A new market is born

Coming to you soon, real soon. And it will mean that the computer I'll be writing this blog on two years from now will turn out to be much cheaper than its cost of production.

What is it that gets me so excited? Stories like this:

More than 250,000 PS3 owners have enrolled their console in the Folding@HoME project which uses it to study the shapes proteins assume.

And, even more, stories like this:

Sun Microsystems has launched a pay-as-you-go service which will allow customers requiring huge computing power to rent it by the hour.

Sun Grid costs users $1 for an hour's worth of processing and storage power on systems maintained by Sun.

So-called grid computing is the latest buzz phrase in a company which believes that computer capacity is as important a commodity as hardware and software. Sun likened grid computing to the development of electricity.

The company will have to persuade data centre managers to adopt a new model but it said it already had interest from customers in the oil, gas and financial services industries.

Today, most companies that rely on computing power face high costs associated with IT maintainance, building up excess processing capacity to deal with peak times (which may be few and far between) and storing all this power in what is expensive real estate.

For such a company, the ability to rent processing power on demand is an amazing boon. But despite Sun's rhetoric, the comparative advantage lies elsewhere: home computers.

Just realise that the average home machine operates only a few hours a day, and even fewer at full capacity. Home users already meet the fixed costs of maintainance and real estate. How long till some clever silicon valley entrepreneur adapts the (already available) software and develops a viable business model?

The Queen and I: a story about change

The New York Times (thanks to Greg Mankiw for the link) have a story on the row that erupted after a chinese restaurant refused to accept payment in pennies. Here's a snippet:

It was about 11:30 p.m. on April 23 when Wayne Jones stopped at the Great Wall Chinese Restaurant in the Soundview section. Mr. Jones, 47, a lieutenant with the Fire Department’s Emergency Medical Service, ordered four fried chicken wings to go. The total was $2.75.

Mr. Jones placed his money on the counter: two $1 bills, two quarters, one dime, one nickel — and 10 pennies.

“The lady behind the counter started yelling, ‘No pennies, no pennies,’ ” Mr. Jones said. The woman told him she would take 3 or 4 pennies, he said, but not 10.

The tale of the 10 pennies unfolded yesterday in a sort of sidewalk circus. It was a melodrama of pocket-change proportions, part political stagecraft, part whodunit and, perhaps, part slow news day. Reporters descended upon the cramped, seatless lobby of Great Wall as customers elbowed their way inside to order food. A Bronx lawmaker stood outside alongside Mr. Jones, vowing to take up the issue in Albany.

I've had the exact opposite problem in the past. The fare for the bus I used to ride to University cost 60p and, while I am an avid coin collector, I don't tend to carry the stuff around with me. That created a bit of a problem: the bus drivers had an almost religious antipathy to handing out change.

At first I accepted this as a fact of life, and settled with walking to university through the (frequently torrential) rain. After spending a big chunk of my first year in bed, coughing and taking temperature, I knew I had to find a way to get on that bus. By mid-year, I had discovered the killer answer to all these heartless drivers.

The bus would stop and I would walk inside, trying my best to project an aura of aristocratic righteousness and superiority (a bit difficult to pull when you are a hair-all-over-the-place, worn-out-jacket-clad student, but nevertheless I tried). The driver would take a look of disgust at my £1 coin or, even worse, £5 note and command me off the bus.

And that was the moment I would go legal on him: 'It's got the Queen's face on it, you are obliged to accept it as payment'. Most of the times, he would frown a little and reluctantly let me in - for free. The few brave souls that resisted the argument were faced with my polite request for their name, so that the police could be invited to settle the matter. No-one ever took the challenge, and I would happily take my seat inside the, oh so warm and cosy, bus.

The funniest thing? I don't even know if this requirement is actually enshrined in law. But as I've found out, alleging lack of respect to the monarch sure makes for a persuading argument.

For those fascinated by this stuff, here is a link to one of my previous posts on why you can't get change in Italy.

For UK readers

From BBC news, a snapshot of life in statistics.

Friday Special - week 1

For those of us in the 'office sector', Friday is a special day. This is the first in a series of Friday posts listing some of the interesting stuff I came across during the previous week.

What to do if you have a big appartment, loads of coins and time to spare (video)

The gender genie - enter any text to predict the gender of the author. Seems to work too!

Via Greg Mankiw, a hillarious anthropological account of Life Among the Econ

Scott Adams, the creator of Dilbert, on The Joy of Righteous Indignation

The New York Times: For $82 a Day, Booking a Cell in a 5-Star Jail

Cheating Scandal at Duke

BBC News: Woman put excrement in man's curry

The New Zealand Herald: Colonisation and Christianity blamed for smacking

Kopi Luwak, the most expensive coffee in the world

Levitt and Dubner discuss economic research on monkeys

Levitt again, on why drugdealers live with their mums. (video)

Reuters: Muslim women in France regain virginity in clinics

Mapped up: News and blog feeds from around the world - with country of origin marked on funky map. Available as screensaver and online.

Sentencing according to probability of guilt

Two murder trials take place within weeks of each other. The first one is almost purely a procedural matter: there is overwhelming evidence that the accused is guilty and no reasonable man could argue otherwise. Not so in the second case, where while the evidence point towards a reasonably high probability of guilt, some jurors and members of the public still have their doubts (reasonable or otherwise).

Both men are convicted - and sentenced to the same number of years in prison.

Repeat this same scenario a few thousand times, and the defendants that fall in the second category will have served a lot more 'undeserved' years in prison than those in the first. In fact, given that 'society' determines its optimal sentencing policy by taking into account the probability a miscarriage of justice takes place, those that are indeed guilty will enjoy a more lenient sentence than they would have been awarded in a world with perfect information.

This is a classic example of the inefficiency arising by awarding an average (rather than probability weighed) performance payout to all agents under conditions of uncertainty. I take it as given that society prefers someone who is undeservedly in jail to at least be freed sooner rather than later. In so far as the balance of opinion within a jury is correlated with probability of guilt (and it better be, because otherwise we should discard the notion of a 'fair trial' all together) our approach to sentencing is grossly inefficient and unfair.

Postscript: I am ignoring potential issues arising from strategic interactions amongst jury members here, however these should not affect the basic thrust of the argument.

Murdoch makes an offer you can't refuse

Here's the story:

DOW Jones could face a flood of shareholder lawsuits if it rejects a buyout bid from News Corporation and its shares tumble, legal and governance experts said overnight.

Dow Jones, publisher of the Wall Street Journal, has said it is evaluating the $US5 billion ($6 billion) takeover bid from Murdoch's News Corp (nws.ASX:Quote,News), a proposal that triggered a nearly 55 percent jump in its stock price on Tuesday.

But a representative of the publisher's controlling shareholders, the Bancroft family, said they would oppose it.

If the board ultimately rejects the offer, and no comparable bids emerge, lawsuits almost surely will be filed accusing the directors for failing to look after investors' interests, said Thomas Dewey, a partner at law firm Dewey Pegno & Kramarsky.

55% jump in the share price upon publication of the offer? If I was a shareholder, I'd sue too.

Who said that the rise of litigation culture is a bad thing?

Advice to the Chinese press

This is from 'Minutes of the News Briefing, Bureau of Propaganda and Management, State Administration of Radio Film and Television':

Abide by the propaganda discipline, stand in the same line with the central government and the people.

They also have a problem with watching cartoons and talking about pigs.