Remember, there shouldn’t be any Cash-on-the-table (unexploited economic profit) only on longrun and on average. Since different people have different emphasis on different goods, their reservation price for a good would not be equal. Thus a bargain that has no cash-on-the-table on averge may actually possess economic profit for some individuals.

he spectrum of Civil Order

|Loyality|———————–|Voice|———————–|Exit|

When people face imperfect repressive state apparatus, their way of resolving the problem varies. Some choice loyality, at least when the situation is still tolerable. When situation becomes more and more untolerable, people start to voice out–protests, debates, etc. When all ‘peaceful’ (at least intentionally) solutions failed, exit becomes the option; people either turn to violence, or just decided to leave the system.

People are often interested in the way I have my meals. They are amused to
see that I eat every item in almost equal speed: one mouth of beef, one mouth of
beans, followed by a little orange juice; after that, the whole sequence starts
over again. Through I have been doing so since I was very small, it
nevertheless, as I now see, make sense from an economic perspective.

To demonstrate why this is the case, suppose I have a limited quantity of 5
mouths of two food items to eat in a meal: meat and vegetables. Further suppose
that my reservation price for another mouth for having another mouth of each
item is as follows:

When I start my meal, I will eat a mouth of meat because it gives me higher
marginal benefit. Following that, I should eat a mouth of vegetables, obviously
for the same reason. It is easy to see that I will eat each item alternatively
until I finish my last mouth of vegetables. My ‘amusing’ way of eating is
just a way of maximizing my benefit from eating.

The way I view my home town, Hong Kong, has been expanded and deepen in these few weeks. In this essay I attempt to explore the networks which Hong Kong are engaged in, and how the city and the networks interact.

Hong Kong was foci of different commercial networks in each stage of its development. The harbor is the most important asset of Hong Kong; when the British first took it one hundred years ago, it was a fishing port, which it now remains to be. Half a century later it has become a commercial port, processing one of the largest flow of goods in and out of the People’s Republic of China (PRC) up till the very moment. In the last decade Hong Kong was well known as a financial capital, with one of the busiest stock market and numerous international corporation regional offices.

Yet a city is not just the container for all these commercial process; what happen inside the city does affect the process. For example, it has been proven that Hong Kong has the ability to affect the international financial market; at the very beginning of the Asia’s economic crisis, there are instances which the world’s stock markets crumbled after Hong Kong’s Hang Seng Index. Furthermore, a city would have some additional effects and control over the processes. In the last several decades Hong Kong has established itself as the “gateway to China”. On one hand, compared to mainland China itself, Hong Kong can provide a better jurisdiction and better human capital to foreign companies; on the other hand, Hong Kong had for years been the only channel available to the enterprises in mainland China to raise capital in the international market. Thus Hong Kong was virtually a monopoly in China’s international financial market; it was the focus which every monetary force must pass through.

Socially, city is where people with different background mixed. Despite the large local Chinese population, there exists some notable diversity. First of all, over a hundred thousand foreign maids and workers, mainly from Philippines, served in the city. While they bring in totally different cultures and values into Hong Kong, they also generated huge amount of capital for their home countries. To them, Hong Kong is a city of capital. This may not be the case for others though; until the last decade illegal immigrants from Vietnam had been a major problem in Hong Kong. During the peak period tens of thousands of these Vietnamese resided in temporary houses provided by the government, and lived their life like locals. Ironically, the reason that motivated these people to go to Hong Kong is to ultimately leave it; most of them aimed for the United States. To them, Hong Kong is the step stone to freedom and protection in the western world. Recently illegal immigrants from mainland China, who are often children of Hong Kong resident, have replaced the Vietnamese as the major problem encountered by the government. These mainlanders aimed for family gathering, yet another goal different from the foreign workers and Vietnamese. Thus, depending on their background, Hong Kong is not the same place to different people; they do not stay for identical reason, nor do their work towards the same goal.

Political network is another interest aspect of Hong Kong. Because of the separation of Taiwan and mainland China, trade and travel between the two places can only be conducted mainly through Hong Kong. As the amount of commerce between the two states increases, Hong Kong has gain a significant position commercially and politically. Even in nowadays, to get from Taiwan to China or the other way round, one must stop at Hong Kong; the city acted as a neutral zone in these instances. In addition, the PRC government is using Hong Kong to demonstrate the “one-country, two-systems” ideology to Taiwan, in hope that one day the peace reunion of the two states will be possible.

Lastly, Hong Kong is also a place of multiple histories. Just as any other British colonies, British system and values has been overlaid on the local ones; and being one of the last few colonies of the British Empire, it witnessed the decline of it. Hong Kong’s history was ‘set’ in one sense—it was designated to be returned to the People’s Republic of China. But when that became reality, Hong Kong has extended its ‘own’ history—with much British influence—into the new administration. Thus Hong Kong did not truly belong to the British Empire in the past, nor do it now to the People’s Republic of China. It can be understood why Hong Kong had still seen itself as a regional center ruled by an alien empire until very recent. It would be erroneous though to say that Hong Kong has full control of its own future; the outcome we see today has been designed to work exactly this way. As the Government of PRC has reminded everyone, the “one-country, two-systems” ideology is ultimately intended for Taiwan; Hong Kong is just a demonstration of the ideology.

