Hotel Booking Tips to Avoid a Travel Nightmare
By Chris | October 26, 2007
If you have an extra half hour to spare, check out Megan McArdle’s lengthy rant about having the hotel room she booked on Expedia sold to another guest. Hotels, like airlines, frequently overbook rooms under the assumption that some guests will cancel. Moreover, reservations without a valid credit card will almost always be canceled. I spent the summer working as a night clerk at a mainstream chain hotel and have a few insights on how to avoid/deal with this type of situation:
- Never use Expedia to book same day reservations. Even in today’s technological age, Expedia’s reservation system is often out of sync with a local hotel’s software. The conglomeration of different computer systems trying to communicate results in frequent glitches. Also, customer contact information often isn’t transferred properly. That is likely why Megan was not contacted about her “declined” card.
- If possible, don’t book online. Hotels make more money when guests book their rooms by calling the hotel (and prices are usually the same). When an error occurs, hotels are more likely to alienate their less profitable internet customers.
- On the day of arrival, confirm your reservation over the phone and get the clerk’s name. Doing so gives the clerk a STRONG incentive to make sure your room will not be sold to someone else. This is critical if you plan on arriving late.
- If you find yourself in this situation, don’t be rude to the night clerk. Most overbooking problems are created during the day and inherited by the night clerk. Politely ask that the clerk find another room for you at the hotel’s expense (you shouldn’t have to pay anything). Night clerks have a lot of discretion when it comes to accommodating such requests, yet have little incentive to help an obnoxious guest (not to imply that Megan was rude). This is especially important when fault lies with a third party.
Expedia normally operates under a direct bill scheme. Expedia charges the credit card provided online immediately and later is billed by the hotel for the cost of the room. There is no reason, that the hotel should have tried to charge Megan’s credit card. It is my guess that the hotel clerk was inexperienced and did not realize that all Expedia reservations are, by default, guaranteed by Expedia. (Travelocity uses a different billing system, where the hotel charges a “Travelocity Credit Card” which can create confusion).
These things happen. Calling the hotel directly to confirm your reservation is a small inconvenience. Think of it as a small insurance premium to pay in order to avoid a traveling nightmare.
Topics: Advice | 1 Comment »
Why eBay is Doomed
By Chris | October 25, 2007
I have heard a number of complaints about eBay over the last few months: the site is being overrun by shady commercial listings, it’s more difficult to find relevant listings, and design changes are confusing. The company definitely is embracing change. In 2005, CEO Meg Whitman spearheaded the hasty and expensive acquisition of Skype. The purchase of Skype has been highly criticized. EBay recently announced it would take a $1.4 billion charge in relation to the purchase. More recently, the auction website added a social networking component called My World.
EBay was one one of the few internet pioneers of the 1990’s that was profitable from the start. Its success can largely be attributed to network effects. As eBay grew larger it’s value to buyers and sellers increased at an increasing rate. Its rating system gave users confidence in transactions with complete strangers. Later, its acquisition of Paypal and its vigilant efforts to fight phishing scams further increased the security it offers its users.
However, ecommerce on the rest of the net has grown and matured as well. Amazon.com has a thriving market for used goods. Yahoo! and other sites have made it simple for small businesses to easily and securely sell products. eBay’s differentiating service is auctions. And for most goods, auctions aren’t very attractive to buyers. First of all they are time consuming in a consumer culture that worships convenience. On eBay it can take seven days for an auction to end. But, more troublesome is their failure to match buyers and sellers efficiently.
For example, I recently was looking to buy a vintage Minnesota Twins t-shirt. I went straight to eBay and found two that I liked. The problem was that bidding on my second choice ended first and bidding on my first choice ended last. I faced a dilemma. I only really wanted one Twins shirt. If I waited to bid on my first choice and I lost the auction, I would be out of luck. But, if I bid early on the less preferred shirt and won, I could possible forego the opportunity to buy a shirt I liked better, for less money. This problem is compounded by software that allows eBayers to place their bids in the final moments of an auction. This makes the auctions similar to a sealed-bid auction where the winner pays the next highest price. It keeps price information private that, if public, would allow buyers to make better informed decisions. If I knew that the price of my preferred shirt was already selling for 100 dollars, I would be more inclined to buy a slightly lesser preferred shirt that cost much less.
It’s an exaggeration to say that eBay is doomed, it has a large base of users and strong brand recommendation. However, it has some real challenges to address. If eBay wants to grow its profitable ecommerce business, it needs to offer buyers more than friend requests and free phone calls.
Topics: Economics, Web 2.0 | No Comments »
Studying Computational Microeconomics?
