Tuesday, April 22, 2014

Tell Me Again How Biased We Are

I've just started reading The Information Diet, which compares how we consume information to how we eat. Just as people are growing more obese while loading up on cheap, calorie-filled snacks, we prefer to consume information that we deem more tasty: the type that conforms with our previously held beliefs. Fox News and MSNBC dominate the ratings by appealing to the respective right and left of the political spectrum, while the more unbiased CNN drags behind.

Of course, the thought occurred to me that I would like this book, given how much I think about how arbitrary decision making is and how terrible humans are at looking at things objectively. I don't often seek out books talking about how rational we are.

Friday, April 18, 2014

Coin Appears to Be Headed toward Failure

Remember Coin? They caused a stir last year with a video about how their device could replace all of your wallet's credit cards. You could bring the George Costanza wallet into the digital age.

Reading over the FAQ section, either the company is running out of money or has a fundamentally flawed understanding of how customers behave. Companies that can appease customers' risk aversion can go far; look at how reassuring Zappos's return policy is.

I've launched a pretend conversation below.

FAQ section: How much does a Coin cost? Each Coin costs $100. For you early adopters there is a very limited quantity that can be purchased for $50.

Risk-averse consumer: I have the choice of buying now and getting an as-yet unfinished product at an unknown time, or waiting and feeling a loss of paying nearly double.

FAQ: How many cards can a Coin hold? A. The Coin mobile app can store an unlimited number of cards, however, a Coin can hold up to 8 cards at a time.

RAC: I'm probably one of the 90+% of people who can get by with only eight cards, but this limit is freaking me out! I hate this just like how I hate cellphone companies limit my monthly data usage, and how I worried about my download limit with my cable provider until they caved.

FAQ: Why do I have to buy a new Coin when my battery runs out? A. Coin is the size of a typical credit card and we were not able to fit a replaceable battery nor recharging components into this form factor. Coin is an electronic device, not a plastic card. We must charge for each device to cover the costs of research and development, manufacturing, and support.

RAC: This is another thing for me to stress about. Why won't you let me charge it? How can I believe your claims about the typical battery life? What if it runs out at an inopportune time (after all, I will have left all of my other cards at home and have no way to settle my bill)? Can't this come with some sort of warranty? I would feel terrible about buying something that I already bought.

FAQ: How do I get help or support? A. Please email us at help@onlycoin.com. We currently only offer email support. Our support hours are 8 am-5 pm PT Monday-Friday.

RAC: That sounds vaguely uninspiring.

Thursday, April 17, 2014

Is It Worth Risking the Caltrain Fine Instead of Buying a Ticket?

I take the techno-elite bus to work (you know, those ones that are becoming increasingly popular with the locals). Since the bus only leaves / departs once per day, I occasionally take Caltrain for one leg of the journey.

Caltrain is a proof-of-payment system. You can simply waltz onto the train without paying, but the conductor issues stern warnings that Caltrain retains the right to check your ticket and issue fines.

Should you actually buy a ticket? To the economically trained, this becomes an intriguing empirical question, solved by the expected-value equation.

Using my Clipper stored-valued card, I ride three zones, which costs $6.75 (see full fare chart). Getting an estimate on the fine is a little tougher. A Yelp post from 2007 says the fine is $300, while another blogger who asked himself this same question in 2012 cites $250. Let's go with the $250 number, since it's more recent, and it can bias my answer toward "you should not pay" (the outcome that all economists are secretly rooting for).

The equation would be as follows: 250x = 6.75, where x is the percentage chance that they'll check my ticket. Turns out that if tickets are checked any more frequently than 2.7% of the time,  you should buy a ticket. Things actually are a bit worse than that, as this equation doesn't factor in the shame you may feel if the conductor yells at you, the anxiety you may feel worrying about whether tickets are checked, or the hassle of physically paying the fine. On the flip side, maybe you could contest the assumption that you'll have to pay 100% of the time when they find you without a ticket, depending upon how good you at sweet-talking or claiming to be a clueless tourist. My wife's cousin also suggests that the "the machine wasn't working for me" excuse might work better if you actually have a Clipper card in your pocket instead of arguing that you were trying to buy a paper ticket but failed.

How often does Caltrain check tickets? Estimates vary widely: I have ridden Caltrain from Millbrae to San Jose or vice versa 10 times and have yet to be checked. My wife's cousin estimates that tickets are checked 1 in 6 times. The aforementioned blogger experienced checks on 45% of his rides in 2012.

Even though I've yet to see a Caltrain ticket check myself, I have to put my Bayesian reasoning to work here and assume the true rate is at least 2.7%. So while I can't squeeze any gains out of a government agency this time, at least I had fun trying.

Tuesday, April 15, 2014

Forgetting the Details

On rare occasions, I get so engrossed in good articles from Grantland and the like during my hour-long bus ride to or from work that I don't want the ride to end.

I felt this a few days ago. But I realize that if you asked me now what any of the articles were about, I'd have no clue. Part of me wants to think that I've somehow internalized the information (like how people say "I think I read that somewhere"). But let's assume I didn't; I've heard (somewhere) that we remember 10% of what we read. Did that defeat the purpose of reading? My answer is no. It gave me satisfaction in the moment, and I remember that satisfaction later. I think the concept could apply to any other fleeting activity I could have been doing with my phone during that bus ride, or a conversation I could have been having.

I have a pretty solid email correspondence with one of my buddies back in D.C. How many of our conversations or emails do I remember in any detail? It's almost certainly less than half. But just remembering the highlights and knowing "I've had lots of great conversations and emails with this friend" is enough for me.