Dutch Flower Auctions

If you have ever learned about auctions in a class, you will have heard about both "English" and "Dutch" auctions. The idea of an English auction is that you start at a low price and the bids keep increasing until the highest bid wins. The Dutch auction on the other hand starts at a high price which keeps dropping until one of the bidders says they are willing to pay the current price.

When you first hear about this auction, it is not clear why anyone would prefer the "Dutch" descending price auction, even if it officially gets the same expected revenue to the seller. But after finally seeing a video of how these auctions are run, it makes a lot more sense to me. My intuitive understanding now is that if you want to run a lot of auctions quickly, this is somehow simpler than it would be to run the auctions in an ascending-price way. (Something this video misses is that after the buyer wins, they submit how many flowers they want and the remainder get re-clocked. So that's why the clock keeps re-starting around 20 cents)

One closing thought: This NYT story suggests that the days of the clock auction may be numbered as buyers get larger and more of the time work directly with the sellers. I wonder what textbook authors will use to talk about the revenue-equivalence theorem then...

Are feelings additive?

Do you know the real definition of ambivalent? From Merriam-Webster:

1. simultaneous and contradictory attitudes or feelings (as attraction and repulsion) toward an object, person, or action

A lot of people interpret ambivalence as having no opinion at all. Based on this older story from NPR about the Ebola outbreak, maybe there is a reason for that. They describe a study where participants were asked to donate to charity to help a starving child, but were also provided information about varying numbers (0, 1, 6) of children who they would not be helping. In the questionnaire, they asked participants to rate the "warm glow" they got from thinking about helping the starving child, and found that how happy they felt was reduced when they also were told about children they weren't helping.

One particularly interesting comment in the study itself is that they tried to figure out if participants attempted to be internally consistent. Usually when you participate in a study if you realize you are being asked the same question a different way, you try to answer the same way you did before. However, this study did not find that people tried to correct their answers. I want to leave you with the closing question of the NPR story, "what should charities do given this understanding?"

The Toilet Paper Problem

During my first year in grad school I came across this paper on "The Toilet Paper Problem" which divides the population into "little choosers" and "big choosers." In trying to find it again to share with all of you, I also came across an essay which is perhaps more useful: "Toilet Paper Algorithms."

Math, answering the important questions in life.

Everything is a trade-off

I recently attended a project management workshop run by an Ann Arbor company (Menlo Innovations). While their company does software development, the techniques we learned are useful pretty much any time you can't do everything you need to, by yourself, in a day. The main takeaway was that by doing any particular thing, you are implicitly choosing not to do other things. Instead, you should try to make those choices explicit.

The tool he gave us for this purpose was to write every possible task on index cards along with estimated time to complete them. The idea is that now you have a physical representation of the trade-offs. You can choose card A which takes one week, or you can choose cards B and C which also add up to one week. He also talked a bit about what our brains are naturally good at:

• Making an initial plan is hard. Poking holes in a plan is easy. Therefore, you should do whatever you can to not work with a blank page.
• If you scale the size of the card to the length of the task (i.e., set your scale as one card = one day of work, so a task that takes half a day you use half a card for), our brains intuitively do the trade-offs.
• Taking away the technology leaves our brains free to just focus on the other aspects. There are definitely advantages to using technology some of the time. But most of the difficulty of project management is these trade-offs, not software giving you a better estimate of how long a particular task will take. Pretty much any estimate will be bad, but some estimates will be useful.

In implementing this approach for my thesis, I am finding that the most critical thing to be working on in the moment is obvious to me. But before I had this system I had no good way to lay out everything left for all of my projects. It would still be nice to have twice as many hours to get everything done, but I am finding a lot of peace in seeing how my current task specifically fits together with the bigger picture.

Comparing alternatives

A few years ago I took a systems engineering course and one of the topics we covered was how to compare different options you might need to choose between. There were two tips that stuck with me, so I thought I would share them here.

1. Compare actual alternatives. When you are considering different options, it is really easy to compare one specific possibility versus the entire world of other possibilities. Do we want pizza for dinner tonight? Well, pizza is cheap and easy, but it isn't exactly healthy, and there are things that are more delicious... But how many things are both healthier and more delicious at the same time as they cost the same amount of money and time? Pizza versus spaghetti however is an actual comparison.
2. Include an evolutionary alternative in addition to revolutionary alternatives. An evolutionary alternative involves doing more or less what you have been doing, but perhaps better. A revolutionary alternative involves a completely new way of accomplishing your goal. The idea being that typically revolutionary ideas will be a lot more costly to implement, and it is easy to get carried away with planning something totally new and lose sight of what you are really trying to accomplish. One example is the repair or replace decision for a car.

Do you have any other tricks for choosing the best alternative?