Monday, August 31, 2009

Pass on Post Grad

Predictable, and unintertaining fare. I found my self checking my watch at the one-hour mark, which is early even for me. Not a good look for Fox Searchlight.

Tuesday, August 25, 2009

Recruiting early

I'm out in LA right now meeting with a few firms for recruiting. If there is one thing that I would definitely stress to business school students, it is the value of early recruiting.

In terms of signaling, it shows that you are interested early, that you are willing to give up some marginal leisure time, and that you are knowledgable about the industry and firms before they do their company briefings, which can add quite a bit of difference at the margin.

Tuesday, August 18, 2009

Over at Austrian Economists, Dave Prychitko says:

I don't want to know what my students believe or think. I have neither the time nor the interest. Instead, I want to know how they think. Are they using the economic way of thinking? And, if so, are they merely using the same words and terms that I use in the classroom, or are they absorbing and understanding economic analysis? I feel that my goal as an educator is to offer them a way of learning how to think about complex social phenomena. "What do you think about minimum wages?" -- forget it. "How do you think about minimum wages?" Now we have something to discuss.

This has basically been my approach to business school. I have consciously selected classes that are going to teach me how to approach a problem, such as "Managerial Decision Making", and have avoided classes that will enhance my knowledge of facts, such as "Doing Business in the Middle East". The latter type may be helpful, but are easier to make up for after business school than the former.

Monday, August 17, 2009

The question of "fit"

Over at the Tuck Admissions Blog, a prospective askes Suds:

All B-schools speak highly of diversity and fit. To my mind, these are really divergent values and each school has its own answer on how these values converge. As a Tuck student, what would you say is common to all Tuck students that gets them to bond despite the diversity and differences in background, actions and goals?

I want to answer it slightly differently than Suds did.

Most of the commonality among Tuck students is created while at Tuck. The reality is that many students who go to top ten business schools all originate from a similar diverse pool. It is the social insitutions within the school's framwork that cause bonding.

If there is any ex ante commonality to Tuck students, I'd say it is more about latent characteristics which are activated in the group dynamic:

- Willingness to commit yourself completely to a compact and inescapable social environment.

- A desire for a smaller, more entrepreneurial setting.

- Openess to a (temporary) rural life.

I'd say that's pretty much it, but I also view this as an entirely positive. I'm big on diversity of all kinds, as I believe that social evolution depends upon it. If "fit" was really about bringing in students with pre-existing commonality, then I would be against a "fit" doctrine.

Monday, August 10, 2009

The Tuck Honor Code: a case study in a public good

For those that don’t know, Tuck utilizes an honor code for most of its academic administration. That means that most exams are unproctored. You can take them anywhere you like, and you self-time within a given window of usually a few days. The honor code has been strong asset for signaling future employers, as the Wall Street Journal survey has show that recruiters consistently rank us as the most ethical business school students out there.

You would think this would be a classic case for free rider problems. One might expect everyone to end up cheating, right? Well, I can say without a doubt, that is not the case. Cheating on these exams is definitely rare, to the point that you rarely hear even whispers or rumors of incidence. This does not mean that it doesn’t exist, and there have been exposed cases in the past, but overall, as a student here, I can unhesitatingly vouch for my classmates.

The question a standard economist might ask himself is why does this public good not suffer from massive free rider problems? After all, in Nash equilibrium, everyone in the school ends up cheating. One possibility is that the threat of the administration is so fearsome that the expected value is negative. But I’m pretty sure that isn’t it. The probabilities of getting caught by the administration are very low and the Judicial Board isn’t very likely to hand out the “death sentence” so to speak.

My take:

This is a Coasian story. The primary value gained from business school is the "property right" in the lifelong network you leave with. Adherance to the honor code is one of the costs of a property right in this network. The costs of self-regulation and self-policing are extremely low in a close-knit environment like Tuck, so it isn't hard to enforce rights related to this social capital. Feedback loops reinforce social costs of cheating (joking about it doesn't even seem permisable).

Saturday, August 8, 2009

What I'm reading right now

The Real Estate Challenge by William Poorvu. HBS' real estate guru runs through a series of case studies dealing with various issues in real estate. The language is dry but the cases are somewhat useful. It still might get abandoned if it doesn't pull me in soon.

The Picture of Dorian Gray by Oscar Wilde. I never read it in college and high school but that is probably a good thing. I'm fairly certain I wouldn't have appreciated or understood it compeltely then.

The Adventures of Sherlock Holmes by Arthur Conan Doyle. I've always been a big fan of the original Gregory House, but my reading of his stories has been anything but cronological. First time reading The Adventures...

The 48 Laws of Power by Robert Greene. This book is on its last leg with me. Will probalby get abandoned this week. Some of the stuff is so obvious and some of it I think is downright useless. Don't bother.

Conceived in Liberty, Volume 2 by Murray N. Rothbard. Rothbard doesn't cite anything, and he has been proven to distort and mismanage source material in the past, but he is one of the few authors who is reanalyzing history in the libertarian light. Overall, I wish more economists did historical work because the analysis that you get from some historians is cringe worthy.

Friday, August 7, 2009

Misconceptions about Austrian Business Cycle Theory

I'm very happy that ABCT is being talked about and debated these days, however, those who are critical of it (Brad DeLong, Paul Krugman, et al), get one thing wrong. The length and depth of the recession need not be explained by sectoral reallocation alone. DeLong has been particularly willful on leaving out this point. The ensuing panic caused by such misallocations (what Hayek called the secondary downturn), may and sometimes does have a much larger impact. In terms of MV=PQ, when people rush to hold cash and less risky assets, V drops. If M is not increased to counterbalance, this deflation can lead to a decline in Q, as P will not adjust immediately. This part of the recession occurs completely independently of the sectoral shifts.

The critics should acknowledge this, or at least acknowledge that Austrians acknowledge that magnitudes between boom and bust need not be symmetrical. Friedman dismissed the link between the bust and the preceding boom. Austrians link the two, but there need not be a 1-to-1 ratio in magnitudes.

Thursday, August 6, 2009

I would use stronger language than Professor French

From Professor French:

After the fact it is easy to identify periods in which stocks did well and periods in which they did poorly. But if you want to use these "seasons" to build an investment strategy, you have to identify them before they occur - and that is not so easy.

I say that it is impossible to indentify such seasons. But then again, I take radical uncertainty seriously, unlike most mainstream economists.