Wednesday, July 7, 2010

Spongeworthiness: An Economic Model

Avinash Dixit, co-author of the outstanding "The Art of Strategy," recently published a paper exploring the Seinfeld episode in which Elaine must ration her remaining contraceptive sponges.

Dixit's model can give Elaine precise advice once she establishes how many sponges she has remaining and how she feels about the trade-offs between "pleasure" today and "pleasure" in the future (the discount rate).

If sponges are plentiful and Elaine's discount rate is fairly low, any man will do. But if her discount rate is high, she'll wait for a nearly perfect man no matter how many sponges she has.

I've finally had enough math to be able to follow the paper's model. I wondered if it made me a bad person that I labored through understanding this model when I usually just skim over models involving, say, optimal portfolio theory.

Hat tip to the Freakonomics blog.


Millsy said...

Sounds like a good nomination for the Ig Nobel.

At what point in an academic career do you decide that figuring out models of spongeworthiness is the most productive/appropriate thing to do? I want to be there ASAP.