Its snowing!

Its snowing! Thick, fast and heavy and its only the end of October. I love watching snowfall but it is distracting me from work.

Beauty

Where beauty is worshipped for beauty's sake as a goddess, independent of and superior to morality and philosophy, the most horrible putrefaction is apt to set in. The lives of the aesthetes are the far from edifying commentary on the religion of beauty.

Aldous Huxley


I am still trying to think this through.

Thought: Beauty is inextricably tied to morality and philosophy. If we consider this as an assumption then the next sentence just serves the same idea by saying that the lives of those sentient to beauty are far from instructive on the religion of beauty. The crux of this, I am not sure what to call it - argument, statement lies obviously in the idea put forth initially that (if simplistically put) beauty without brains does not last and withers away. If beauty is worshipped for beauty's sake, i.e., worshipped just as an art form without being embellished with philosophy and morality then its akin to a cat's meow but without a cat. I am still having trouble crossing the chasm on this bridge of 'morality and philosophy'. I definitely see that beauty by itself just as a pure art form cannot and will not last for all to see and revel for a long time. It has to be associated with an 'edifying commentary'. I am having a little trouble associating beauty with morality.

I am still going to mull this over.

Any thoughts? Anybody?

Update 2:
Let me draw a simple analogy to religion and add in the same breath that I am not religious.

When the Gods are worshipped for worshipping sake, most probably because one has always been told to worship God (whatever the reason, it falls outside the scope of the argument that I am trying to present), people (at least people like me) start to question the givens in this religion. With unanswered questions comes doubt. With doubt comes decay in the once strong belief system. With decay and an absence of an equally strong second set of beliefs, putrefaction sets in. It is the same in the case of beauty - it is not lasting, it is not captivating enough when seen and appreciated just for what it is in the present frame of reference. For eg., when you watch a beautiful sunset at a beach, your eyes might pop out at the sight of it. When you try and describe it to your friend and try to tell him/her about the wondrous riot of colors, the streaks of motley hues of red in the sky, gold shimmering on the waves - what do you think happens? They might excited for the first time. What about the second time? and the third? How long do you think they are going to share, in their mind's eye, this wonderful image of a sunset at the beach?

Back to the religion analogy, the aesthetes in this case are high priests involved in worship. Do their lives, in any manner, serve as an edifying commentary on religion? In my opinion, not at all. So what is it what keeps me interested in religion, continue to foster my belief in God? Theology? Maybe. Why? because it is the philosophy of religion. It rationalizes, tries to explain and answer your queries. It puts religion and its underlying foundation of a system of beliefs in a different perspective. The change in perspective is what makes it self-sustainable and not the aesthetes themselves. Would you remain interested in God and religion and recite the same prayers over and over because the priests (aesthetes) do? or would you be interested in religion if you were to read vedic texts, upanishads?

Back to the sunset at the beach example, if you distill the essence of nature's beauty into lets say, a poem (or an essay) wouldn't that be more self-contained and sustainable than all your explanations? - the functional being a change in the frame of reference, "philosophizing" beauty. Or would the fact that you are sentient to nature's beauty generate continued, sustained interest on the part of your friends.

I rest my case.

Quality, Uncertainty and Market Mechanism - Part 2

The Model with Automobiles as an Example:
Suppose (for the sake of clarity rather than reality) that there are only four types of cars – new and used cars, good cars (creampuff) and bad cars (lemons). A new car may either be a good one or a bad one and the same is true for used cars too. The individuals in this market buy new cars without knowing whether the car they will buy is a creampuff or a lemon. Let us say that the probability of buying a new car that is also good is “q” and that of landing up with a lemon is “1-q”. “q” by assumption is the proportion of good cars produced and “1-q” is the proportion of lemons. After owing a specific car for certain duration of time, the owner has a good idea of its quality and assigns new probability to the event that the car is a lemon. Note that this estimate is more accurate than the previous one. An asymmetry in available information has now developed for the sellers have more information about the quality of the car than do the buyers. It is also clear that a used car cannot have the same valuation as that of a new car – if it did, it would be clearly advantageous to trade a lemon at the price of a new car and buy another new car, at a higher probability q of being good and a lower probability of being bad. Thus the owner of a good car is locked in and not only cannot he receive the true value of his car but cannot even obtain the expected value of a new car.
Thus, the bad cars drive out the good cars as most traded cars are lemons. This is analogous to the way “bad money drives out the good” as stated by Gresham’s law. Gresham’s Law is explained in simple terms over at the Wikipedia. For those Indians who are reading without clicking through to Wikipedia, let me give you a quick analogy to illustrate Gresham’s law – remember the times when all the currency notes that exchanged hands were soiled, torn notes and everybody, in spite of possessing good clean bills preferred to trade in the soiled ones? As this practice continued, all the notes that were traded in the market were soiled torn ones that actually had a lower value (on account of being torn, when one exchanges these notes at the bank one is left a little short of the face value of the turned in bill) but were traded at the same exchange rate as good clean bills were. If the picture is still not clear, then I advise you to click through to Wikipedia and go through the explanation.

