Heavy Lifting - thoughts and web finds by an economist
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Wednesday, February 09, 2005

Economist has epiphany

and has to perform a mea culpa. For all those who took the time to read my first crack at a theory on scalping, I apologize for wasting your time. Today on the plane to Myrtle Beach (for the Academy of Economics and Finance meetings) I think I figured out the problem with the theory. The problem is in the "average value" that I used to set the value with and without scalpers - which is WRONG!! The theory can be salvaged, however, and the ultimate result still stands (with the added bonus that the math is actually easier!!), so I am confident that I can salvage the paper.

If you read the paper after I posted a link to it here, let me know and I will grant an acknowledgement to you. Why? Because putting the paper in the public domain forced me to take another look at aspects of the model that never set well with me. Therefore, if you read the paper you indirectly helped me to make the paper better, which is what acknowledgements are all about.

What solved the problem? Drawing a picture.

Sounds stupid, but it's true. A simple picture showed me where I had gone wrong. This is a valuable lesson for the young economist (one that even us "well published" folks can forget). When the math doesn't feel right, draw a picture. Two things can force you to really look at what you are doing: a seminar or letting your paper escape the friendly confines of your hard drive.

I apologize for those who read the paper and either (a) didn't understand what the heck was going on or (b) tried to figure out what was going on and couldn't.

I am more embarassed about the mistake in my model than I am about my bad prediction on last week's Superbowl.

Mea Culpa, Mea Culpa, Mea Maxima Culpa...

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