, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, Joseph Schumpeter, latency arbitrage, Long Term Capital Management, Mark Zuckerberg, market design, market microstructure, pattern recognition, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, transaction costs, Watson beat the top human players on Jeopardy!, zero-sum game

That meant the only way certain high-frequency firms—such as the scalper variety that profited on the difference between bids and offers—could make money was through maker-taker rebates, the fees they collected when other firms had to trade with them. The trouble for the exchanges: Everyone wanted to pocket the rebates. Every reasonably sophisticated firm, including Trading Machines, was putting orders into the market designed to earn the rebate. That posed a conundrum for the exchanges, Bodek theorized, because everyone couldn’t get the rebate. Everyone couldn’t win, because for every winner there had to be a loser. It was a zero-sum game—simple math. And so, Bodek reasoned, a complex system was designed to pick winners and losers. It was done through speed and exotic order types. If you didn’t know which orders to use, and when to use them, you lost nearly every time.


pages: 319 words: 106,772

Irrational Exuberance: With a New Preface by the Author by Robert J. Shiller

Andrei Shleifer, asset allocation, banking crisis, Benoit Mandelbrot, business cycle, buy and hold, computer age, correlation does not imply causation, Daniel Kahneman / Amos Tversky, demographic transition, diversification, diversified portfolio, equity premium, Everybody Ought to Be Rich, experimental subject, hindsight bias, income per capita, index fund, Intergovernmental Panel on Climate Change (IPCC), Joseph Schumpeter, Long Term Capital Management, loss aversion, mandelbrot fractal, market bubble, market design, market fundamentalism, Mexican peso crisis / tequila crisis, Milgram experiment, money market fund, moral hazard, new economy, open economy, pattern recognition, Ponzi scheme, price anchoring, random walk, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Small Order Execution System, spice trade, statistical model, stocks for the long run, survivorship bias, the market place, Tobin tax, transaction costs, tulip mania, urban decay, Y2K

Investors are striving to do the right thing, but they have limited abilities and certain natural modes of behavior that decide their actions when an unambiguous prescription for action is lacking.1 Two kinds of psychological anchors will be considered here: quantitative anchors, which themselves give indications for the appropriate levels of the market that some people use as indications of whether the market is over- or underpriced and whether it is a good time to buy, and moral anchors, which operate by determining the strength of the reason that compels people to buy stocks, a reason that they must weigh against their other uses for the wealth they already have (or could have) invested in the market. With quantitative anchors, people are weighing numbers against prices when they decide whether stocks (or other assets) are priced right. With moral anchors, people compare the intuitive or emotional strength of the argument for investing in the market against their wealth and their perceived need for money to spend now. Quantitative Anchors for the Market Designers of questionnaires have learned that the answers people give can be heavily influenced by suggestions that are given on the P S YCH O L O G ICAL AN CH OR S FOR THE MAR KET 137 questionnaires themselves. For example, when people are asked to state within which of a number of ranges their income falls, their answers are influenced by the ranges given. The ranges serve as “anchors” to which they make their answers conform.


pages: 431 words: 107,868

The Great Race: The Global Quest for the Car of the Future by Levi Tillemann

Affordable Care Act / Obamacare, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, banking crisis, car-free, carbon footprint, cleantech, creative destruction, decarbonisation, deindustrialization, demand response, Deng Xiaoping, Donald Trump, Elon Musk, en.wikipedia.org, energy security, factory automation, global value chain, hydrogen economy, index card, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, Joseph Schumpeter, Kickstarter, manufacturing employment, market design, megacity, Nixon shock, obamacare, oil shock, Ralph Nader, RFID, rolodex, Ronald Reagan, Rubik’s Cube, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, smart cities, sovereign wealth fund, special economic zone, Steve Jobs, Tesla Model S, too big to fail, Unsafe at Any Speed, zero-sum game, Zipcar

The overwhelming odds are that the car of the future will drive on electricity in some form or another, and eventually it will be less car than robot. In other words, it will drive itself. It is a race that will unfold over the course of decades, but the early leaders are already clear. Ultimate victory will hinge on technology, but also a country’s internal politics and its institutional understanding of policy tools and market design. Consistency of purpose and partnership between the public and private sectors will be a hallmark of success. But luck and, perhaps surprisingly, honesty will also have something to do with it. Rules of the Road We are on the frontier of an exciting new age. But for America to get there will require a recognition of the powerful potential for symbiosis between market and state. As a young entrepreneur, I had little appreciation for the pivotal role of government in driving innovation within large swaths of the economy.


pages: 416 words: 106,582

This Will Make You Smarter: 150 New Scientific Concepts to Improve Your Thinking by John Brockman

23andMe, Albert Einstein, Alfred Russel Wallace, banking crisis, Barry Marshall: ulcers, Benoit Mandelbrot, Berlin Wall, biofilm, Black Swan, butterfly effect, Cass Sunstein, cloud computing, congestion charging, correlation does not imply causation, Daniel Kahneman / Amos Tversky, dark matter, data acquisition, David Brooks, delayed gratification, Emanuel Derman, epigenetics, Exxon Valdez, Flash crash, Flynn Effect, hive mind, impulse control, information retrieval, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jaron Lanier, Johannes Kepler, John von Neumann, Kevin Kelly, lifelogging, mandelbrot fractal, market design, Mars Rover, Marshall McLuhan, microbiome, Murray Gell-Mann, Nicholas Carr, open economy, Pierre-Simon Laplace, place-making, placebo effect, pre–internet, QWERTY keyboard, random walk, randomized controlled trial, rent control, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Satyajit Das, Schrödinger's Cat, security theater, selection bias, Silicon Valley, Stanford marshmallow experiment, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, the scientific method, Thorstein Veblen, Turing complete, Turing machine, twin studies, Vilfredo Pareto, Walter Mischel, Whole Earth Catalog, WikiLeaks, zero-sum game

Yet it is this third stage—writing and rewriting life code—that is by far the most important and profound. Few realize, so far, that life code is spreading across industries, economies, countries, and cultures. As we begin to rewrite existing life, strange things evolve. Bacteria can be programmed to solve Sudoku puzzles. Viruses begin to create electronic circuits. As we write life from scratch, J. Craig Venter, Hamilton Smith, et al., partner with Exxon to try to change the world’s energy markets. Designer genes introduced by retroviruses, organs built from scratch, the first synthetic cells—these are further examples of massive change. We see more and more products derived from life code changing fields as diverse as energy, textiles, chemicals, IT, vaccines, medicines, space exploration, agriculture, fashion, finance, and real estate. And gradually, “life code,” a concept with only 559 Google hits in 2000 and fewer than 50,000 in 2009, becomes a part of everyday public discourse.


pages: 398 words: 105,032

Soonish: Ten Emerging Technologies That'll Improve And/or Ruin Everything by Kelly Weinersmith, Zach Weinersmith

