YouSaid · the spoken record

Hal Varian

lines on the record: 84
first: 2019-06-19
most recent: 2019-06-19
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Well, for example, there's a big debate going on now about how margins of changed over the years. You may have followed this. Well. It comes right from manipulating first order conditions, throwing in a little bit of duality. So understanding how that model works is critical to understanding that particular literature. Now, it may be that, you know where to look it up, and that may be good enough for some of these things, but it's just the nature of a textbook. It has to prepare you for. Actually, performing for actually doing and reading and understanding what's going on in the economics literature.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, absolutely. When I thought about what should go into that book, I thought about what do you need to understand the journal. So take something like the American Economic Review and you'll thumb through the American Economic Review and come up with a list of topics and the two things you mentioned, they're still mentioned in the research literature. So that's what you need to know to read the journals and that's what the textbook is supposed to teach you.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“There seems to be something of a pecking order there. It depends, not so much in tech, I would say, but maybe in finance, Wall Street kinds of things. There's a motivation that's different than we see on the West Coast.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“The billionaires. It's interesting. The billionaires are kind of like our instance of royalty. The people want to see what they're doing and where they're going out and how they dress and all this kind of stuff. But I don't think it's actually envy. And by the way, I know a few billionaires, and there's a lot of cost of being a billionaire in the sense that you can't go out in public, maybe you need bodyguards doing a trip here and there is a major undertaking because of the people that have to be informed. So it's not, it's much better to be a half a billionaire, I think, than to be a billionaire.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think what's interesting is there are lots of cases where we're seeking some sort of fair division or something that we agree is equitable, et cetera. And if you look at that theory of fairness that I worked on, actually my thesis was on that topic. Everything seemed to work out nicely if you just have a fixed pot of goods and you wanted to divide them in fair way. Like, for example, an estate or a number of inheritors to estate and you wanted to make it both equitable and also efficient. So that problem we can solve. The difficulty came when you brought production into it because people could contribute differently, different amounts to the production. And then how much do they be compensated for the contributions? And there seems to be a great variety of views in the world.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's one of these things. Of course, the index is totally arbitrary, and as I would suspect, as the Dow Jones has perhaps receded in importance compared to S&P or other indices, probably this pattern became dramatically weakened or was eliminated altogether.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Aha, it's very interesting you can raise that question. What happened was, back in the gosh, when would this be in the seventies sometimes the Dow Jones approached one thousand and then backed off and they did it 23 times I believe I don't remember the exact number but it was multiple times and people were talking about the barrier $1,000 barrier etc and I said hmm I wonder what shows up historically and it turns out at this time Dow Jones had just published a book of all of its prices going way back when it was founded and we did a little analysis of that to see if there were barriers of century marks was at a barrier in the sense that the stock price behave in some unusual way so this was not a theory or hypothesis we were just looking at the data to see what it said what we found out was that the”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's good. I mean, I would say, yeah, why trade? You shouldn't be trading, we know that just as an empirical fact.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“So I agree with your point that there's more trading than there should be by any reasonable model. Part of it is because people really do have differences of opinion and are not fully Bayesian, so they may not find the other person's opinion credible, and so it doesn't, we don't really get the agreeing to disagree or I guess the converse. We don't get this pushed into a model where you've got full agreement. Actually, Rhote did some work in this area several years ago, and it really came down to people who have a different model. We can't agree on the model. So if we don't agree on the model, then we won't get the uniformity.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, people say it's massive, but actually it's usually a relatively small fraction of the total amount of the asset that's held, so even on a very heavy trading day that might be a few percent of the total volume of the asset. So it's not so big.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so this question of intensity there is one margin, namely people who feel very strongly about a certain candidate or certain issues devote their own time, energy, volunteerism. That's a measure of intensity there. So if I can recruit another voter to my side, then it's like I get two votes, my own vote plus the person I recruited. So there's a little intensity going on there as well.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, but we have seen things like instant runoff voting, which Australia has been doing for 100 years. We've got now Maine doing the same mechanism. Eric Maskin talked to me a few days ago. He's working on an initiative to get Massachusetts to adopt this kind of system. And I think he puts forth some pretty compelling reasons.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“How can Well, there are all sorts of screwed up incentives. If you start thinking about it from a mechanism design point of view, you can imagine situations where you could improve those incentives by various kinds of marketplaces, market mechanisms. Now, I'm not an expert in health. I said health because we're living in an aging population. There's going to be all sorts of increased expenditures in this area. There's going to be greater calls for more efficiency and cost reduction. And so using a mechanism design tool might really help in some of these cases.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm just referring to our particular case. There was another example at the same time, Ford was running a market, and Ford would have futures markets on price of gasoline, which was very relevant to them. It was an external price and so on, and it extended beyond the usual futures market. That's the other thing. You're not going to get anywhere if you're just duplicating a market that already exists. You have to add something to it to make it attractive to insiders. So we ran a number of cases internally. We found some interesting behavior. There's an article by Bo Caugio on our experience with this auction, but ultimately we ran into this problem that I described. The most valuable predictions would be the most sensitive predictions, and you didn't want to do that in public.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, and we had a prediction market, and I'll tell you the problem with it. The problem is the things we really wanted to get a probability assessment on were things that were so sensitive that we thought we would violate the SEC rules on insider knowledge. Because if a small group of people knows about some acquisition or something like that, that is a secret among this small group, you might like to have a probability assessment of whether that would go through, but then anybody who looks at the auction is now an insider. So it's a problem in you have to find things that A are of interest to the company, but B do not reveal financially critical information. That's not so easy to do.