The first time I encountered the name “Daniel Kahneman” was in a behavioral economics class, where we were introduced to his seminal 1979 Econometrica paper on “prospect theory.” Initially, I pigeonholed him as an economist—a label he might not dispute, given his significant contributions to the interdisciplinary field of experimental economics, which bridges psychology and economics and has been instrumental in the development of behavioral economics. However, Daniel Kahneman is perhaps more a psychologist than an economist. The recent Freakonomics podcast episode, “The Men Who Started a Thinking Revolution (Update),” features an interview with journalist Michael Lewis about his 2016 book The Undoing Project, which offers a high-level exploration of Kahneman’s impact on our understanding of ourselves. ...

And how many years can some people exist Before they’re allowed to be free? – Bob Dylan, Blowing in the Wind It is becoming easier for non-college graduates to settle for a job in metropolitans, thanks to the growing platform economy that lowers the bar for job entry. As netizen jokes for the go-to job choices, about the three so-called auspicious opportunities: security, cleaning, insurance sellers and the challenging ironman triathlon: takeout delivery, courier, uber driver". ...

Previously, we discussed the challenges faced by apple farmers in ShaanXi, China (see the sweet and sour of apples and cranberries), that the farmers battle against the fluctuating price by strategically storing apple inventories so as to sell later, yet their decisions are far from optimal that brings regret and misfortune that sabotages the families’ living business. My initial thought was that the problem belongs to market failures, that potential solutions lies in redesigning the selling mechanism and boost information transparency etc.. But here’s another way of tackling the problem, which is somehow pretty fancy: ...

unpacking solvers: streamlining complexity Solvers are advanced software tools designed to process specific mathematical programs and deliver solutions, like a linear programming solver. When juxtaposed with algorithms—which are methods crafted for distinct problems—solvers operate on a broader spectrum, targeting classes of problems rather than individual cases. This abstraction not only boosts their flexibility but also their application across industries. Solvers enable a division of labor that heightens efficiency. Industry specialists focus on refining models to encapsulate real-world complexities, while solvers handle the computational tasks. This specialization allows engineers and scientists to enhance solvers’ efficiency and modeling power without getting mired in external complexities. ...

Here’s a note that clarifies two notions in econometric that I found confusing somehow. And mid-term exam is on the way so here’s a note. playground Let ${Y_1, Y_2, \ldots, Y_n}$ be a collection of independent and identically sampled random variables out of $f(y; \theta)$, where $\theta \in \Theta$ is a (possibly unknown) parameter associated with the distribution. In general, we want to estimate $\theta$ using our samples $Y$. An estimation of $\theta$ - random variable $W$ can be expressed as $$ W = h(Y_1, \ldots, Y_n) $$ ...

Marianela Nunez’s rendition Kitri in The Royal Ballet’s production of Don Quixote is amazing. Kitri, if one doesn’t know, is the lead character in Don Quixote’s ballet-adjusted version. She embodies the Mediterranean dream of men: a flirtive, sexy and charismatic matured woman in her signature red dress. The first time I watched it I was in awe. After almost infinite replays I came to realize that Nela’s Kitri is by far the most nuanced classical artistic performance I’ve ever seen. ...

Prof. Yi Xiong’s Frontiers in Management Science Session covered a crash course on online learning and multi-armed bandits (MAB). A simple way to view MAB is to consider it as a tool to model and study online learning problems. At time $t$, a decision maker chooses an ‘action’ or arm $i_t\in \mathcal I$ ($\mathcal I$ is the known set of distributions). The chosen machine returns a random reward $r_t$ following its distribution $Q_t$. Our goal as the octopus is to maximize the expected cumulative rewards $\sum_{t = 1}^T \mathbb E[r_t]$. ...

Our Frontiers of Management Science Seminar looked into a study that grounded operational management analysis in real application: Capacity Investment in Renewable Energy Technology with Supply Intermittency: Data Granularity Matters! Hu et al., MSOM 2015 ABSTRACT We study an organization’s one-time capacity investment in a renewable energy-producing technology with supply intermittency and net metering compensation. The renewable technology can be coupled with conventional technologies to form a capacity portfolio that is used to meet stochastic demand for energy. The technologies have different initial investments and operating costs, and the operating costs follow different stochastic processes. We show how to reduce this problem to a single-period decision problem and how to estimate the joint distribution of the stochastic factors using historical data. Importantly, we show that data granularity for renewable yield and electricity demand at a fine level, such as hourly, matters: Without energy storage, coarse data that does not reflect the intermittency of renewable generation may lead to an overinvestment in renewable capacity. We obtain solutions that are simple to compute, intuitive, and provide managers with a framework for evaluating the trade-offs of investing in renewable and conventional technologies. We illustrate our model using two case studies: one for investing in a solar rooftop system for a bank branch and another for investing in a solar thermal system for water heating in a hotel, along with a conventional natural gas heating system. ...

Take Five is a jazz standard (i.e. a jazz song that has a rich history of being interpreted and reinterpreted), first recorded in 1959 and is the third track on Time Out by the Dave Brubeck Quartet. The song is in quintuple $5/4$ time, and this is where it got its name. Channeling my inner Dave Brubeck with a ‘Take Five’ moment, I am taking a short five-day breather to recharge and find some fresh tunes. Can’t wait to jazz things up again with you all soon! ...

Just imagine how much cool I’d be in summer! In Summer, Frozen (2013). Summer holds a cherished place in the hearts of Chinese people. It’s a time of graduation, moving onto new chapters in life, accompanied by the humming of hot air and cool breezes, and the taste of iced watermelon. My heart skips a beat whenever I recall those memories—the midnight walks along the Thames in London, driving along Big Sur, or even just buying silly cat dolls at home with my dad. ...