Sunday, August 26, 2012

The Economics of Kua Simi Kua

Staring incidents can be nasty. Just a few months back, one such incident sparked off a fight, and  a 17-year old boy suffered stab wounds in his back. Ouch. Despite this, Game Theory, a branch of economics applied to competition between firms, suggests that fights should never happen. I know it doesn't make sense, but let's run through the logic and see what we can learn from it.

Consider the diagram below. First a challenger decides whether to challenge an Ah Beng*, maybe by staring his girlfriend. If he decides not to stare, he does not win anything, and gets a 0 payoff. Subsequently, the Ah Beng happily hangs out with his girlfriend, and gets a payoff of 5.

*"Ah Beng" eludes simple definitions. Try Wiki for more.



However, suppose a challenge is made. The Ah Beng now has to decide whether to fight. However, nobody wins in a fight. If you don't get injured, you'll probably end up arrested. Even if neither happens, life goes on and you are no better off. As a result, payoffs are negative for both parties, at -5.

Lastly, if the Ah Beng doesn't fight, his payoff is 0. This is smaller than the "status quo" payoff of 5 - his might "lose face", and even his girlfriend. Even so, this is better than getting arrested for assault. In turn, the Challenger gets a payoff of 5 from looking at the Ah Beng's girlfriend.

From what I've said so far, I think it should be clear that the Ah Beng will never fight when challenged. Working backwards, the Challenger will find it better to challenge than not challenge. If this were true, why do we still see staring incidents, and why do we not see guys openly ogling at Ah Bengs' girlfriends?

Saturday, August 4, 2012

Does the Chinese Zodiac affect when people marry?

In an earlier post, I wrote about how births go up during dragon years, an auspicious year for having children. Because of this, Chinese couples might like to get married in the rabbit year, the year before the dragon year, to have a dragon baby. This, at least, is what I heard from a friend who had trouble booking a wedding venue in the rabbit year. Does this bear out in the data?

Wednesday, August 1, 2012

Do Olympics host countries have a home ground advantage?

Olympics host countries not only enjoy an influx of tourists and global attention, but their athletes benefit from, as the Metro puts it, "stadiums full of supportive fans cheering them on... There is no question that the home advantage will have an influence on performance".

Besides supportive fans, host athletes also compete in familiar environments. For instance, conditions in Weymouth Bay, the London Olympics sailing venue, are unique and hence challenging. British sailors will no doubt have an edge navigating local waters. Lastly, home teams don't have to battle jet lag and referee bias.

Do these really matter that much? At the end of the day, we want to find out if host countries haul in more medals.