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, when I started out at the University of Michigan and wanted to furnish my first house, I would go to auctions. And one of the rules of thumb that I developed was you never go to the auction that has to best stuff because everybody's there. You go to the auction, the sort of second best, because then you have a better chance of meeting the dealer. So there's a lot of, I don't know, common sense sort of strategies that people use in this. And I think there are inefficiencies that can be exploited, at least in these small-scale auctions with non-professional buyers.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Winter's curse would be most relevant when there's some asymmetry of information. I think, from what I could tell looking at the experimental literature that naive players do have a winner's curse, but they learn over time to shade their bids in a way that gives them a better outcome. So there's a learning behavior going on there.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well remember they normally use this ascending bid English auction. And as you know, the second bid auction is equivalent under certain circumstances, but there is some degree of excitement irrationally, irrationality, madness of crowds, whatever you want to say, that people get caught up in the bidding, and they probably do make higher revenue from the ascending bid auction than from the theoretically equivalent Vickery auction.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, sure. And I think there's two big firms doing this kind of antiques, fine arts, auctions, and so on. They've established these patterns of behavior. And I'm sure that we will see challenges to that in the future because it's so easy to experiment with auction design now”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, remember the Sothebyes is offering some services or offering you some guarantees about whether this is an original, they're offering you certain amenities and so on. Now, whether that's worth a fifteen percent fee, that's up to you to decide. But”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Or even better, the first person to push the button gets the item, but he has to pay the price when the second person clicks the button. So you've got a combination of a sealed bid and a descending auction. That's a very good question. Of course, we do see it. It still happens in the Netherlands at the flower auction if you're passing through Scheepel, one of these days. It's a five minute taxi drive. You could go see the market in all of its glory. But I don't really know. I think you need to have this equipment, this infrastructure that will allow you to do it. That used to be kind of hard, but now with a mobile phone, it just comes down to being an app. So why? I don't know.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Ah, well, that's quite an interesting question, especially now you've probably seen this note that Google was switching to a first price auction on display ads. And the reason they did that is because they wanted to put all of the ad sellers on a level playing field. And there was concern, I think unfounded concern, but I will say there's definitely concern about having the last look at the price. And so if you're going through a series of auctions as you often are, then the person who gets a look at the last price can say, oh, well, do I want to beat that or not? We all know from the revenue equivalence theorem that you would expect a continuous first price auction to end up about the same place as a one time second price auction. So we'll have a nice chance to see how well that theory works in this context.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“But many they are priced remarkably high, and it's a situation where I think I really would like to see lower prices because obviously there's a durable goods monopoly problem there as you have more and more competition from previous editions. The new editions have to differ markedly from the old edition to support the pricing model. That's getting harder and harder to do. In fact, a friend of mine once told me having a successful textbook is like being married to a very wealthy person you don't like much anymore.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would say if you take the journal example again, as we all know, where we're going to get the price reductions is competition, and you probably see that in the last couple years American Economics Association has offered four new journals. You've got bigger set of publishing outcomes. There's a high level of prestige attached to these journals, and they're very reasonably priced. So I think we are seeing entry of that sort, not only in economics, but in other scholarly disciplines as well”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, the main use are going to be people at universities. The universities already have a license for these things. So, yes, you might go to SciHub for if you can't find it elsewhere. But just like you said before, the path of least resistance is just search over my library connection and see if we have access to this material.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“They do to some degree, and you'll see situations especially at smaller places where they will arrange an interlibrary loan or some system that they can ride on the larger organization's coattails. And that's not at all uncommon.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“But not to you, it's to the library of the university you're at is the basic answer, so there's a little bit of a division of a problem with incentives here in terms of getting you to face the true cost of that journal access.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“And there are semi close substitutes because, as you know, you often find copies of published papers or preprints or something available online. The users, the end users, the faculty members, or the students, they can usually get what they want so they don't protest these high prices much. It's the libraries that end up paying and the librarians generally say we want to provide useful information to our constituency so they're not highly motivated to resist these high prices either.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, how much would you charge to do two clicks? It's one of these things where, yes, there's a minor extra cost because the site is trying to make it as easy as possible for you to buy. But at the same time, they can't really impose any significant cost. So the most they can make is the difference between your valuation of one click, two clicks, whatever.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, I'm in it. And by the way, this is not an uncommon behavior because lots of people will go to a big retailer, might be Amazon, might be Macy's, and they'll get a price, and then they'll do a little search to see if they can improve on that price. And so it's a model. It's not at all unusual to see people describe that kind of behavior as their normal way of online shopping.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“We hear two stories, of course. One is obedience highly personalized pricing that will leave consumers with no surplus whatsoever. That story seems to me to be ridiculous because it's so easy for consumers to conduct this kind of search and try to find a lower price. So consumers have been empowered by this technology in my view.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“The economics of sales has really found its home on the Internet because you look at users, some people search for the lowest price and they have all these tools to find it. Some people just buy on an as needed basis. And so you've got these two segments of the population. It fits the model that I wrote in 1980 really quite nicely.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“And when you say They had to be charging a higher price before and then actually cut the price from the previous high price.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source
“But they're unloading at a loss because some new models come along and disappear. They'll cut the price. You know, in France, you're only allowed to have sales twice a year, and they have to be legitimate price discounts. And of a remarkable fact, I discovered.”
2019-06-19 · Conversations with Tyler · Hal Varian on Taking the Academic Approach to Business · IDENTIFIED FROM THE TRANSCRIPT · source