Wednesday, May 19, 2010
Barry Nalebuff's Banana
Felix Salmon's post that I recently mentioned, contained in it a reference to Yale economist Barry Nalebuff, who is now trying to by some sort of life coach. If you see this lecture Barry talks about a lot of stuff, but his signature insight is his banana. You see, most people, including me, grew up peeling a banana from the stem down. However, the stem makes a better handle, and the other end is actually easier to peel, so peeling the banana from the other end is strategically dominant. Indeed, this is what banana-experts (monkeys) do. The implication is that some traditions we take for granted are suboptimal.
I remember in grad school reading some really difficult articles Nalebuff wrote on game theory. He was recognized as a true 'genius' by economists. There were stories of his brilliance. One anecdote had him visiting a campus as an undergrad, and he walked onto some debate forum. He entered the debate without preparation and won! A grad student was in a job interview with Yale professors, and Nalebuff supposedly told him one of his results was wrong even though Nalebuff hadn't read the paper, he was just thinking about the applicant's exposition (this annoyed the job applicant who thought he was not wrong, and I don't know if Nalebuff was indeed correct, but the chutzpah is what's important).
Hhowever, his great insight even in the early 1990's was his banana anecdote. Twenty years later, it remains his marquee idea. That would be a little humbling. All that genius, all that mathematical wizardry, and it comes down to watching a monkey peel a banana, and instructing us to do likewise.
Good ideas are hard to find, and great ones even more difficult. I would say humans are very good at finding good ideas, and smart people come up with a lot more than dumb people. Yet, great ideas are like great melodies, rare, with many one-hit wonders, often derived by people with many flaws. For example, if you read Kary Mullis's autobiography (he discovered PCR, a central technique in biochemistry and molecular biology), you'll see he has a rather adolescent sense of humor and strong views on lots of things that are bizarre, but usually intriguing. I'm sure a 21-year old Barry Nalebuff was considered a genius by most of his professors, destined for greatness, because Nalebuff was better at the techniques those professors thought were most important. Mullis was probably seen as a smart but much less impressive kid.
At the end of the day most really great economic ideas aren't derived through the formalism of abstruse mathematics, but rather, finding an important parochial problem and solving it, and then fortuitously finding out it has general relevance. Math is merely a way to compliment the exposition of an economic idea, not to prove it: if an idea is only compelling within the context of a complex mathematical proof, it is probably not robust to slight changes in assumptions. There is a strange emphasis in economics on rigor in economics, leading to lots of silly articles that aren't important, as Nalebuff's career demonstrates (I can't think of an important non-banana insight from his academic papers). When you look at the curriculum vitaes of economists you'll find their best good ideas, if they have any, are pretty independent of some trick using a fixed-point theorem (a la John Nash). And hopefully, a monkey hasn't figured it out first.