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 23andMe, 3D printing, Airbnb, Alvin Roth, augmented reality, autonomous vehicles, connected car, double helix, Elon Musk, en.wikipedia.org, Google Glasses, hydraulic fracturing, industrial robot, information asymmetry, Kickstarter, low earth orbit, market design, megastructure, microbiome, moral hazard, multiplanetary species, orbital mechanics / astrodynamics, personalized medicine, placebo effect, Project Plowshare, QR code, Schrödinger's Cat, self-driving car, Skype, stem cell, Tunguska event

, Gilpin, K., and Rus, D. “M-Blocks: Momentum-Driven, Magnetic Modular Robots,” 4288–95. IEEE/RSJ International Conference on Intelligent Robots and Systems, Piscataway, N.J.: IEEE Publishing, 2013. Rose, David. Enchanted Objects: Innovation, Design, and the Future of Technology. New York: Scribner, 2015. Roth, Alvin E. Who Gets What—and Why: The New Economics of Matchmaking and Market Design. Boston: Eamon Dolan/Mariner Books, 2016. Rubenstein, M. “Emissions from the Cement Industry.” State of the Planet. Earth Institute. Columbia University. May 9, 2012. blogs.ei.columbia.edu/2012/05/09/emissions-from-the-cement-industry. Rubenstein, M., Cornejo, A., and Nagpal, R. “Programmable Self-Assembly in a Thousand-Robot Swarm.” Science 345, no. 6198 (2014):795–99. Sandia National Laboratories.


pages: 398 words: 108,889

The Paypal Wars: Battles With Ebay, the Media, the Mafia, and the Rest of Planet Earth by Eric M. Jackson

bank run, business process, call centre, creative destruction, disintermediation, Elon Musk, index fund, Internet Archive, iterative process, Joseph Schumpeter, market design, Menlo Park, Metcalfe’s law, money market fund, moral hazard, Network effects, new economy, offshore financial centre, Peter Thiel, Robert Metcalfe, Sand Hill Road, shareholder value, Silicon Valley, Silicon Valley startup, telemarketer, The Chicago School, the new new thing, Turing test

But I had a lingering sense that dramatic change was about to unfold for our young company, that the entrepreneurial adventure I naively joined as Peter and I strolled through San Francisco’s marina district many months earlier was now coming to an end. I left from the Arctic Circle’s back exit and steered clear of the T-shirt box. The day’s meeting marathon continued at three o’clock in Sacks’s office. The marketing, design, and international teams, about twenty people in all, packed into his sparse and functional workspace. Sacks began with a nervous chuckle and a couple of informal remarks. He then addressed the reasons behind his push to resume negotiations with eBay, characterizing them as a response to feedback from within the company. He shared that numerous employees had approached him following eBay Live and had encouraged him to make new overtures toward eBay after seeing its dynamic community and marketplace in person.


pages: 326 words: 106,053

The Wisdom of Crowds by James Surowiecki

AltaVista, Andrei Shleifer, asset allocation, Cass Sunstein, coronavirus, Daniel Kahneman / Amos Tversky, experimental economics, Frederick Winslow Taylor, George Akerlof, Howard Rheingold, I think there is a world market for maybe five computers, interchangeable parts, Jeff Bezos, John Meriwether, Joseph Schumpeter, knowledge economy, lone genius, Long Term Capital Management, market bubble, market clearing, market design, Monkeys Reject Unequal Pay, moral hazard, Myron Scholes, new economy, offshore financial centre, Picturephone, prediction markets, profit maximization, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Toyota Production System, transaction costs, ultimatum game, Yogi Berra, zero-sum game

But there’s reason to wonder if a market such as the betting market—one that allowed the people participating in it to rely on many different kinds of information, including but not limited to polls—might at the very least offer a competitive alternative to Gallup. That’s why the Iowa Electronic Markets (IEM) project was created. Founded in 1988 and run by the College of Business at the University of Iowa, the IEM features a host of markets designed to predict the outcomes of elections—presidential, congressional, gubernatorial, and foreign. Open to anyone who wants to participate, the IEM allows people to buy and sell futures “contracts” based on how they think a given candidate will do in an upcoming election. While the IEM offers many different types of contracts, two are most common. One is designed to predict the winner of an election.


pages: 422 words: 104,457

Dragnet Nation: A Quest for Privacy, Security, and Freedom in a World of Relentless Surveillance by Julia Angwin

AltaVista, Ayatollah Khomeini, barriers to entry, bitcoin, Chelsea Manning, Chuck Templeton: OpenTable:, clean water, crowdsourcing, cuban missile crisis, data is the new oil, David Graeber, Debian, Edward Snowden, Filter Bubble, Firefox, GnuPG, Google Chrome, Google Glasses, informal economy, Jacob Appelbaum, John Markoff, Julian Assange, Marc Andreessen, market bubble, market design, medical residency, meta analysis, meta-analysis, mutually assured destruction, Panopticon Jeremy Bentham, prediction markets, price discrimination, randomized controlled trial, RFID, Robert Shiller, Ronald Reagan, security theater, Silicon Valley, Silicon Valley startup, Skype, smart meter, Steven Levy, Upton Sinclair, WikiLeaks, Y2K, zero-sum game, Zimmermann PGP

“Now imagine if a social network were to offer a comparable service, permitting advertisers to blend their spokesperson with the user’s own profile picture.” Calo doesn’t know of anyone using this technique. But he speculates that it is not a far leap from our current state of bathtub ads following us around. After all, if food engineers can design junk food to specifically target our taste buds in a way that makes us consume more and gambling companies can build slot machines that encourage us to play more, why won’t marketers design their online presence to manipulate us in new ways? Already, my privacy team had uncovered companies changing their prices based on a user’s location. And Calo speculates that companies will soon find ways to tailor prices based on when people are the most vulnerable—perhaps after a long day at work. People may also be manipulated into giving up more data than they want to. Companies can use that data to find out more about how to target that person.


Pour Your Heart Into It by Howard Schultz

Albert Einstein, barriers to entry, clean water, corporate raider, Exxon Valdez, fear of failure, job satisfaction, market design, Ray Oldenburg, shareholder value, The Great Good Place, urban renewal, working poor, zero-sum game

Dave Seymour, who has worked in distribution in the plant since 1982, became our unofficial photographer, and he has boxes of albums and home videos of those gatherings. I used to think that marketing was the most important department at Starbucks. Today, I’d say, unequivocally, it’s human resources. Our success depends entirely on the people we hire, retain, and promote. However outstanding our performance in marketing, design, real estate, manufacturing, store operations, new products, or R & D, it is ultimately interpreted and given life and meaning by the people of the company. How well each function is carried out depends entirely on how they feel about one another and how much they care about Starbucks. But how can 25,000 people feel intimate with a corporation? I ponder this question all the time. Giving stock options to all our employees was probably the best step we took toward keeping the company personal and caring.


