Bryan Caplan  

Fortune Favors the Bold; Markets Favor the Meek

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Shrewd labor economics from the latest issue of Entertainment Weekly:

For an actor, speaking out about contract demands may seem like a smart PR or legal move, but the strategy can often backfire in Hollywood when it comes to landing the next job. After all, who wants to work with a troublemaker always looking for a bigger payday?
We often think of hard bargainers as good bargainers. The truth, though, is far more interesting. At best, hard bargaining is a high-risk strategy. In the long-run, if word gets around, hard bargaining is just plain stupid: The only people willing to deal with you will be other people who habitually insist on the lion's share.

If you don't believe me or EW, how about the guy who should have won the Nobel Prize?


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The author at Knowledge Problem in a related article titled Less than noble complaints writes:
    Michael Giberson It happens every year. The Nobel prize in economics is announced, the prize winner is delighted, as are his colleagues, his department, his university, newspaper articles get written and published. And then, before the papers hit the r... [Tracked on October 20, 2007 8:23 PM]
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jaim klein writes:

On the other hand, if word gets around that you are a soft touch, you will never be able to negotiate a raise. Experience speaking.

General Specific writes:

Maybe twenty years ago, after a very competent fellow employee was fired after she pushed her luck too far, I modified the old saying "the squeaky wheel gets the oil" to "the squeaky wheels gets the oil or gets replaced." I should also add "or everyone just learns to ignore it."

People can derive benefits beyond their level of competence or worth by pressing their case, pushing the envelope, shouting everyone down. All are ingredients, with due caution, of great leaders. But fortune may have a fall in store for those guilty of hubris and over-self-promotion.

Mat writes:

The hard bargainer creates the equivalent of an odd lot problem in economics.

He defines his standard inventory as too big and too high and he does not fit in any containers his customers might be using. Combinatorially, he has caused quantum noise because the high cost of changing his state to fit a better linear market over transaction * price range.

In my general theory, the odd lot problem can be construed as the total sum of quantum noise. It can easily be measured, and it is directly related to Solow growth residual.

To measure quantum noise, or the generalized odd lot problem, measure the probability distribution of cash transaction sizes. This distribution matches the best fit to quantum inventory restrictions. Number theory applies, prime exclusions with a restricted multiplication over integers. For example, look at the face value of currency. These values were defined to lower the cost of multiplication, actually, by matching the odd lot prime exclusion problem.

Under a Solow growth regime, the over all yield curve will simply become ever more accurate as we become more efficient at changing quantum states in inventory management.

Troy Camplin writes:

I have thought long and hard about the title of thisentry of yours, resulting in my commenting at length upon it at my own blog (click on link above).

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