By Chris | October 24, 2007
If you are in at least the second year of a PhD program and are doing research in the area of online markets, prediction markets, sponsored search auctions, or query incentive networks, consider applying for a fellowship from Yahoo! Fellowship winners are awarded tuition and fees for 2 years and 1,000 dollars for their respective departments.
Topics: Opportunities | No Comments »
Why Your Meteorologist has a Shot at the Nobel in Economics
By Chris | October 23, 2007
That might be a bit of a stretch, but meteorology and economics have a lot more in common then you might think. Both the youngest and oldest winners of the Nobel Prize in Economics were meteorologists before they were professional economists. Kenneth Arrow, the youngest to win, was a weather forecaster during his military service in World War II. Similarly, Leonid Hurwicz, one of this year’s winners, taught meteorology at the University of Chicago between 1942 and 1944 before entering the field of economics. At 90 years of age, he is the oldest person awarded a Nobel prize in any field.
In a 2000 interview, Kenneth Arrow compares and contrasts the two fields:
“What I found then was another example of a very complex, interacting system. It [meteorology] had a big advantage over economics because the fundamental theory was very well understood.”
Stanley Alcorn and Ben Solarz in the Yale Economic Review also find the weather to be similar to – albeit less complex than – economic phenomena:
“Economic models would bear resemblance to those of meteorologists, though with the added difficulties of the absence of conservation laws, evolutionary change, and decisions being influenced by uncertain perceptions of the future.”
Maybe the Fed should accompany its next interest rate change with a report of bright employment prospects with a 30% chance of inflation. That was a pretty bad joke, one of many targeted at professions with which the public has very little confidence. Economists “predict 9 out of the last 5 recessions” while an honest weatherman says, “Today’s forecast is bright and sunny with an 80% chance that I’m wrong.”
References: I learned Arrow was a meteorologist listening to a podcast at Bloomberg, there are lots more economics and meteorology jokes where the above came from.
Topics: Economics, Great Economists | 1 Comment »
Inviting Ridicule
By Chris | October 22, 2007
Children in England and Wales have been routinely weighed at school for the last two years. Now, parents of children as young as 5 will receive notification if their child is obese, reports the Times. When I was 6 years old, a routine eye screening caught my lazy eye while there was still time to correct it with an eye patch. Of course, the patch made it much more difficult to kick a soccer ball and it had a tendency of “falling off” during recess.
The government definitely has a role screening children to identify ailments that otherwise might go untreated. But does obesity fall in this category? If a child’s parents haven’t noticed that their child is 30 pounds overweight I highly doubt a letter from the school district will cause them to spring into action.
When I learned that my eye sight was not perfect, I was devastated. Not because it drastically reduced the likelihood I’d ever play professional baseball, but because I knew that glasses invited ridicule. It is only a matter of time before a child’s peers find out that he is so fat that his parents have been notified. Secrets have a tendency of spreading in elementary school.
But, what does this have to do with economics? The collective nature of medicine in the United Kingdom and elsewhere results in “externalities” that didn’t exist before. Regulators are focusing on obese children because they grow up into obese adults, and obese adults have more health problems. Weighing children is one method of addressing this externality, but isn’t a Pigou tax also appropriate? In the best blog post I’ve read all month, Free Exchange (The Economist’s blog) argues against “fat taxes.” Here’s my favorite quote, but I recommend reading the entire post:
“A prior choice to socialise previously private costs does not throw us ineluctably into a game of restricting liberties to minimise the externalities our choice of system has caused.”
Topics: Economics, Education | No Comments »
The College Experience
By Chris | October 21, 2007
Michael Wesch, a cultural anthropologist at Kansas State University, asks 200 students their thoughts on a Vision of Students Today. The video is available on YouTube.
Having attended Kansas State University, the University of Minnesota, and the University of Idaho I can say that this video does a decent job of capturing the culture in a mainstream public university. More and more students are going to college today to send the right signals to potential employers, learning is an afterthought. The problem with mainstream universities isn’t large classes or professors that don’t know students names: it’s apathetic students. As an undergraduate and now as a TA, I’m constantly amazed at how little work undergraduate students are willing/expect to put into their classes.
The video points to the massive amount of time students spend online. While the internet can be a distraction there is no doubt that it has facilitated the free flow of information that was only a dream even a few decades ago. I’m reminded of a quote in Good Will Hunting when Will criticsizes an arrogant Ivy League student:
“You wasted $150,000 on an education you coulda got for a buck fifty in late charges at the public library.”
Today, you don’t even need to go to the library. When hardworking students get so much out of their college education and others get so little, it is hard to blame the system.