pages: 379 words: 109,223

Frenemies: The Epic Disruption of the Ad Business by Ken Auletta

Airbnb, barriers to entry, Bernie Sanders, Boris Johnson, Build a better mousetrap, Burning Man, call centre, carbon footprint, cloud computing, commoditize, connected car, corporate raider, crossover SUV, disintermediation, Donald Trump, Elon Musk, forensic accounting, Google Glasses, Internet of things, Jeff Bezos, Khan Academy, Lyft, Mark Zuckerberg, market design, Menlo Park, move fast and break things, move fast and break things, Naomi Klein, NetJets, Network effects, pattern recognition, pets.com, race to the bottom, Richard Feynman, ride hailing / ride sharing, Saturday Night Live, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Snapchat, Steve Ballmer, Steve Jobs, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, Upton Sinclair, éminence grise

Later in 2015, IBM ingested live streaming and marketing software companies. Over two weeks in February 2016, it purchased two digital advertising agencies in Germany and one in the United States, and announced that it planned to open design studios in Prague, Warsaw, and Dubai. Worldwide, IBM had marketing offices in thirty locations and a staff of more than ten thousand performing creative and marketing design work for companies. Paul Papas, the global leader of its Interactive Experience division, announced, “We’re raising the bar for experience-led digital marketing and commerce.” Coupled with its October 2015 acquisition of the online assets of the Weather Company, weather.com, IBM made it clear that it was in the data business. Joanna Peña-Bickley works for Papas and is the global chief creative officer for IBM iX.


pages: 335 words: 111,405

B Is for Bauhaus, Y Is for YouTube: Designing the Modern World From a to Z by Deyan Sudjic

3D printing, additive manufacturing, Albert Einstein, Berlin Wall, Boris Johnson, Buckminster Fuller, call centre, carbon footprint, clean water, dematerialisation, deskilling, edge city, Elon Musk, Frank Gehry, Guggenheim Bilbao, illegal immigration, James Dyson, Jane Jacobs, Kitchen Debate, light touch regulation, market design, megastructure, moral panic, New Urbanism, place-making, QWERTY keyboard, Silicon Valley, Steve Jobs, Steve Wozniak, the scientific method, University of East Anglia, urban renewal, urban sprawl, young professional

‘Conventionally, design is used to create objects that make us feel better about ourselves, to suggest that we are cleverer, or richer, or more important, or younger than we actually are,’ say Dunne and Raby. The mushroom-cloud cushion is a mildly sinister demonstration of the essentially ridiculous nature of this process. Our fear of the prospect of nuclear annihilation will no more be resolved by a cushion than a new kitchen will rescue a failing marriage. For the market, design is about production, it is not about debate. Mainstream design looks for ways to be innovative; Dunne and Raby want to be provocative. As they put it, rather than looking for concept design, they offer conceptual design. Rather than treating design as science fiction they say they are interested in social fiction. They don’t want design to make us buy things, instead they want to use design make us think; they are less interested in the process of design than in the idea of authorship.


pages: 302 words: 82,233

Beautiful security by Andy Oram, John Viega

Albert Einstein, Amazon Web Services, business intelligence, business process, call centre, cloud computing, corporate governance, credit crunch, crowdsourcing, defense in depth, Donald Davies, en.wikipedia.org, fault tolerance, Firefox, loose coupling, Marc Andreessen, market design, MITM: man-in-the-middle, Monroe Doctrine, new economy, Nicholas Carr, Nick Leeson, Norbert Wiener, optical character recognition, packet switching, peer-to-peer, performance metric, pirate software, Robert Bork, Search for Extraterrestrial Intelligence, security theater, SETI@home, Silicon Valley, Skype, software as a service, statistical model, Steven Levy, The Wisdom of Crowds, Upton Sinclair, web application, web of trust, zero day, Zimmermann PGP

In addition, he is one of Symantec’s primary spokespersons for communicating critical information about security outbreaks to the public. He holds a B.S. in electrical and computer engineering from Carnegie Mellon University and is a Certified Information Systems Security Professional (CISSP). B ENJAMIN E DELMAN is an assistant professor at the Harvard Business School. His research focuses on market design, particularly regarding electronic markets and Internet advertising. His recent work compares the revenue of alternative structures of pay-per-click advertising auctions, quantifying the losses caused by early, inefficient auction systems. He has also analyzed the stability and truth-telling properties of certain online advertising mechanisms, and he has designed a simulated bidding environment to evaluate bidding strategies empirically.


pages: 391 words: 117,984

The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World by Jacqueline Novogratz

access to a mobile phone, Ayatollah Khomeini, Berlin Wall, business process, business process outsourcing, clean water, failed state, Fall of the Berlin Wall, half of the world's population has never made a phone call, Hernando de Soto, Kibera, Lao Tzu, market design, microcredit, Nelson Mandela, out of africa, Ronald Reagan, sensible shoes, side project, Silicon Valley, Skype, The Fortune at the Bottom of the Pyramid, transaction costs, zero-sum game

I also thought of Yasmina Zaidman, a young heroine to many business school students because of her example of how to live a life. I believe this next generation will change the world. Everywhere I go, I meet young people who are hungry and ready to contribute. University students and freshly minted MBAs from across the globe ask me what skills they’ll need for meaningful work in serving the world. They should gain skills in the functional areas of business—marketing, design, distribution, finance—as well as in medicine, law, education, and engineering, because we need more people with tangible skills to contribute to building solutions that work for the poor. And they can be of service in this area by working for NGOs, progressive corporations, or governments. Our team has come to see the work not just as investing patient capital. Although this is at the center of our mission, we’ve learned repeatedly that money is not enough.


Trading Risk: Enhanced Profitability Through Risk Control by Kenneth L. Grant

backtesting, business cycle, buy and hold, commodity trading advisor, correlation coefficient, correlation does not imply causation, delta neutral, diversification, diversified portfolio, fixed income, frictionless, frictionless market, George Santayana, implied volatility, interest rate swap, invisible hand, Isaac Newton, John Meriwether, Long Term Capital Management, market design, Myron Scholes, performance metric, price mechanism, price stability, risk tolerance, risk-adjusted returns, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two-sided market, value at risk, volatility arbitrage, yield curve, zero-coupon bond

One very important group of market makers typically carries an edge into every transaction—those who operate as the designated liquidity provider for all transactions processed through a given market mechanism. Those with this designation include floor brokers on regulated exchanges, those who sit at banks and broker dealerships Bringin’ It on Home 223 trading against clients seeking access to specific markets, designated liquidity providers on electronic exchanges, and a small number of others. In exchange for a willingness to act as a buyer for investors wishing to sell and as a seller to investors wishing to buy, these entities typically are able to buy at the bid and/or sell at the offer, thereby creating a sustainable revenue flow that can be very lucrative indeed. Of course, the responsibilities that house traders assume are almost never riskless, as they are routinely subject to a nasty type of exposure called event risk, under which they might theoretically be caught with a large position in a market that has just received dramatic new information that is negative to their position.