Reviewing my description of Hong Kong in the paragraphs about, I notice several differences. First of all, Hong Kong’s role as a node in the commercial world has been my dominant view before; this is the first time I tried to inspect other aspects of Hong Kong more carefully. In particular, I start to see Hong Kong as the focus for all these people from different social networks; and the history and political role of Hong Kong is also topics that I would like to investigate further. I believe that through studying these different networks I can have a better grasp of the dynamics of the city in this ever changing world.

The full-disclosure principle states that if some individuals stand to benefit by revealing a favorable value of some trait, others will be forced to disclose their less favorable values. An example of toads competing for mates was used to demonstrate this principle. Note that the toads need to croak only at night, when vision information is not available; there is no need to croak under bright sunlight as the size of the opponent is clear to each toad. That is fine, but what about under dim light? In this case, the vision is not as clear as under bright sunlight, yet the size of the opponent can still be approximated. Now would the toads still croak? And which of them would croak? I asked my economics professor, and he said he did not know. Half-kidding, he said I can do a research on it.

Well, a serious research do not seems to be possible; however, a little study seems might be a choice. That is what I did.

My argument is that when there is a moderate amount of information (e.g. vision in dim light), those competitors who clearly have the most advantage, as well as those who clearly have the least, would not need to disclose the favorable value (e.g. pitch). However, those in the middle do.

Of course, it is impossible to get a bunch of toads to do an experiment. Yet as the toad example serves to explain the principle, so I can also use other scenarios for solving my doubt. One real world scenario that can demonstrate this “dim light” situation is the standard of colleges. Basic statistical information of the colleges is available, yet it is insufficient for judging the standard of a college. We can approximately tell which of the colleges are among the best, but we cannot do the same for the rest. My hypothesis is that the middle-ranking colleges would put more effort in promoting themselves; one way of doing that is to write more detail description on college guides, which is what I studied. The following is the procedure of my study:

1. A Random sample of size 9 or 11 was taken from each of the ranking categories in U.S. News’ doctoral ranking . The categories are: Top 50, tier 2, tier 3 and tier 4.

2. Peterson’s Guide to Four-Years College allows deans to write a passage to describe each of their own college . The length of the passage is no set (each college has two pages for all their information). I aware points according to the length of the passage a college used to describe itself; 1 points for a quarter page or less, 2 for half page, 3 for half and a quarter, and so on.

3. The mean is taken for each of the sample. Here is the result:
Category Top 50 Tier 2 Tier 3 Tier 4
Sample Size 11 11 9 9
Mean 1.636 2.182 2 1.889
4. 2-sample t-tests are done for each category against others .

The result is simple—the only difference that is statistically significant is the one between Top 50 and tier 2. So the only conclusion that I can firmly made is that tier 2 colleges use more effort (measured in how long they wrote) to describe themselves than top 50 colleges. Ignoring statistical test results however, the mean of each category does seem to indicate that the colleges in the middle use more effort in describing, thus promoting, themselves. The figures also seem to indicate that the colleges ranked the worst use more effort in promoting themselves than the top colleges. This may suggest that even the worst equipped competitors would try every possible way to enhance their competitiveness.

Recall the different situations I put forward in the first paragraph. If all college applicants have perfect information on the standard of the colleges, none of the college will write more to promote itself, because that would be useless. If no information is available, then all colleges will try to write long descriptions, because that description would be the only information the applicants have. The real situation we found, however, is that colleges of moderate standard wrote more. Therefore, despite that evidence is weak, the argument that under moderate information, only moderate competitors would disclose advantageous values seems to make sense.

The two highly anticipated new episodes of Star Wars have been criticized as disappointing, having a stupid script and over-dependent on computer effects. Reviewing past Hollywood movies, it is quite often that the second or third episode has much lower quality, even if the production crew is the same (personally, I will take Jurassic Park 3, Alien 4 and Men-In-Black 2 as examples). Why is this the case?

To solve this mystery, we need to know when in what circumstances will there be a second episode of a movie. The story of a movie is not what determines if the movie would have a second episode or not, because almost all Hollywood movies have an ending implying the possibility of a second episode. Plenty of dinosaurs are still alive in the end of Jurassic Park, which eventually leads to Jurassic Park 3; yet there is not another episode for Gorzilla, which has a comparable ending. Frankly, the real determining factor is how much money the movie has made. A rational filmmaker would not invest in the second episode of a movie that resulted had lost money. It should not be surprising that the first episode of a movie series is always the blockbuster of its year.

I believe the real reason behind the decline of a series is regression to the mean. The problem here is that to be a blockbuster of the year (out of the hundreds of other films being produced in that year), a movie must be exceptionally good. And to be exceptionally good intuitively implies exceptionally better than average. It should not be surprising then when we find the second episode of a movie worst than the first; they are just either doing average, or only slightly better than average. Honestly, the new Star Wars movies are still better than most of the movies in their respective years. The second episodes are not too bad; it is just that the first episodes are too good.