Utility Theory: A Brief Introduction
[Source: Wikipedia]
In economics, utility is a measure of the happiness or satisfaction gained from a good or service. There are mainly two kinds of measurement of utility implemented by economists: cardinal utility and ordinal utility. Utility was originally viewed as a measurable quantity, so that it would be possible to measure the utility of each individual in the society with respect to each good available in the society, and to add these together to yield the total utility of all people with respect to all goods in the society. Society could then aim to maximize the total utility of all people in society, or equivalently the average utility per person. This conception of utility as a measurable quantity that could be aggregated across individuals is called cardinal utility. Cardinal utility quantitatively measures the preference of an individual towards a certain commodity. Numbers assigned to different goods or services can be compared. I would assign a utility of 100 to a glass of chilled beer in summer and desire it twice as much as a cup of steaming coca which I would assign a utility of 50. There is already an obvious disadvantage – that of comparing cardinal utilities across people. The concept of cardinal utility suffers from the absence of an objective measure of utility when comparing the utility gained from consumption of a particular good by one individual as opposed to another individual.
Another approach is based on preferences - an individual is observed to prefer one choice to another. Preferences can be ordered from most satisfying to least satisfying. Only the ordering is important: the magnitudes of the numerical values are not important except in as much as they establish the order. It is nonetheless possible, given a set of preferences which satisfy certain criteria of reasonableness, to find a utility function that will explain these preferences. Such a utility function takes on higher values for choices that the individual prefers. With this approach to utility, known as ordinal utility it is not possible to compare utility between individuals.
Let X be the consumption set, the set of all packages the consumer could conceivably consume. The consumer's utility function u: X-> R assigns a happiness score to each package in the consumption set. If u(x) > u(y), then the consumer strictly prefers x to y. In microeconomics models, there are usually a finite set of L commodities, and a consumer may consume an arbitrary amount of each commodity. This gives a consumption set of R_L and each package x Є R_L is a vector containing the amounts of each commodity. For u to be a utility function on X, it must be defined for every package in X. A von Neumann-Morgenstern utility function u: X -> R assigns a real number to every element of the outcome space in a way that captures the individual's preferences over both simple and compound events. The individual will prefer a lottery L1 to a lottery L2 if and only if the expected utility (iterated over compound lotteries if necessary) of L1 is greater than the expected utility of L2.

I’ll give you guys a couple of days for all this to sink in – it is a little heavy on the digestive system

Quality, Uncertainty and Market Mechanism - Part 1

     A seminal paper by this title published by George A. Akerlof in 1970 was so influential in helping analysts analyze quality and uncertainty in markets under conditions of asymmetrical information flow that in 2001, George A. Akerlof was awarded the Nobel Prize in economics. His paper has been singular in analyzing markets ranging from the used car market to health insurance markets. After being awarded the Nobel Prize, Akerlof penned an interpretive essay on this paper and it can be found [here].

     I have since read his 1970 paper and would like to share the wonderful and thought provoking points he makes by reviewing his paper. In the next section, I will try to give the interested reader a brief run through of the philosophy of Akerlof’s theory. Most of the subsequent sections will be taken right out of his paper simplified, expanded and presented. Of course, he does assume (and so will I) that his readers have been blessed with some exposure to basic economic verbiage. I will provide the necessary information and references to background wherever necessary. I must bring to your notice that most of the language will be his but I will provide explanations/analogies to make things (seemingly) simpler.

A Brief Run Through:
     In the seminal paper on markets with asymmetric information, George Akerlof strives to provide “a structure for determining the economic costs of dishonesty”. He points out two possible outcomes that may occur where sellers have better information about the quality of products than do buyers. There are many markets in which buyers use some market statistic to judge the quality of prospective purchases. In these cases, there is incentive for sellers to market poor quality merchandise - if buyers cannot distinguish the quality until after the purchase is made, there is no incentive for the sellers to provide good quality products and the average quality of traded goods will decline below the socially optimal level. This is often referred to as “bad driving out the good”. The explanation for this course of events is fairly logical – if all sellers, despite having the information advantage, traded only in high quality goods then average quality of goods in the market will go up, prizes will stabilize leaving a small operating and profit margin. If under these conditions, a seller makes use of his informational advantage to sell a poor quality product – his profits are much higher and the buyer in his position has no way of determining the quality until after the sale has been made. In Akerlof’s own language – “…. the returns for good quality accrue mainly to the entire group whose statistic is affected rather than to the individual seller.” Akerlof cited the used car market as an example for his findings – in the case of used cars, buyers who find out much to their chagrin that they are now the proud new owners of a “lemon” will now attempt to sell it to an unsuspecting buyer (such as themselves) in the used car market. As this continues, more lemons make their way to the market and not only does the quality decline but the market itself is threatened as all buyers are wary and there exists a huge disparity between the number of sellers and buyers. Contributing to the declining quality of this market are owners of “creampuff”(s) who do not sell their cars as they are indistinguishable from lemons and the price is dictated by the demand for cars which the buyers suspect to be primarily lemons. Thus, this information asymmetry leads to quality uncertainty which in turn leads to reduced volume of transactions thereby threatening the very survival of the market itself.
     A second possibility as suggested by Akerlof is that institutions may develop to counteract the effects of quality uncertainty. Warranties and brand names can be used to give the buyer an assurance of quality. These institutions may prevent good products from being driven out of the market but will not necessarily eliminate the inefficiency. These institutions may be costly to set up, run and sellers may over invest in signaling the quality of their product to buyers.
     Stabilization (not necessarily efficient) of the market can be attributed to the development of counteracting institutions. The provision of warranties and the seller’s concern for his reputation may prevent sellers from supplying inferior quality products. Another possibility is that the buyer has somehow stabilized the initial information asymmetry by obtaining additional information enabling him to use a more global market statistic to evaluate the quality of the product prior to sale. The market is still deemed inefficient if this stabilization is achieved through costly counteracting institutions or through expensive information search by buyers. In the context of the used car market, this explains the existence of “information stabilizers” such as Kelly’s Blue Book, Car Fax etc.