Lonely Planet Best of Spain by Lonely Planet

augmented reality, bike sharing scheme, centre right, discovery of the americas, Frank Gehry, G4S, Guggenheim Bilbao, haute cuisine, illegal immigration, market design, place-making, trade route, young professional

Built by Domènech i Montaner between 1905 and 1908 for the Orfeo Català musical society, it was conceived as a temple for the Catalan Renaixença (Renaissance). Mercat de Santa Caterina Market map Google map (%93 319 57 40; www.mercatsantacaterina.com; Avinguda de Francesc Cambó 16; h7.30am-3.30pm Mon, Wed, Sat, to 8.30pm Tue, Thu, Fri, closed afternoons Jul & Aug; mJaume I) Come shopping for your tomatoes at this extraordinary-looking produce market, designed by Enric Miralles and Benedetta Tagliabue to replace its 19th-century predecessor. Finished in 2005, it is distinguished by its kaleidoscopic and undulating roof, held up above the bustling produce stands, restaurants, cafes and bars by twisting slender branches of what look like grey steel trees. Castell dels Tres Dragons Architecture (mArc de Triomf) The Passeig de Picasso side of Parc de la Ciutadella is lined by several buildings constructed for, or just before, the Universal Exposition of 1888.


pages: 387 words: 120,155

Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern

Affordable Care Act / Obamacare, availability heuristic, carbon footprint, Cass Sunstein, centre right, choice architecture, cognitive dissonance, collaborative consumption, correlation does not imply causation, Daniel Kahneman / Amos Tversky, different worldview, endowment effect, happiness index / gross national happiness, hedonic treadmill, hindsight bias, IKEA effect, illegal immigration, job satisfaction, Kickstarter, libertarian paternalism, light touch regulation, longitudinal study, market design, meta analysis, meta-analysis, Milgram experiment, nudge unit, peer-to-peer lending, pension reform, presumed consent, QR code, quantitative easing, randomized controlled trial, Richard Thaler, Right to Buy, Ronald Reagan, Rory Sutherland, Simon Kuznets, skunkworks, the built environment, theory of mind, traffic fines, twin studies, World Values Survey

Similarly, we know that ideas and practices spread through social networks, and yet that these networks often work to keep out new ideas, too. Even in science it’s often remarked that ‘science progresses one coffin at a time’, as people so rarely change their views within their lifetimes.12 So what are the best ways of spreading new ideas and better practices? Is it peer-to-peer learning, or new forms of online education? Can we reshape incentives and market designs to catalyse the spread of better practice? These might seem less grand questions than how to address disadvantage or conflict, but they are fundamental to economic and social progress. A linked issue is to focus behavioural science on to organisations and governments themselves. It’s a common question at seminars, to which we have only a partial answer, as to how behavioural science can make organisations work better.


pages: 448 words: 117,325

Click Here to Kill Everybody: Security and Survival in a Hyper-Connected World by Bruce Schneier

23andMe, 3D printing, autonomous vehicles, barriers to entry, bitcoin, blockchain, Brian Krebs, business process, cloud computing, cognitive bias, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, Donald Trump, drone strike, Edward Snowden, Elon Musk, fault tolerance, Firefox, Flash crash, George Akerlof, industrial robot, information asymmetry, Internet of things, invention of radio, job automation, job satisfaction, John Markoff, Kevin Kelly, license plate recognition, loose coupling, market design, medical malpractice, Minecraft, MITM: man-in-the-middle, move fast and break things, move fast and break things, national security letter, Network effects, pattern recognition, profit maximization, Ralph Nader, RAND corporation, ransomware, Rodney Brooks, Ross Ulbricht, security theater, self-driving car, Shoshana Zuboff, Silicon Valley, smart cities, smart transportation, Snapchat, Stanislav Petrov, Stephen Hawking, Stuxnet, The Market for Lemons, too big to fail, Uber for X, Unsafe at Any Speed, uranium enrichment, Valery Gerasimov, web application, WikiLeaks, zero day

This includes fines for insecurity and liabilities when things go wrong. The third is by mandating disclosure: product-labeling laws and other transparency measures, testing and rating agencies, information sharing between government and industry, and breach disclosure laws. (Some of these disclosures are ex ante and others are ex post.) And the fourth is what I would broadly categorize as measures that affect the environment. These include deliberate market design, funding for research and education, and using the procurement process as a means to drive product improvement more broadly. That’s the toolbox. It’s what we have to work with. The goal of these kinds of policies isn’t to require that everything be made safe, but to create incentives for safe behavior. It’s to put our fingers on the scales by raising the cost of insecurity or (less commonly) lowering the cost of security.


pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, John Meriwether, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War

The provision of low-cost funding to the banking system raises the profitability of banking, and increases in the supply of liquidity tend to push up asset prices, with significant distributional effects across income groups and between generations. Few of these effects are intended or desirable, and the notion that monetary policy is anonymous and impersonal is flawed. The thought experiment – suppose electricity were like finance – is not as fanciful as it might appear. In 1996 California began a process of deregulating its electricity industry, centred round the creation of a wholesale market in electricity. The market design retained a mixture of price caps and supply constraints but encouraged the entry of traders, including some with no, or only a negligible, interest in either the generation of electricity in California or the supply of electricity to the residents of the state. In the summer of 2000 and 2001 business and social life in California was disrupted by black-outs and price hikes in electricity. Enron traders were to the fore, implementing strategies described as ‘Death Star’ and ‘Get Shorty’.


The Future of Technology by Tom Standage

air freight, barriers to entry, business process, business process outsourcing, call centre, Clayton Christensen, computer vision, connected car, corporate governance, creative destruction, disintermediation, disruptive innovation, distributed generation, double helix, experimental economics, full employment, hydrogen economy, industrial robot, informal economy, information asymmetry, interchangeable parts, job satisfaction, labour market flexibility, Marc Andreessen, market design, Menlo Park, millennium bug, moral hazard, natural language processing, Network effects, new economy, Nicholas Carr, optical character recognition, railway mania, rent-seeking, RFID, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, smart grid, software as a service, spectrum auction, speech recognition, stem cell, Steve Ballmer, technology bubble, telemarketer, transcontinental railway, Y2K

In nature, that allows them to lock on to parts of invading pathogens, neutralising the invader. In the laboratory it means that biotechnologists can create antibodies with active sites tailored to perform particular tasks. One task they are often asked to perform is to attach themselves to a cancer cell. Genentech, the oldest biotechnology company around, has two therapeutic antibodies on the market designed do just that: Herceptin, which attacks breast cancer, and Rituxan, which attacks a form of cancer called non-Hodgkin’s lymphoma. The latest wheeze, perfected by idec, is to attach a radioactive isotope to an antibody, so that when the isotope decays, the target cell is destroyed by the radiation. This is the most precise form of radiotherapy imaginable. Rheumatoid arthritis is another target.