Topics: Education | No Comments »
Huckabee is Mistaken
By Chris | October 21, 2007
Recent comments by Republican presidential candidate Mike Huckabee via Krugman’s blog:
“Sometimes we talk about why we’re importing so many people in our workforce,” the former Arkansas governor said. “It might be for the last 35 years, we have aborted more than a million people who would have been in our workforce had we not had the holocaust of liberalized abortion under a flawed Supreme Court ruling in 1973.”
What I find most disturbing about this statement is the implicit assumption that jobs are static. Had all the children aborted since 1973 been born, they would be working and consuming resulting in the creation of new jobs in the economy. America would still purchase labor (through outsourcing or immigration) for jobs that Americans are unable, unwilling, or at a competitive disadvantage to do.
Topics: Outsourcing | 1 Comment »
Nobel Theory, File Sharing and Social Networking
By Chris | October 21, 2007
TorrentFreak reports that researchers at Harvard are using mechanism design theory to create an improved BitTorent file-sharing client. BitTorent is a peer-to-peer file sharing protocol that breaks files into little bits, which are then shared based on reciprocity with other users. For a succinct and clear explanation, check this link out. The current BitTorent protocol exchanges data with others offering something in exchange which, while preventing free-riding, faces traditional game theory problems. In addition to creating a system that promotes an efficient use of bandwidth, the researchers are examining how to best maximize the social dimensions of file sharing.
I think that mechanism design theory and other areas of economics have the potential to improve social networking sites such as Facebook and MySpace. Administrative decisions about privacy and the introduction of outside applications have complicated and far reaching effects . Facebook introduced a News Feed last year that alerted users when friends had updated their profiles. This change was met by an outcry from users complaining that their privacy had been violated. The problem with the News Feed was an economic one, everyone wanted to easily check for updates of friends’ profiles, but no one wanted their every move scrutinized. Facebook relented and allowed users to opt-out of the feed. It has also taken a strictly voluntary approach to the introduction of “apps” created by independent developers.
The voluntary dissemination of information protects users’ privacy but it also creates suboptimal outcomes. So many people opted out of the News Feed that it is virtually worthless as an informative tool. Other friends can still scrutinize your every move, it just takes longer. An aggregater that provides targeted, useful information is likely a positive thing. Unfortunately, an incentive structure that encourages users to share information that costs them little and offers others a lot is logistically difficult. But, with millions of dollars at their disposable and control over the environment that real world regulators can only dream of, I wouldn’t be surprised if Facebook and MySpace can solve prisoner’s dilemmas that plague the real world.
Topics: Web 2.0 | No Comments »
Tv-links.co.uk shut down
By Chris | October 20, 2007
A popular British website that linked to streaming videos of television shows and movies was shut down on Friday. I was introduced to the site as an undergraduate while working as a night auditor at a hotel in my college town. My coworkers would use the site to catch the latest episode of “House” when there was a lull at work. I wasn’t particularly impressed with site as links were often dead (having been shut down for violating copyright) and the quality of videos was poor. I much preferred to watch a TV show through the video feed of its respective network’s website.
While piracy on a large scale likely reduces industry profits and the incentive for innovation, it also fills demand that would otherwise go unmet. Many of the links on the tv-links.co.uk were for shows that are no longer, or very rarely, on the air. For example, past shows that aren’t out on DVD such as “The Wonder Years” are virtually impossible to watch legally. When their is no legal venue to view a show, piracy may be illegal and/or immoral, but it’s probably not inefficient.
Topics: Piracy | No Comments »
On immigration
By Chris | October 20, 2007
When Poland joined the European Union in 2004, the United Kingdom opened its borders to Polish immigrants. The New York Times reports on the impacts of this wave of immigrants. A few highlights:
- It’s estimated that Poles in Britain have an estimated combined disposable income of 4 billion dollars annually.
- Poles are thought of so highly that other Eastern Europeans pretend to be Polish to improve their employment chances.
- As economic conditions in Poland improve immigration is dropping and Britain is facing labor shortages.
I was also struck by the similarities between Polish and Mexican immigrants both in the type of jobs they typically fill (construction, nannies, agriculture etc.) and the concerns of natives about immigration (crime, overuse of public services etc.). While some economic literature finds that immigration from Mexico is a wash, I support more liberal immigration policies on humanitarian grounds alone. I can’t help but suspect that competition for workers encouraged Poland to enact market friendly reforms. Wouldn’t it be great if Mexico’s economy reached the point where the U.S. faced a shortage of workers in low-skilled industries? Maybe, a more lenient immigration policy is the first step in that direction.
Note: If you missed the Freakonomics interview with Philippe Legrain, I highly recommend you check it out.
Topics: Immigration | 1 Comment »
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