I recently submitted my thesis for the completion of my MSc in Economics and many people have been asking what it was about. You can find the uploaded version here.

I want to do it in 3 different versions for different lengths, details, and complexity.

Tweet format
It explores why people trust a well connected person's recommendation when they know seller invests disproportionately in those Influencers (139 characters including space)

Elevator Pitch format
This paper looks at how sellers form a reputation for themselves and also tries to think about why people believe in others' endorsements. I focus on exploring how different types of learning (tastes and skills) affect investment behaviour by the seller. I find that overall, having a more connected network is beneficial for the buyers (as they enjoy higher levels of investment) but may result in lower system surplus.

Essay format
In short, my thesis explores reputation dynamics when a seller can invest differently in different buyers. Some examples of such behaviour include management consulting (where the consultant can distribute their effort to different projects that they handle), restaurant chefs (an example we'll delve into in a moment), and investment portfolio managers (again, splitting their effort between different portfolios.)

Once you go to page 6 of my thesis, you'll realize that it gets a bit mathematical. For those who have done some game theory then the math shouldn't look too unfamiliar but it can definitely be confusing. This paper essentially describes and explores the following situation:

Imagine that you're deciding where you're going to be eating dinner. You have 2 choices. One restaurant that has received favourable reviews from many reviewers and food critic. The other restaurant has one (and only one) positive review on Yelp. If the price is the same, the cuisine is the same, and booking is not an issue, most people (myself included) will choose the restaurants that has received many positive reviews.

But restaurants know this fact. So let's think one step further. Put yourself in the shoe of the chef that has to cook hundreds of meals for a service. And you're facing two tickets. The server has informed you that one of the ticket likely belongs to one of those food reviewers (youtuber, influential blogger... you name them), or anyone with a wide audience. If you have to choose between investing more in one diner's dinner, it would probably be the acclaimed food reviewer's.

And here's the puzzle, as customers, we know that this is the case. We know that the food critic (or anyone that can communicate to a wide audience) probably received a better service and better food that we will. In other examples of the same phenomenon, we know that shoes or brands that received celebrity endorsement will not live up to our expectation because of our understanding of endorsement contracts.

So why is it that we still buy those things? Why do we still see value in those endorsement that we know results from investments by the seller that we're not likely to receive ourselves?

What I focus on is 2 different learning processes. Seller learns how to serve a good quality product better by serving good quality products (a classic case of learning by doing.) The first type, which I termed taste learning, is the kind of learning you get by serving person A that you can only use to serve person A better. When you learn about a specific person's taste, it's hard to apply that same kind of learning to other people. The second type, which I termed skill learning, is the kind of learning you get from serving person A well that you can use to serve person B better. In other words, you learn the important skills in serving something.

Now, let's add another layer of abstraction and think about how these two effects interact with one another. Let's say you serve person A a good meal and as a result, learns their taste, say they want a bit more pepper in their meals, and you also learn a skill, how to put more pepper in the meal without breaking the overall taste. Now, the skill you learnt is tied to the taste profile for each buyers. This is to say, that you can't really use this new skill if you don't know the new diner's taste profile! Which means that without knowing a person's taste (which you only get by serving them well), you can't fully use the skill learning you got by serving another person well. Some skill learning obviously doesn't fall into this category and thus you can fully utilize those skill without knowing the other person's taste.

Finally, let's add the reputation aspect to this model. I use a very simple framework here. There are 2 buyers and one of the buyers (Influencer) can communicate their quality realization to the other buyer (Consumer.) Which means that the Consumer has access to 2 quality realizations: their own and the Influencer's. The Influencer on the other hand only observes their own realized quality.  The expected quality that each buyer comes up with is the seller reputation.

I then explore equilibrium behaviour (which means given everyone's actions, people don't have an incentive to move away from what they're doing) in this model, specifically on how the seller invests in these two buyers. What I find is not very surprising: that a limited network means that there's an imbalance in the level of investment between the Influencer and the Consumer. This tends to diminish as the importance of taste learning increases (so seller can't take advantage of the expectation of skill learning.) Further, as complementarity between the two learning effect increases, you have less incentives to invest in both (since another person's success is now more important.)

Finally, a more connected network (where both people observes each other's realization) is better off for the buyers since they get a high level of investment. However, overall surplus, that is once we take seller costs into account, is higher ex-ante in limited observation network.

Hopefully in the future I can extend this to a more complex network and come up with empirical specifications to test this idea, but it was definitely a fascinating topic to explore.

Originally posted on my Facebook:
I've heard from a few people around that these days, it's tough to open up the news feed, that they would rather see pictures of puppies and babies to cheer themselves up, rather than reading the news.
It's tough. But you have to face it. Because it's not going away. I know it's a lot to ask, but it's tough on me as well, and many others, and we are fighting this together.
You have to light that anger, and that discontent at what's happening and turn that to action.
If you're in the US, call your Senators and Representatives. Emails and tweets are fine, but also call them. Talking over the phone (even to an answering machine) has the largest impact.
If you're in Canada or the UK, call your MPs. Tell them this is an international issue you care about and ask them to speak out and intervene diplomatically. The action committed today is not an inconsequential action that only affects domestic American politics. It affects all of us.
If you have some spare change (or any money), donate it to ACLU Nationwide. They're on the ground fighting this and they need all the resources they can get, not just now, not just tomorrow, but for the next months. I have just donated $25. I challenge you to match it (if it's financially possible) or go even further than that.
Talk to your friends who are in a better financial position than you or have better political powers than you. Urge them also to take those actions.
Whatever we do, we can't close our eyes.
Whatever we do, we can't stay silent.
#StopTheBan

A few days ago, I spent some time watching the first press conference by Donald Trump and also the Senate confirmation hearing of Rex Tillerson.

