OR: models

In my opinion, the use of mathematical/economic models is that *we don't have to generalize as much*. When we limit ourselves to words and avoid the use of numbers, we might generalize a multivariate, complex situation to a much simpler one. There is no meaningful contrast between "logical reasoning" and "mathematical models"--"real" facts, reasoning, and a spreadsheet full of "real numbers" can all be considered models (though many would refuse to consider "real" information to be models). If you pass legislation that affects the future, the content of debate on the senate floor can be considered models.

Proving things using formal logic requires very strong statements and assumptions (for all x, we have y), which may alter the outcome substantially (especially in situations involving complexity--It is rather difficult to predict emergence only using predicate logic.). For example, Aristotle used the rather strong assumption: ALL physical objects in the absence of disturbing will come to rest. It is quite difficult to say the least to prove something is the best decision if we limit ourselves to only taking assumptions not involving numbers--because the only assumptions left are so very strong (i.e., a=>b).

All models are wrong; some models are useful.
- George Box, statistician (generally attributed)

Of course, it is difficult to see when assumptions are unreasonable. That goes for assumptions of the form "best decision"=max{x|...}, and of the form "a=>b for most a and b."

Especially dangerous is when people try to make it look like they're doing operations research, when really they're just throwing numbers on conclusions made in the form "a=>b for most a and b" and failing to take things like complexity into account at all. In other words, don't judge the validity of a model based on the probability that it is valid enough to be useful given that it contains numbers versus the probability that it is valid enough to be useful given that it does not contain numbers--there is probably a small difference in probability (which could go either way--who knows!) that we could calculate based on Bay's law, but this probability difference could go either way, will change over time (even in response to printing such a report!--there might be cyclic trends or long term trends in the value or in it's probability distribution; the value might follow Brownian motion; and the rules might change completely over time), is almost certainly too small to be significant (i.e., validity and having numbers are functionally probabilistically independent--we know the two are not dependent such that their state space are concentric or disjoint like a causal relationship, but the probability distribution might not be mathematically independent). My guess is that they are probabilistically independent (to a relevant number of significant digits).

Regulation Q

Did you know that Regulation Q (introduced in 1933, phased out for non-checking accounts in the 1980s) was a regulation that set a ceiling on the interest banks could pay?

I wonder what the typical interest rates banks paid on deposits before 1933. I wonder if the regulation had lasting effects that outlived its phasing out (like that Freakenomics anecdote about how charging late fees for parents picking up kids at day care caused lateness to jump catastrophically, and removing the fee had no effect). When the regulation was phased out for non-checking accounts, interest on deposits had been suppressed below interest on everything else for 50 years. 70 year olds in 1980 had been earning Regulation Q influenced interest on deposits from the age of 20 to the age of 70. How many years had they earned pre-Regulation Q interest on deposits? 2? 4? Teenage years may be formative, but day-in-day-out 50 years--your entire carrer and much (on average all) of your retirement might be more formative.

If people don't expect to earn money on deposits any more, undoing the regulation would not undo the effect.

I suppose this is sorta like the reasoning behind affirmative action. Though of course, just because stopping the action didn't help, we can't conclude that doing the opposite would help either--would paying parents for picking up kids at day care late cause them to stop picking kids up late? (Probably not, though it might, if it were framed as shaming)

Credit

I see signs that banks are tightening credit.

One bank canceled my line of credit because I never used it.

Another bank declined a small charge yesterday, even though I had enough credit, and even though customer service assured me it was not denied because they thought the card was stolen. He said it was a very rare glitch in the system, where the payment I made (13 days prior) was not posted for some reason.

My groundless theory is that they're freezing lines of credit for microseconds to prevent momentary fluctuations of debt above their own (voluntarily or involuntarily reduced) line of credit.

Or it could have just been a once-in-a-blue-moon computer malfunction, reducing my credit to 0 until a backup corrected the error.

Verizon and Hardware Crippling

Verizon is known for "hardware crippling," where they disable functionality built into the hardware of their phones. After crippling, native functionality of the hardware can only be utilized at a fee. This is kinda evil, but not necessarily illegal.

False advertising is the only law legally relevant here. Extortion in the courts only refers to a written or verbal treat. Usery only refers to interest rates. Price-gouging only refers to raising prices in an emergency.

Verizon has already been involved in false advertising class-action lawsuits:

- they marketed phones as "GPS enabled," when they actually disabled it (you have to pay a monthly fee to enable it)

- they marketed phones as "full Bluetooth capability," when they actually disabled full Bluetooth capability (and removed it on certain devices)

Taking photos is normally free. A company is obviously completely within it's legal rights to sell a camera that charges you a $1 service fee every photo--but only if they explicitly advertise/market/label it as so, because a box that just says "camera" implies "free photo taking" in the marketplace.

I argue that "digital camera" implies that you can transfer the photos to your computer without a fee, unless you say otherwise.

Could a camera company get away with selling a digital camera whose box listed 100 specifications, but neglects to mention that data transfer capabilities have been disabled, and the buyer cannot download his own pictures directly, and instead must pay the camera company to pipe the pictures over the internet from camera to computer.

Could this camera company argue that:

"Data transfer capabilities were only disabled and not removed.

If the user hacks into his camera, voiding his warranty,

s/he can still access his pictures for free.

Therefore, not writing 'pictures can be accessed at a fee'

next to the word 'digital camera' on the box

does not count as false advertising.

Our service only charges for convenience."

Can this company get away with putting 'pictures can be accessed at a fee' as fine print, the same size as all the other fine print? No, they have to use very large print in this surprising case.

The Motorola RAZR hardware allows you to access the media (pictures, audio, video) that you yourself recorded using your phone for free.

Verizon admits that they crippled the V3m's hardware in order to restrict user access to copyrighted material. Therefore, whether purposely or inadvertently, they have also restricted user access to material that users themselves have recorded, forcing them to download them through Verizon's network at a fee. This is fine--as long as they appropriately advertise this fact next to the affected functionality, namely voice recording, photo taking, and video taking.

Can Verizon market a RAZR that says "2.0 megapixel camera," "voice recording," and "video recording capability," without a huge asterisk next to each and larger-than-fine print?

They might be, but only if consumers have come to expect that media recorded with cameraphones cannot be accessed without a fee (which might be the case by now, especially for the dying breed of "non-smart phones").

Unintended Consequences

The only reason I am aware of the effects of Reinforcement, Escape, Punishment, and Penalty is:

• to better avoid unintended operant conditioning
• not to explain behavior--because Affirming the Consequent is difficult to defend; if it's not necessary or relevant or even helpful, why weaken my credibility and future effectiveness?
• and certainly not to intentionally condition behavior--because unintended operant conditioning is almost unavoidable in many settings