pages: 1,373 words: 300,577

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin

"Robert Solow", addicted to oil, Albert Einstein, Asian financial crisis, Ayatollah Khomeini, banking crisis, Berlin Wall, bioinformatics, borderless world, BRICs, business climate, carbon footprint, Carmen Reinhart, cleantech, Climategate, Climatic Research Unit, colonial rule, Colonization of Mars, corporate governance, cuban missile crisis, data acquisition, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, diversification, diversified portfolio, Elon Musk, energy security, energy transition, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, fear of failure, financial innovation, flex fuel, global supply chain, global village, high net worth, hydraulic fracturing, income inequality, index fund, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), James Watt: steam engine, John von Neumann, Kenneth Rogoff, life extension, Long Term Capital Management, Malacca Straits, market design, means of production, megacity, Menlo Park, Mikhail Gorbachev, Mohammed Bouazizi, mutually assured destruction, new economy, Norman Macrae, North Sea oil, nuclear winter, off grid, oil rush, oil shale / tar sands, oil shock, Paul Samuelson, peak oil, Piper Alpha, price mechanism, purchasing power parity, rent-seeking, rising living standards, Robert Metcalfe, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, Silicon Valley startup, smart grid, smart meter, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, technology bubble, the built environment, The Nature of the Firm, the new new thing, trade route, transaction costs, unemployed young men, University of East Anglia, uranium enrichment, William Langewiesche, Yom Kippur War

It now permits long-term contracts. In 2009, after several years of work, the state’s Independent System Operator (ISO) introduced a new market design. It incorporated experience from PJM and other systems as well as the painful lessons from what Mason Willrich, the chairman of the ISO, called the “flawed, flawed market” that had been put in place in California in the 1990s. This new design was intended to better reflect the true cost of electricity, including the cost of transmission congestion in the grid, and, with appropriate market monitoring, deliver the benefits of competition, rather than design a crisis.21 The major question today for electric power is no longer market design—regulation versus deregulation. Rather, it is fuel choice. Whatever the setup in different parts of the country, the United States faces the same question about the future of its electricity supply as do many other countries: What kind of generation to build?


pages: 385 words: 133,839

The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding

carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, MITM: man-in-the-middle, Naomi Klein, Nelson Mandela, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair

People of all ages drink it. It has a bite and a distinctive taste. It comes in a contour bottle. It is modern, funny, emotional, simple, large, friendly, consistent, and everywhere.” Of course, such an approach to advertising raises the question: At what point are you anticipating customers’ needs and at what point are you creating them? Coke didn’t dwell on the ques­ tion long. For each attribute, the marketers designed a different ad, rolling them all together in a new campaign under the slogan “Always Coca-Cola” (which had the delicious double entendre of harkening back to Coke’s heritage while encouraging consumers to drink it at every occasion). At the same time, Zyman shook up Madison Avenue by spreading work among different agencies, having them compete for Coke’s vast advertis­ ing war chest. Along with Apple and Nike, Coke even began to contract out BIGGERING AND BIGGERING 71 to Hollywood powerhouse Creative Artists Agency, which created one of Coke’s most compelling symbols.


pages: 441 words: 136,954

That Used to Be Us by Thomas L. Friedman, Michael Mandelbaum

addicted to oil, Affordable Care Act / Obamacare, Albert Einstein, Amazon Web Services, American Society of Civil Engineers: Report Card, Andy Kessler, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business process, call centre, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, Climatic Research Unit, cloud computing, collective bargaining, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, delayed gratification, energy security, Fall of the Berlin Wall, fear of failure, full employment, Google Earth, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), job automation, Kenneth Rogoff, knowledge economy, Lean Startup, low skilled workers, Mark Zuckerberg, market design, mass immigration, more computing power than Apollo, Network effects, obamacare, oil shock, pension reform, Report Card for America’s Infrastructure, rising living standards, Ronald Reagan, Rosa Parks, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, the scientific method, Thomas L Friedman, too big to fail, University of East Anglia, WikiLeaks

“What they have in common,” said Hogg, “is superb surgeons with high levels of skill, enthusiasm for the project, an interest in research, and reasonable costs.” What’s in it for America? As long as the venture money, core innovation, and key management comes from this country—a lot. If EndoStim works out, its tiny headquarters in St. Louis will grow much larger. The United States is where the best jobs—top management, marketing, design—and the main shareholders will be, said Hogg. Where innovation occurs and capital is raised still matters. To go from EndoStim to Eko India Financial Services—humming away in a garage in South Delhi—is to go from the most virtual of startups to the most conventional, but it is still striking how much they have in common. Eko’s founders, Abhishek Sinha and his brother Abhinav, started with the simplest observation: Low-wage Indian migrant workers flocking to Delhi from poorer regions had no place to put their savings and no secure way to send money home to their families.


pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

"Robert Solow", bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

CHAPTER THIRTEEN The Adaptive Mixed Economy Adaptive (adj): having a capacity for adjustment to environmental conditions . . . [The capacity] of an organism or its parts that makes it more fit for existence under the conditions of its environment. —Webster’s Dictionary CAPITALISM 4.0 WILL BE an adaptive mixed economy. But what does this really mean? First, it will be explicitly a mixed economy. It will combine government and business in partnership rather than opposition and deliberately mix normal competitive markets, designed to be as transparent and efficient as possible, with a smaller number of controlled markets, consciously regulated to limit their “efficiency” in the narrow and misleading sense of Capitalism 3. Second, Capitalism 4.0 will be an adaptive system, able and willing to change its institutional structure, its regulations, and its economic principles in response to changing events. The obvious examples of new interaction between governments and markets will be seen in the financial area, where more detailed and intrusive regulation is inevitable.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

Every currency embodies specific values through the nature of its design, which ignores certain things and elevates others. For example, the single largest sector of health care providers is never discussed in our health care debates because mothers don’t charge for their caregiving. Vital things such as breathable air and drinkable water have no monetary value until they become scarce. This is not an inherent behavior of markets, only for markets designed to revolve around artificially scarce currencies. Different currencies incentivize different behaviors and, hence, yield different economies. Information Age economies will replace commercial markets with more efficient, high-trust, self-organizing social networks that immediately channel appropriate resources where they are needed. Just as factories and finance were high-leverage tools of the Industrial Age, social software and reputation currencies that fuel these new social markets are the tools of the new economy.


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

"Robert Solow", accounting loophole / creative accounting, agricultural Revolution, barriers to entry, business cycle, cognitive bias, creative destruction, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, endogenous growth, Ernest Rutherford, experimental economics, financial innovation, informal economy, interchangeable parts, invention of radio, invention of the printing press, invisible hand, James Watt: steam engine, Jean Tirole, John Harrison: Longitude, Joseph Schumpeter, Kenneth Arrow, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, peer-to-peer, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, transaction costs, Y2K

See also non-compete clauses x-inefficiency, 68 tragedy of the commons, 156, 177 transaction costs, 254 Zimbabwe, 151–152 Document Outline Cover Half-title Title Copyright Contents Acknowledgments ONE Introduction Comments Notes TWO Creation under Competition Software �� �� Copyrightables: Books, News, Movies, and Music �� �� The Modern American Newspaper The World Before Copyright �� The Birth of the Movie and of the Recording Industries �� �� Comments Notes THREE Innovation under Competition World without Patent The Industrial Revolution and the Steam Engine Agriculture Spanish Hortalezas and Italian Maglioni Financial Markets Design Sports Profits without Patents Patent Pools Comments Notes FOUR The Evil of Intellectual Monopoly The Cost of Patent �� �� �� Undoing Progress �� �� �� �� �� Comments Notes FIVE The Devil in Disney Everlasting Copyright The Economics ofMusic The Digital Millennium Copyright Act Freedom of Expression From Policy Error to Policy Blunder: Mandating Encryption Rent Seeking and Taxes Notes SIX How Competition Works The Fruits of the Idea Tree Fixed Costs and Competition Indivisibility The Collaborative Advantage The First-Mover Advantage �� �� Ideas of Uncertain Value The Social Value of Imitation Notes SEVEN Defenses of Intellectual Monopoly Private Property and Public Goods Economic Arguments for Intellectual Monopoly Fixed Cost and Constant Marginal Cost �� The Imitative Externality Quantifying Unpriced Spillovers Secrecy and Patents Schumpeterian Good Monopoly The Idea Economy The Global Economy The Public Domain and the Commons Notes EIGHT Does Intellectual Monopoly Increase Innovation?