     I hope everyone appreciates the theory so far. If you have ever bought a used car, you can analyze for yourselves why you did what you did – paid to go through car fax reports, paid mechanics to give a prospective car a once over to ease your fears – all in your attempt to equalize the information flow in the market.

I will post more technical details in upcoming posts.

Announcing my link blog

“Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information upon it.”
—Samuel Johnson quoted in Boswell’s “Life of Johnson.”

In the spirit of that quote, I have decided to link to all the blogs/posts/webpages that interest me on my MSN Spaces blog.

Toodle doo!

update: Mike Tyson Vs. Keshto Mukherjee

I have updated this [post] with a couple of links and a rather short rue on the state of India's development. Worth checking it out.

Black Metal Silliness

Those who know me know that I am a huge black metal fan and even I found this funny. This is just a take on the awe and shock promoted by black metallers in their photo shoots in an attempt to create this dark atmosphere replete with pagan imagery. The intention is to remain 'true' to the cause - corpse paint, bleak winters in the mountains, old forests, primitive wicca/occult rituals and medieval weapons. Of course, some of them carry it off very well but at some point of time the charade just turns out to be that - a charade. To see exactly what I mean, visit this page.

Of Lovecraft and Spiritual Anamolies

Though cthulu and the necronomicon of the mad arab Abdul are more often associated with any tale from Lovecraft's stable, there are a couple of astounding nuggets to be found in his short stories that have an undercurrent of the morbid and macabre.

One such story is called "The Shunned House" - a typical theme of a supposedly haunted house replete with a history of unexplained deaths, now dilapidated but yet draws our protagonists into a lengthy and costly investigation into its macabre past. After reading quite a few Lovecraft stories, I see that most movies have popularized his dark psychological terror theme. So a movie buff may not find a twist to the tale so to speak but has found a treasure trove of good old story telling, not to mention a very dark evil brooding terror that waits in the dark recesses of your mind, biding its time to unleash its numbing horror on your psyche.

This is THE best attempt at a rational explanation for the existence of parasites at a spiritual level. One can be anal and argue some points from a technical and scientific standpoint but I urge you to gloss over them and appreciate the entireity of the argument - its language and the poetic way in which Lovecraft crafts his terror.

"Scientific study and reflection has taught us that the known universe of three dimensions embraces the merest fraction of the whole cosmos of substance and energy. In this case an overwhelming preponderence of evidence from numerous authentic sources points to the tenacious existence of certain forces of great power, and so far as the human point of view is concerned, of great malignancy. To say that we believed in vampires or werewolves would be a carelessly inclusive statement. Rather it must be said that we were not prepared to deny the possibility of certain unfamiliar and unclassified modifications of vital force and attenuated matter; existing very infrequently in three dimensional space because of its more intimate connection with other spatial units, yet close enough to the boundary of our own to furnish us occasional manifestations which we, for lack of a proper vantage point, may never hope to understand.
Such a thing was surely not a physical or biochemical impossibility in the light of a newer science which includes the theory of relativity and intra-atomic action. One might easily imagine an alien nucleus of substance or energy, formless or otherwise, kept alive by imperceptible or immaterial subtractions from the life force or bodily tissue and fluids of other more palpably living things into which it penetrates and wth whose fabric it sometimes completely merges itself. It might be actively hostile or may be dictated merely by blind motives of self preservation. In any case such a monster must be in our scheme of things, an anamoly, an intruder whose extirpation forms the primary duty of every man not an enemy of the world's life, health and sanity.
It might be pure energy - a form ethereal and outside the realm of substance - or it might be partly material; some unknown and equivocal mass of plasticity, capable of changing at will to nebulous approximations of solid, liquid, gaseous or tenuously unparticled states."