Oh boy.

But I'm not here to talk about all the cringe-worthy moments I saw throughout those interactions. What I'm here to talk about is role models.

Remember that campaign ad that Hilary Clinton campaign put out regarding who we want our children to look up to? If not, go watch it, because we're living in that future now.

It has been striking me of late, that we're awfully short of political role models that are currently in office that children can look up to. Of course there are still scientists, innovators, writers that act their best but what message are we sending our kids about politics if individuals like Donald Trump, Nigel Farage, and Rodrigo Duterte are the role models we have?

As a result, I have a challenge for you.

The next few years will be tough (not just in the US, but also elsewhere in the world) and kids will grow up looking to those politicians.

So be a role model for them instead. 

Fight to protect the right of someone you love. Learn about issues, get involved politically and don't shy away from talking to others about these topics. I'm not saying it will be easy. I'm saying it will be necessary. You will have to distinguish what you want to hear to what's actually true and credible and it'll involve challenging yourself often. Go out there and vote. Go attend those town hall meetings. Email/call those politicians.

Younger people (or even your colleagues) will look up to you as an example. And it is our responsibility to ensure that we move forward and do better things.

Let 2017 be not the year shrouded by the Donald Trump presidency, or the break down of peace talks and climate talks. Let it be the year that we change the course of conversation and start making better decisions.

I just finished reading Strangers in Their Own Land and it was one fascinating read. Just about a month ago, everyone around the world (myself included) woke up on November 9th and was dismayed. Donald Trump has won the US Presidential elections.

That was a pretty sobering moment. The people I thought were fanatics, the crazies, the fringe, won. There were many reasons that led to this outcome (misogyny, timing of the FBI report, handling of emails, and Hilary Clinton as a candidate to potentially name a few.) There was another compelling narrative. It argued that people voted for Donald Trump because they couldn't take the establishment anymore. And we couldn't see it coming because we were so polarized that we stopped talking with each other.

This is the thesis of Stranger in Their Own Land. The book follows the journey of Ariel Russell Hochschild across Louisiana as she interviews and talks to ordinary tea party supporters to try to discern their "deep story", right in the midst of the Republican Primaries of 2016. 

It’s a compelling story, a story of those who believed adamantly in waiting in line for their turn to do great things, create wealth, build communities, and succeed. As they waited patiently in line, they perceived that the big social movements started to condone people to cut the line. Now they're pushed all the way to the bottom.

The deep story she discovered also helped to explain and fill the gap that Hochschild saw as "the Great Paradox" - most people who she interacted with cared about the environment. They were angry at how the big chemical companies have ruined the environment. And yet they were willing to overlook those things to support oil companies' expansions (because jobs are created) and elect Republican politicians (because they keep the "Big Brother" government out.)

A line that I heard often repeated surrounding Donald Trump's election is that the people who voted for him weren't necessarily racists, sexist, or homophobia, it's just that they didn't care. This statement is often said in an accusing tone. This book flips that narrative. It's not that they didn't care, Hochschild argues that these individuals couldn't afford to care. Because caring for these groups meant condoning behaviours (breaking the rules and cutting in lines) that were so fundamental to their identity.

Hochschild finishes her journey with 2 letters. One of which is directed to the left and the other to the right: "You may assume that powerful right-wing organizers-pursuing their financial interests-"hook" right-wring grassroots adherents by appealing to the bad angels of their nature - their greed, selfishness, racial intolerance, homophobia, and desire to get out of paying taxes that go to the unfortunate. But that appeal obscures another - to the right wing's good angels - their patience in waiting in line in scary economic times, their capacity for loyalty, sacrifice, and endurance - qualities of the deep story self."

We live in uncertain times now and there has never been a more important read, to try to bridge the gap that has seemingly opened between the left and the right. If you read a book during this holiday seasons, this would be one that should be on top of your list.

For the past few days, I've thought about home a lot. Where home is, if I'll ever be back home and whether London will ever be a home to me.

I realized that after moving to London 3 months ago, the variation I use to answer  "where are you from?" has changed from when I was in Vancouver. The most common answer that I give out now include "I'm from Canada" and "I was in Vancouver before here." Usually, people are satisfied with that answer and doesn't pursue the issue any further.

And it's true. I know what Canada stands for. I've studied, worked, and lived there. I can proudly explain how the electoral system works, what the geographical makeup is, what the big issues facing Canada are, what the best pub you can go to in Vancouver is (for the record, it's a toss-up between St. Augustine's and Alibi Room.)

And yet it's false. I don't have a Canadian citizenship yet (I'm under an open post-graduation work permit.) I don't have a childhood in Canada, I wasn't "born and bred" in Canada. And I only moved to Canada 5 years ago. My parents aren't even in Canada. Most of me is okay with this, having grown up as a Third Culture Kid, but some of me is still somewhat uncomfortable with characterizing Canada as home.

A few weeks ago, I had a chance to go to my high school reunion and catch up with a few old friends there (many I haven't seen for years.) The concept of home came up and despite all of us having gone to school in Vietnam, they all understood the sentiments I had towards Canada being home to me. And we reminisced about our time in Vietnam, about how so many things have changed.

And then I realized something. 

Home is a place that I yearn for. It's a place that I remember, that I miss, that I have fond memories and stories of. But it's more than that. Home is a places where I left pieces of myself. Home is places where I know I have changed my surroundings and my communities as a result of me having lived there. The relationship I have with home is reciprocal. Vancouver left pieces of itself in me and I left pieces of me in Vancouver. Home is a place I'm a local of, and I'm a local in Vancouver.

5 years ago, I was from Japan and Vietnam. Today, I'm from Japan, Vietnam, and Canada. I couldn't be happier to say that.