Random thoughts of an economist

Need some incense, sir?

Posted in Economics by kafuwong on January 10, 2017

Stepping out of Wong Tai Sin MTR station towards the Wong Tai Sin Temple, you will see a line of four persons trying to sell incense to tourists.  If you are like most tourists, you will walk pass them and go to the point of interest – the Temple.

Unlike most tourists, I was not in a hurry.  In my recent visit, I paused to observe how they did business.  Initially, I wanted to know how often they were successful selling incense and the characteristics of the sellers who were more able to persuade.  Yes, there was a person with only one hand.  I would assume that more people would buy from him.  Nonetheless, I did not stay long enough to see any successful sales.

Initially, I thought the four persons would compete against each other for business.  To my surprise, they did not circle the potential customers at the same time to compete for business.  Instead, they took turns.  They organized themselves in a line.  The one in the front would approach the passer-by.  After the attempt, success or not, he/she would move to the end of the line.

The business appeared organized.  The obvious advantage of such arrangement is to avoid vicious competition and potential conflicts among the salespersons. That all salespersons circling the potential customers at the same time to compete for business can be understood as an outcome of non-cooperation, an inferior outcome.  That all salespersons lining up to approach potential customers one by one can be understood as an outcome of cooperation, a superior outcome.

What caused the cooperation?  Economists have studied repeated games and found that cooperation (which yield better outcome) is more likely in “infinitely” repeated games.

Now, think about the several local dominant players in specific sectors.  Have you ever wonder why they appear cooperative?


Coming home for dinner, honey?

Posted in Life by kafuwong on January 9, 2017

The telephone rang.  I picked the phone.

“Are you coming home for dinner?” My wife asked.

“What time is it?”  I replied.

“It is already six thirty.”  She said.

“Gosh.  I should be leaving office soon.  Should be home for dinner by seven thirty.”  I said.

“Good.  Dinner will be ready by seven thirty.”  She said.

It was eight when I opened the door.  My wife said, “We just started fifteen minutes ago.  Almost done.  Your son and I decided not to wait any longer.  We did save some for you.  All in the rice cooker.”  I could tell she was annoyed that I was late — again.

That was a normal day.  My wife was home taking care of the household chore.  That included cooking a dinner for the family.  In a normal day, I would be late for dinner.  In fact, even if I got home early, I would continue to do my work in the study — until I was told dinner was ready.  Even with the dinner-ready announcement, I continued to work for some time (kind of to finish the things at hand) and would show up late at the dinner table.  My wife was not happy.

In recent months, our roles switched.  My wife is now working full-time.  I stay home to take care of the household chore.  That includes cooking a dinner for the family.  Now it is my turn to ask whether and when she will come home for dinner.  Just like me in the past, she is often late for dinner.  I feel annoyed.

Yes, I feel annoyed by my wife’s being late for dinner.  I am even more annoyed by my being late for dinner when my wife was the cook.  Today, I start to understand how much I was hurting my wife back then — but only when finally we have a role switch.

Because I have been through it, I am more sympathetic of the hectic schedule of my love ones, and thus try to be more tolerant and supportive.