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

Affordable Care Act / Obamacare, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Ben Bernanke: helicopter money, bitcoin, Black Swan, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Edward Snowden, eurozone crisis, fiat currency, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global reserve currency, global supply chain, Growth in a Time of Debt, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market design, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, obamacare, offshore financial centre, oil shale / tar sands, open economy, plutocrats, Plutocrats, Ponzi scheme, price stability, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

In comparison, U.S. thinking about financial warfare did not take recognizable shape until ten years later, in 2009, in response to an even bigger shock, the global financial panic of 2008. By 2012, both China and the United States had engaged in extensive efforts to develop strategic and tactical financial warfare doctrines. It was in this context that our group was summoned to brief Andy Marshall and his team on the emerging threat. * * * Financial warfare has both offensive and defensive aspects. Offense includes malicious attacks on an enemy’s financial markets designed to disrupt trading and destroy wealth. Defense involves early detection of an attack and rapid response, such as closing markets or interdicting enemy message traffic. Offense can consist of either first-strike disruption or second-strike retaliation. In game theory, offense and defense converge, since second-strike retaliation can be sufficiently destructive to deter first-strike attacks.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Satyajit Das, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, zero-sum game

Princeton, NJ: Princeton University Press, 2010. Reich, Robert B. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. New York: Alfred A. Knopf, 2007. Reinhart, Carmen M., and Kenneth S. Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009. Roth, Alvin E. Who Gets What—and Why: The New Economics of Matchmaking and Market Design. Boston: Houghton Mifflin Harcourt, 2015. Rothkopf, David. Power, Inc.: The Epic Rivalry Between Big Business and Government—and the Reckoning That Lies Ahead. New York: Farrar, Straus and Giroux, 2012. Saval, Nikil. Cubed: The Secret History of the Workplace. New York: Doubleday, 2014. Scheiber, Noam. The Escape Artists: How Obama’s Team Fumbled the Recovery. New York: Simon & Schuster, 2012.


pages: 504 words: 139,137

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen

activist fund / activist shareholder / activist investor, algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Black-Scholes formula, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, Eugene Fama: efficient market hypothesis, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, late capitalism, law of one price, Long Term Capital Management, margin call, market clearing, market design, market friction, merger arbitrage, money market fund, mortgage debt, Myron Scholes, New Journalism, paper trading, passive investing, price discovery process, price stability, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, shareholder value, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stocks for the long run, stocks for the long term, survivorship bias, systematic trading, technology bubble, time value of money, total factor productivity, transaction costs, value at risk, Vanguard fund, yield curve, zero-coupon bond

Brunnermeier, Markus, Stefan Nagel, and Lasse Heje Pedersen (2008), “Carry Trades and Currency Crashes,” NBER Macroeconomics Annual 23, 313–348. Brunnermeier, M., and L. H. Pedersen (2005), “Predatory Trading,” Journal of Finance 60, 1825–1863. Brunnermeier, M., and L. H. Pedersen (2009), “Market Liquidity and Funding Liquidity,” The Review of Financial Studies 22, 2201–2238. Budish, Eric, Peter Cramton, and John Shim (2013), “The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response,” working paper, University of Chicago. Buraschi, Andrea, Robert Kosowski, and Worrawat Sritrakul (2014), “Incentives and Endogenous Risk Taking: A Structural View on Hedge Fund Alphas,” Journal of Finance, forthcoming. Calvet, L. E., J. Y. Campbell, and P. Sodini (2007), “Down or Out: Assessing the Welfare Costs of Household Investment Mistakes,” Journal of Political Economy 115, 707–747.


pages: 464 words: 155,696

Becoming Steve Jobs: The Evolution of a Reckless Upstart Into a Visionary Leader by Brent Schlender, Rick Tetzeli

Albert Einstein, Apple II, Apple's 1984 Super Bowl advert, Bill Gates: Altair 8800, Bob Noyce, Byte Shop, Charles Lindbergh, computer age, corporate governance, El Camino Real, Isaac Newton, John Markoff, Jony Ive, Kickstarter, Marc Andreessen, market design, McMansion, Menlo Park, Paul Terrell, popular electronics, QWERTY keyboard, Ronald Reagan, Sand Hill Road, side project, Silicon Valley, Silicon Valley startup, skunkworks, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Tim Cook: Apple, Wall-E, Watson beat the top human players on Jeopardy!, Whole Earth Catalog

“He was working his ass off till the end, in pain,” remembers Eddy Cue. “You could see it in the meetings, he was taking morphine and you could see he was in pain, but he was still interested.” He did make some adjustments upon his return, most of which were simply extensions of the shifts in priority he’d made after his 2004 operation. He focused on the parts of the ongoing business he cared about most—marketing, design, and the product introductions—and he started to take active steps to ensure that he would leave Apple in good shape after his death. This was a process that had started earlier—Tim Cook says that Steve started thinking of succession and the post-Steve era of the company back in 2004—but everything accelerated now. He spent some of his time working with Joel Podolny, a professor he had hired away from the Yale School of Management, to develop the curriculum for an executive education program he wanted to create called Apple University.


pages: 543 words: 153,550

Model Thinker: What You Need to Know to Make Data Work for You by Scott E. Page

"Robert Solow", Airbnb, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Alvin Roth, assortative mating, Bernie Madoff, bitcoin, Black Swan, blockchain, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Checklist Manifesto, computer age, corporate governance, correlation does not imply causation, cuban missile crisis, deliberate practice, discrete time, distributed ledger, en.wikipedia.org, Estimating the Reproducibility of Psychological Science, Everything should be made as simple as possible, experimental economics, first-price auction, Flash crash, Geoffrey West, Santa Fe Institute, germ theory of disease, Gini coefficient, High speed trading, impulse control, income inequality, Isaac Newton, John von Neumann, Kenneth Rogoff, knowledge economy, knowledge worker, Long Term Capital Management, loss aversion, low skilled workers, Mark Zuckerberg, market design, meta analysis, meta-analysis, money market fund, Nash equilibrium, natural language processing, Network effects, p-value, Pareto efficiency, pattern recognition, Paul Erdős, Paul Samuelson, phenotype, pre–internet, prisoner's dilemma, race to the bottom, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, school choice, sealed-bid auction, second-price auction, selection bias, six sigma, social graph, spectrum auction, statistical model, Stephen Hawking, Supply of New York City Cabdrivers, The Bell Curve by Richard Herrnstein and Charles Murray, The Great Moderation, The Rise and Fall of American Growth, the rule of 72, the scientific method, The Spirit Level, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, urban sprawl, value at risk, web application, winner-take-all economy, zero-sum game

