Game Theory of Black Friday

If you’re reading this real-time, you’re probably not out shopping.

Black Friday, the day after Thanksgiving, is a day of shopping madness, and is sometimes considered the beginning of the Christmas shopping season. Most major retailers open extremely early andd offer promotional sales to kick off the shopping season.

A few days ago on NYT, Robert H. Frank described Black Friday as a retail race to the bottom in terms of a zero-sum or negative-sum game:

In recent years, large retail chains have been competing to be the first to open their doors on Black Friday. The race is driven by the theory that stores with the earliest start time capture the most buyers and make the most sales. For many years, stores opened at a reasonable hour. Then, some started opening at 5 a.m., prompting complaints from employees about having to go to sleep early on Thanksgiving and miss out on time with their families. But retailers ignored those complaints, because their earlier start time proved so successful in luring customers away from rival outlets.

Tyler Cowen, of MarginalRevolution, has a different opinion.  Based on the fact that early December has in general the cheapest prices of the year, not Black Friday, he says:

Dare I suggest that some people like waiting in those lines with their thermos cups and stale bagels.  You could try to argue they are “forced to do so,” to get the bargains, but in a reasonably competitive world  each outlet will (roughly) try to maximize the consumer surplus from visiting the store, including the experience of waiting in line.

All I know is that a few of my colleagues were more excited to go home for Black Friday than for Thanksgiving on Thursday.

Wondering why Rebecca Black’s face is the photo for this post?  Check out the commercial below.  Read about it here.

Choosing between Strawberry, Raspberry, and Blueberry

Have you ever been overwhelmed by a restaurant menu with far too many options?  The Cheesecake Factory is notorious for this — they hand out a Bible-sized booklet of different dishes you can choose from.  Most of us feel a little lost examining these menu treatises.  How can we possibly decide on what to eat when there are so many options?

There’s a faction of behavioral economists who think that too much choice is a bad thing; we, as humans, don’t know how to optimize our choices when presented with more than six or seven options. Are they right?

Economist Sheenya Iyengar (I wrote about her here), is a popular proponent of this idea.  Her book, which I’m failing to make my way through right now, details the most popular study backing up the too-much-choice assertion.  It’s frequently cited as proof of the negative consequences of too much choice.

She and psychologist Mark Lepper set up a jam-tasting booth at a grocery store in California.  Sometimes, shoppers were offered six varieties of jam, and at other times, they were offered 24.  Either way, they were then offered a voucher to buy jam at a discount. The results? Shoppers presented with an assortment of 24 jams were 1/10th as likely to buy some than those who were shown only six jams.

A few weeks ago, I had the pleasure of meeting British Economist, and one of my personal heroes, Tim Harford.  He’s written one of my favorite economics, books, called “The Undercover Economist.”  He’s got a new book out now, “Adapt: Why Success Always Starts with Failure,” (This book is the main reason I’ve put Iyengar’s down – I find Harford a much more compelling writer.)

Harford disagrees with the idea that too much choice is debilitating, and wrote about it on his blog.  In a post titled “Given the choice, how much would you like?” he quickly surveys the field of research, including followup studies that have been done, and concludes,

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.” Perhaps choice is not as paradoxical as some psychologists have come to believe. One way or another, we seem to be able to cope with it.

My guess is that we have a “choice muscle,” that we can train and teach to deal with larger number of choices.  Like with any other muscle, practice will improve our ability to use it.  If we practice at deciding between a large number of options, we certainly can’t get any worse at it.

Information is Beautiful

Part of examining the firehose-of-information  phenomenon is taking a look at some solutions people are coming up with.  From TED:

David McCandless turns complex data sets (like worldwide military spending, media buzz, Facebook status updates) into beautiful, simple diagrams that tease out unseen patterns and connections. Good design, he suggests, is the best way to navigate information glut — and it may just change the way we see the world.

McCandless shows unconventionally gorgeous graphs.  He looks at worldwide fears, trends in violent video games, and when romantic relationships end.  (According to data drawn from Facebook, April heralds  the “Spring Break,” and November ushers in the “Turkey Drop.”  Your partner is least likely to call it quits on December 25th.)

Data is the new soil, McCandless says.  And data visualizations are the flowers that spring from this fertile ground.

Look for the final two posts in the “Information Overload” series over the next few weeks.

World Future Wrap-up: The Virtualization of America (And the World)

Michael Rogers is an author, journalist, and futurist.  He attended Stanford, where he double-majored in physics and creative writing.  After graduating, he turned down a job at Intel to write for Rolling Stone.

I always look forward to hearing journalists speak, and Rogers did not disappoint.

After a jam-packed weekend of ideas, theories, and predictions, Rogers’s talk was the perfect capstone.  He provided a snapshot of the current state of affairs in the world of technology and touched on a number of points that had been discussed throughout the weekend.  Rogers elegantly drew together many different ideas, and, without overwhelming his audience, succinctly summarized the weekend.  Here are a few of the topics he discussed and how they related to the rest of the event.

Rogers identified three main challenges going forward concerning the virtualization of the world.

  1. Creating New Laws.  This was addressed at a both the Nebulous aspects of Cloud Computing break-out session and the Space Tourism break-out session.  The main issue here is that the internet is essentially the Wild West of computing — there are no overarching governmental standards or regulations at the moment.
  2. Implementing Accountability via Real Identities. The future of anonymity on the internet was one of the topics discussed at the Pew Research Internet Evolution break-out session.
  3. Employing Taxation or a Virtual Currency.  Edie Weiner touched on the virtual currency aspect of this at the Unemployment Conundrum break-out session.  Many break-out sessions, such as the Nebulous Aspects of Cloud Computing and the Human-Computer Interface, also referenced issues surrounding virtual ownership.

Rogers ended the session with a question.  In the transition from the physical world to the virtual world, Rogers asked, what will be lost?  What aspects of the physical world will not be translatable to the virtual world?

This weekend has been a whirlwind of ideas.  Right now, they’re simmering in my head, waiting to be sorted and dissected over the next few weeks.  This weekend has been inspirational on a variety of levels, not the least of which is that it has reaffirmed my desire to return to school.  The world seems full of possibilities for the future – both global and personal – in a way that it didn’t a week ago.  Short-term, however, many posts on blog posts exploring many of these topics will follow.

While Rogers asks what we will lose in this transition, I want to leave you with a different question.  All of these ideas – technical, biological, virtual, faith-related, academic – open doors for new opportunities to explore and understand the human condition.  Yes, we may lose some things, but that always happens when technology advances.  Rather, I would like you to ask yourselves the following.

In the transition from the physical world to the virtual world, what will we learn about ourselves?  At the end of the day, what will we gain?

You know what they say about Assumptions …

In the Space Tourism break-out session, Melchor Antuñano showed a clip on the hazards of assumptions.  He showed the first bit of this video – I found the rest online, later.

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