Friday, January 29, 2016

Salt, plow, or do nothing?

Last week we had a reminder of what an inch of snow can do at the wrong time. But how should a city decide when and how to act to avoid unsafe roads?

Modeling what will happen is tricky. The Washington Post link mentions that they get information from the "High-Resolution Rapid Refresh" weather model, which they say typically does well for short-term storms. They also cited a concern by city officials that low temperatures would result in the brine application freezing instead of keeping the roads ice-free. This means that the physics-side of the problem is tricky to figure out.

In addition to predicting what different snow-removal solutions would do, cost plays a role. Salting in some ways is preferable since it can be done ahead of the storm, but it depends on an accurate estimate of not-too-much snow falling. Plowing on the other hand requires you to wait until snow has actually built up, but then you know with certainty how much snow there is (taken to the extreme, the city of Ann Arbor does nothing until it stops snowing).

There do not seem to be comprehensive models which do the optimal tradeoff between the cost of accidents and lost productivity and the cost of snow removal. One could argue that a policy like Ann Arbor's makes the most sense since discouraging drivers in bad weather limits the number of accidents. But that only works if people are able to stay home, which is only sometimes true. If snow falls after people have already driven to work (which is frequently the case for these public failures), doing something so they can get home safely becomes much more important.

Wednesday, January 20, 2016

Are you a change agent?

Last fall I attended a Lean Green Belt certification course put on by IIE. One of the things that it included was this partitioning of people:

  • 20% of people who are change agents.
  • 60% of people who get on board once they see results.
  • 20% of people who don't want to change.
While the exact percentages are obviously made up, the strategy they mentioned based on this partitioning is still useful. You start by getting a group of people together who are excited for positive change. By your combined forces you get some initial results which you can use to convince the middle people. Finally, simply outrun the people who are unwilling to change.

I was talking this idea over with a friend, and we joked about making a survey which asked people to classify themselves. It was a fun idea, but highlights one way new projects get derailed. In a study, 82% of adults say they have done something in the past six months to contribute to positive social change. In an optimistic world where the number is accurate, that matches up nicely with the made-up percentages above if you assume the middle people find something with evidence behind it to pursue. But it still makes it harder to figure out who to include in your initial concept-motivated group, and who to bring on board after you have some success.

Wednesday, January 13, 2016

Think about the incentives.

When you start applying game theory to business, the first question to ask is "what are everyone's incentives?" For example, when you buy insurance, you are trying to limit your risk in the event of a low-probability but very high cost event. An insurance provider on the other hand is interested in making as much profit as possible. They accomplish their goal by increasing total premium payments (rate * customers) while limiting how much they pay back out.

When incentives are misaligned, things that "don't make sense" from your point of view happen more frequently. If you have a car accident, from your perspective this is exactly why you bought insurance. From the insurance companies perspective, they would like to keep you as a customer in the future if the cost of fixing this accident is low enough1. If the cost is higher though... they'd rather make it as difficult as possible for you to get a pay out.

My recent experience with this was that I rented a car from a company I won't name here. Most of the experience went well, which seems to be hard to come by for rental car companies. Except, I forgot my GPS in the car. Since it is clear that the GPS would have been found on cleaning the car, I reported a lost item, and the value of a GPS is pretty low by comparison to any future rentals, you might expect that it would have been returned. However, their are four players in this situation. Me, the car rental company, the specific rental location, and the person actually cleaning the car. It clearly benefits me to get my GPS back. It benefits the car company if I choose to use them again. It benefits the specific rental location considerably less than HQ in expectation. And it benefits the person cleaning the car to have a bonus GPS unless there are negative repercussions to them.

In short, a new GPS is purchased and on the way to me. I don't plan on using this rental company again, but I much more strongly don't plan to forget things in the car next time.



1 The benefit of you staying a customer also includes any word-of-mouth generated by how the incident is handled.