A fixed rule applies the same algorithm at all times. Just as rational-choice models provide an upper bound on people’s cognitive abilities, fixed-rule models provide a lower bound. A common fixed rule in markets, the zero intelligence rule, accepts any offer that produces a higher payoff. It never takes a stupid (i.e., utility-reducing) action. Suppose we want to gauge the efficiency of a one-sided market design in which sellers post take-it-or-leave-it offers for some good. A seller following a zero intelligence rule would randomly pick a price above her value. A buyer would purchase any good with a price below her value. When we encode those behaviors in a computer model, we find that in markets zero-intelligence traders produce nearly efficient outcomes. Thus, exchange markets do not need rational buyers and sellers to function well.19 An adaptive rule switches among a set of behaviors, evolves new behaviors, or copies the behaviors of others.


pages: 490 words: 146,259

New World, Inc. by John Butman

Admiral Zheng, Atahualpa, Bartolomé de las Casas, British Empire, commoditize, currency manipulation / currency intervention, diversified portfolio, Etonian, Francisco Pizarro, Isaac Newton, joint-stock company, market design, Skype, spice trade, trade route, wikimedia commons

Other images depicted a mother and daughter, the child holding an Elizabethan doll, evidently a gift from one of the colonists; a medicine man identified as “the flyer,” who is shown hovering above the ground; and a squatting man and woman sharing a meal of hulled corn, which looks like popcorn, laid out neatly on a wooden platter. Also, White captured family gatherings, religious ceremonies, burial rituals, fishing, and farming.34 White’s paintings were not intended as works of art, although that is what they have become. They were visual marketing designed to stimulate interest from prospective investors and settlers. It was hoped that they would reassure would-be English colonists and quell their fears about making a life in America. White went to great lengths to portray the Indian culture as friendly, charming, and even familiar. Indeed, some of the Indians are presented in poses similar to those found in the costume books then popular in Europe.35 The chief crooks his elbow to rest the back of his wrist on his hip, looking almost like a gentleman waiting for his carriage.


pages: 554 words: 149,489

The Content Trap: A Strategist's Guide to Digital Change by Bharat Anand

Airbnb, Benjamin Mako Hill, Bernie Sanders, Clayton Christensen, cloud computing, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, disruptive innovation, Donald Trump, Google Glasses, Google X / Alphabet X, information asymmetry, Internet of things, inventory management, Jean Tirole, Jeff Bezos, John Markoff, Just-in-time delivery, Khan Academy, Kickstarter, late fees, Mark Zuckerberg, market design, Minecraft, multi-sided market, Network effects, post-work, price discrimination, publish or perish, QR code, recommendation engine, ride hailing / ride sharing, selection bias, self-driving car, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, special economic zone, Stephen Hawking, Steve Jobs, Steven Levy, Thomas L Friedman, transaction costs, two-sided market, ubercab, WikiLeaks, winner-take-all economy, zero-sum game

They’d just sit around trading stories, doing sports, hacking with their designers. This was user-generated product, and then the products marketed themselves.” Next came a book outlining Winsor’s philosophy. But “my publisher titled it Beyond the Brand . They wouldn’t let me call it Co-Creation . That will never happen, they said. User-centered marketing will never happen.” Pro women athletes had been the first user-marketer-designer partnership for Winsor. And it had come naturally there: “Boulder is all about athletic hacking. Climbers would break things to make it easier to climb. Inline skaters would hack equipment. Nordic skiers would tweak materials. If you have the best hack, chances are it will help you win the race.” But Radar quickly moved beyond athletics to launch several more partnerships: Levi’s signature brand (“we found fifteen mothers and their twelve-year-old daughters, paired them with a designer, and the job was to build a new line of products for the Signature Line”).


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Asian financial crisis, asset allocation, Berlin Wall, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

The artificial market project in particular focuses on the dynamics arising from interactions between human and artificial agents in a stochastic market environment in which agents learn from their interactions, using recently developed techniques in large-scale simulations, approximate dynamic programming, computational learning, and tapping insights in and resources from mathematics, statistics, physics, psychology, and computer science. This laboratory recently constructed an artificial market, designed to match those in experimental-market settings with human subjects, to model complex interactions among artificially intelligent (AI) traders endowed with varying degrees of learning capabilities [79]. The use of AI agents with simple heuristic trading rules and 132 chapter 4 learning algorithms shows that adding trend-follower traders to a population of empirical fundamentalists has an adverse impact on market performance, and the trend-follower traders do poorly overall.


pages: 597 words: 172,130

The Alchemists: Three Central Bankers and a World on Fire by Neil Irwin

"Robert Solow", Ayatollah Khomeini, bank run, banking crisis, Berlin Wall, Bernie Sanders, break the buck, Bretton Woods, business climate, business cycle, capital controls, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency peg, eurozone crisis, financial innovation, Flash crash, George Akerlof, German hyperinflation, Google Earth, hiring and firing, inflation targeting, Isaac Newton, Julian Assange, low cost airline, market bubble, market design, money market fund, moral hazard, mortgage debt, new economy, Northern Rock, Paul Samuelson, price stability, quantitative easing, rent control, reserve currency, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, savings glut, Socratic dialogue, sovereign wealth fund, The Great Moderation, too big to fail, union organizing, WikiLeaks, yield curve, Yom Kippur War

It wasn’t entirely an exaggeration: The suicide rate in Greece in 2011 was estimated to be double the precrisis level. The discontent wasn’t just on the streets. Tensions between the troika and Prime Minister George Papandreou’s government were growing as the lenders found Greece failing to live up to its commitments, particularly in privatizing state-run concerns such as telecommunications firm OTE and the ports of Piraeus and Thessaloniki. Reforms to the labor market designed to give employers greater flexibility to fire or cut the pay of workers were drawn up by representatives of the IMF and the ECB, translated into Greek legalese by an Athens law firm, and delivered to the government as legislation that was to be passed. That was the situation in the debtor countries of Europe. But social strains had emerged in the creditor countries as well. In Finland, the nationalist True Finns party had shocking success in parliamentary elections on April 17 after campaigning on an anti-EU, anti-immigrant platform.


