Pareto Improvement

I come to your place to trade my saxophone for your guitar. Just before I leave your flat, I notice a guitar-case lying on the ground. "Wanna throw in the case?" I say. You quickly agree: a guitar case with no guitar is useless, so handing it over helps me ... Read more »


Offsetting Behavior

Suppose I told you that putting on a seatbelt makes you drive more dangerously. "Nonsense!," you might think, "why would wearing a seatbelt change how I drive?" Well, suppose I told you instead about a different car modification: a very sharp spike that attaches to the front of the steering ... Read more »

Path Dependence

If you drive to work in the morning, you probably do so in a gasoline-powered car. Compared against the electric cars that actually exist (versus maybe the ones we wish existed), gas-powered cars just make more sense for most people: they're just much cheaper and far more convenient than electric. ... Read more »

Truck and Forklift by Ricecracker

Orders of Magnitude

Imagine you're building yourself a new house, from scratch, and you're trying to guess how many bricks you'll need. You can't be sure in advance what the exact number will be, but you can try to calculate within the right ballpark: will it be thousands? Tens of thousands? Hundreds of ... Read more »

Cute kids eating chocolate

TCP Shorts: Revealed Preferences

Imagine you're trying to impress your friend Olive with how healthy you are. "Oh, yeah, spinach, I love that stuff," you say. "And chocolate? Pfft, don't like it at all." The next day you're at a store (in the strictest versions of the theory it needs to be a store ... Read more »

Vintage cans by Fabian Reus

Fixed and Marginal Costs, and Economies of Scale

How much does it cost to buy a case of soda from Costco? The simplest answer is that $5 seems to be the asking price. But this simple answer is not complete, because Costco is not like a normal store. Costco charges an annual membership fee, $55 per year for ... Read more »

Dating in the best of all possible equilibria

Multiple Equilibria, Public Policy, and How to Get a Date

It's been a bad month. Your hair's gotten scruffy, you've stopped shaving, and you haven't even thought about cutting your nails. And... somehow, you haven't managed to get any dates. When you wake up in the morning you go to your wardrobe and look at all the beautiful clothes you ... Read more »

Principal Agent Problem by Leonardo Rizzi

Understanding Principal-Agent Problems

You're young and lazy and you've been hired for a summer job at the record store downtown (remember those?) The boss' interest is for her store to make as much profit as possible, long term; this probably routes through selling more records today and keeping customers happy so she can ... Read more »

Understanding the Coase Theorem with lettuce and Turtles

Understanding the Coase Theorem

First, a caveat: the Coase Theorem is an interesting thought experiment and a stepping-stone to further understanding and not intended as a real description of the actual world. Says who? Says Coase. Please keep that in mind. Now: imagine that you've decided to go into the lettuce-farming business, and your ... Read more »

This is a rat race

Understanding the Permanent Income Hypothesis

You're 22, young and free, and you've saved up hard until you have $1000 in the bank. Your job covers your necessities in life and you have a sweet babysitting gig that gives you $40 a week for luxuries, much of which you tend to blow on a nice meal ... Read more »

Thinking at the Margin

Economists often talk about "thinking at the margin" -- you might even hear them say "everything happens at the margin." What does that actually mean? Imagine you're taking your piggy-bank on a walk through the forest when you trip on an unfortunately-placed rock and your precious piggy flies out of ... Read more »

Subway in the City by Instant Vintage

The Lucas Critique

The Lucas critique is an important concept in economics; it talks about how to evaluate how good alternative policies would have been when looking back at what actually happened. Here’s an example: Imagine you’re visiting New York for a few days and you want to ride the subway. ... Read more »

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Greatest Hits

Thinking At The Margin: what to do when you drop your piggy bank in the middle of the forest.

Strategy and Backward Induction: how to win a week of lunches from your unsuspecting colleagues.

What is Multiple Imputation?: when statisticians turn into detectives.

On Shuttle Drivers, Chocolate and NP Completeness: a deliciously difficult problem in computer science.

Rest and Digest vs Fight or Flight: how your body (and medications) help with fighting tigers.

Sites we like

William Shaw, writing about Politics, Theatre, Sci-fi… Mainly Sci-fi.

Better Explained, for maths explanations that click.

Science Non Fiction, a graduate student perspective on science in the news and in our lives.

Clearer Thinking, learn to think more clearly and make better decisions., working to improve the quality of research communications.

Jess Whittlestone, a blog about decision making and behavioural science.