Lonely Planet London by Lonely Planet

Boris Johnson, British Empire, car-free, carbon footprint, centre right, congestion charging, discovery of the americas, East Village, Etonian, financial independence, haute couture, haute cuisine, Isaac Newton, John Snow's cholera map, low cost airline, Mahatma Gandhi, market design, place-making, post-work, Skype, trade route, transatlantic slave trade, urban renewal, Winter of Discontent

London society, including such writers as Pepys, Fielding and Boswell, gathered here in the evenings looking for some action among the coffee houses, theatres, gambling dens and brothels. Lawlessness became commonplace, leading to the formation of a volunteer police force known as the Bow Street Runners (see Georgian London, Click here). In 1897 Oscar Wilde was charged with gross indecency in the now-closed Bow St magistrate’s court. A flower market designed by Charles Fowler was added at the spot where London’s Transport Museum now stands. During the 1970s the city traffic made it increasingly difficult to maintain the fruit and veg market so it was moved in 1974. Property developers loomed over the space and there was even talk of the market being demolished for a road but, thanks to the area’s dedicated residential community who demonstrated and picketed for weeks, the piazza was saved and transformed into what you see today.


pages: 701 words: 199,010

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal by Ludwig B. Chincarini

affirmative action, asset-backed security, automated trading system, bank run, banking crisis, Basel III, Bernie Madoff, Black-Scholes formula, business cycle, buttonwood tree, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, corporate governance, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, discounted cash flows, diversification, diversified portfolio, family office, financial innovation, financial intermediation, fixed income, Flash crash, full employment, Gini coefficient, high net worth, hindsight bias, housing crisis, implied volatility, income inequality, interest rate derivative, interest rate swap, John Meriwether, Kickstarter, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low skilled workers, margin call, market design, market fundamentalism, merger arbitrage, Mexican peso crisis / tequila crisis, Mitch Kapor, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Northern Rock, Occupy movement, oil shock, price stability, quantitative easing, quantitative hedge fund, quantitative trading / quantitative finance, Ralph Waldo Emerson, regulatory arbitrage, Renaissance Technologies, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, Sam Peltzman, Sharpe ratio, short selling, sovereign wealth fund, speech recognition, statistical arbitrage, statistical model, survivorship bias, systematic trading, The Great Moderation, too big to fail, transaction costs, value at risk, yield curve, zero-coupon bond

This was one of the many ideas that this joint collaboration would have achieved. It wasn’t a hedge fund and it was very innovative. LTCM didn’t see its hedge fund as the end product. Its goal was to apply quantitative and creative techniques to create an impressive financial company. Unfortunately, the hedge fund that would have provided the initial fuel to do this collapsed before it could be done. We were a couple of decades ahead of the market, designing solutions that now are being introduced for the first time: life-cycle savings and other innovations. Unfortunately, I don’t think the bank in Italy really understood this and caused negotiations to drag on. They were after the high returns of the LTCM fund at a time when stock markets were yielding double digits. That was of course the wrong attitude. Management in the bank was fearful that this partnership would cause them to lose control.


Lonely Planet London City Guide by Tom Masters, Steve Fallon, Vesna Maric

Boris Johnson, British Empire, centre right, Clapham omnibus, congestion charging, dark matter, discovery of the americas, double helix, East Village, financial independence, first-past-the-post, ghettoisation, haute cuisine, Isaac Newton, John Snow's cholera map, Mahatma Gandhi, market design, Nelson Mandela, place-making, South of Market, San Francisco, Stephen Hawking, transatlantic slave trade, urban planning, urban renewal, Winter of Discontent, young professional

London society, including writers such as Pepys, Fielding and Boswell, gathered here in the evenings looking for some action among the coffee houses, theatres, gambling dens and brothels. Lawlessness became commonplace, leading to the formation of a volunteer police force known as the Bow Street Runners (see Georgian London, Click here). In 1897 Oscar Wilde was charged with gross indecency in the now-closed Bow St magistrate’s court. A flower market designed by Charles Fowler was added at the spot where London’s Transport Museum now stands. During the 1970s the city traffic made it increasingly difficult to maintain the fruit and veg market so it was moved in 1974. Property developers loomed over the space and there was even talk of the market being demolished for a road but, thanks to the area’s dedicated residential community who demonstrated and picketed for weeks, the piazza was saved and transformed into what you see today.


pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar

"Robert Solow", Al Roth, Albert Einstein, Andrew Wiles, Brownian motion, business cycle, cognitive dissonance, Columbine, experimental economics, fear of failure, Gunnar Myrdal, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Arrow, Kenneth Rogoff, linear programming, lone genius, longitudinal study, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, Paul Samuelson, prisoner's dilemma, RAND corporation, Ronald Coase, second-price auction, Silicon Valley, Simon Singh, spectrum auction, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile, zero-sum game

William Safire, “The Greatest Auction Ever,” New York Times, 3.16.95, as quoted by Paul Milgrom, Auction Theory’ for Privatization (New York: Cambridge University Press, forthcoming). 3. Edmund Andrews, “Wireless Bidders Jostle for Position,” New York Times, 12.5.94. 4. Milgrom, Auction Theory for Privatization, op. cit. 5. Michael Rothschild, dean of the Woodrow Wilson School, remarks at conference, “Market Design: Spectrum Auctions and Beyond,” Princeton University, 11.9.95. 6. Peter C. Cramton, “Dealing with Rivals? Allocating Scarce Resources? You Need Game Theory” (Xerox, 1994). Nash provided the fundamental theory used to analyze and predict behavior in simple games in which rational players have complete knowledge of each other’s preferences and abilities. Harsanyi, in papers published in 1967 and 1968, analyzed games in which some parties had private information.


pages: 872 words: 259,208

A History of Modern Britain by Andrew Marr

air freight, Albert Einstein, anti-communist, battle of ideas, Beeching cuts, Big bang: deregulation of the City of London, Bob Geldof, Bretton Woods, British Empire, Brixton riot, clean water, collective bargaining, computer age, congestion charging, cuban missile crisis, deindustrialization, Etonian, falling living standards, fear of failure, Fellow of the Royal Society, financial independence, floating exchange rates, full employment, housing crisis, illegal immigration, Kickstarter, liberal capitalism, Live Aid, loadsamoney, market design, mass immigration, means of production, Mikhail Gorbachev, millennium bug, Neil Kinnock, Nelson Mandela, new economy, North Sea oil, Northern Rock, offshore financial centre, open borders, out of africa, Parkinson's law, Piper Alpha, Red Clydeside, reserve currency, Right to Buy, road to serfdom, Ronald Reagan, Silicon Valley, strikebreaker, upwardly mobile, Winter of Discontent, working poor, Yom Kippur War

With Heath in power, over eighteen months of haggling in London, Paris and Brussels, a deal was thrashed out. It infuriated Britain’s fishermen, who would lose most of their traditional grounds to open European competition, particularly from French and Spanish trawlers. It was a second-best deal on the budget which would later be reopened by Margaret Thatcher. Above all it left intact the previous Common Market designed for the convenience of French farmers and Brussels-based bureaucrats, not for Britain. Vast slews of European law had to be swallowed whole, much of it objectionable to the British negotiators. Only at the very margins, dealing with New Zealand butter, for instance, did the Six make concessions – and the Commonwealth farmers’ deal was won at the expense of a worse agreement on the budget. The truth was that the British negotiators had decided it was essential to the country’s future to get in at any price.