Research and Ethics of Research

Many people from academic background and non academic background are arguing about the story of the world's first gene-edited babies, and it is normal to see that people disagree with each other and have different views over this issue. Even some scholars in the field have contradicted opinions about this 'experiment' (it is an experiment for He Jiankui and his colleagues, but I can‘t see it purely as an experiment since it will affect two lively human beings).

Scientists and scholars from other fields are conducting experiments which involve human participants to find out the answers to their valuable questions; however, when conducting experiments, scholars are supposed to follow ethic codes. I am not a researcher in natural science; however, I still need to follow certain ethic codes if I want to conduct experiments in my field. I am currently researching about networking, which seems a very harmless topic; however, according to the codes, I need to let participants know the experiments (including potential risks and harm, even some very minor risk), and I also need to appreciate the time they spend on my study (in some cases, I should pay for their participation). The most difficult part is to let participants know the experiment. It involves two main issues. The issue is the impact of providing information on experiment results, the other issue is unknown information asymmetry and unknown knowledge.

If I conduct an experiment to study humans' behaviour (irrationality), and I tell my experiment's purpose to my participants, because people tend to be rational, they will try to guess how they should react to the experiment in order to make themselves look rational; under such circumstance, the outcome of the experiment will not reflect people's true behaviour. Secondly, of course, we need to inform our participants about all the potential risk and harm; however, we do not necessarily know all information, and the impacts on different people can be different, but we may not know that.

Despite the existing difficulties, researches should always follow the ethic codes.

Technology makes things possible

If one day we could travel back to the past, unless we brought all modern technologies with us, otherwise we would gain many advantages comparing with the people living in the past. Some things are not possible without the support of modern technologies. For example, delivery was not possible in the past, because it was too risky for anyone to run a delivery business like UPS. Delivery men could just run away with goods because information transformation was very slow in the past, the risk for delivery men to run away with parcels was very low. Moreover, many jobs just could be done in the past. People were well educated not because of their lack of incentive, it was caused by the lack of technology. The invention of printers lowers the cost of publishing significantly and makes education cheaper in general, so technology makes more people be able to read.

The key in technological development is information. Almost all technological development relates to information. Trains, ships and planes make people easier to travel, so people are easier to exchange information or see information (sight viewing can be a way of seeing information). The inventions of radar, stealth jets aim to create information asymmetry to benefit oneself. Furthermore, people like sharing information with each other, especially with those who are close to them, that is why Facebook has such an enormous number of active users. The information that users upload online also helps companies like Facebook to earn significant amounts of profits. Therefore, it seems that to determine whether an invention is a significant and meaningful one or not is to see its impact on information, if it can improve information symmetry or create information asymmetry, it is a very good invention.

Trump's influence

Trump is definitely not a popular president that he did not win the popular vote in the 2016 presidential election and his party lost the midterm election this year; however, his influence over the entire country is enormous. Furthermore, though the US Federal Reserve should operate independently, Trump can still influence the Fed. Trump has criticised the rate hike decision made by the Fed chairman who was picked by himself several times, and today Powell, the Federal Reserve chairman declared US interest rates are closing in on "neutral" level, implying the rate hike will be less likely in the future, at least, it is highly unlikely to see a significant increase in rates. Trump definitely played an important role in his Powell's annoucement.

Over the recent two years, Trump has House and Senate, so he can almost get anything done. During these two years, Trump has cut taxes for individuals, especially wealthy individuals, and businesses significantly. In addition, Trump has launched a trade war with China and the relationship between the US and its allies has been damaged by Trump's outrageous claims and behaviour. Therefore, Trump does not influence America domestically but also internationally. Of course, this is the case as all American presidents have such influence. However, Trump is trying to extend his influence to a greater extend. He is trying to influence the judge system and the Fed, those independent government branches.

Some commenters argue that Trump is using his presidency to benefit his family and himself, all he cares is how much he can benefit. However, the wealth is not actually his first priority, his priority is to make him look correct. He never commits any mistake he ever makes and he always looks for someone else to be blamed. However, Trump’s comfortable era will come to an end that Republican lost the control of the House and Democratic Party will control the House starting from 2019. This will make Trump much more uncomfortable as he will be questioned much more frequently and more harshly. Trump is not very good at handling pressure and oppositions; therefore, his behaviour under a Democratic House will become more unpredictable, unstable and outrageous.

Trump's intervention

The US economy has been performing relatively well over the last decades; however, General Motors recently announced it would shut two of its Michigan plants, along with others elsewhere. Trump has always been promising American people that he is the man to bring more jobs for American people and these closures will definitely affect his promise. And what is his action? He sends people to talk to the executive of GM and openly expresses his disappointment and wishes. It is clear that Trump wants to use his power and influence to overturn GM's decision; however, does it work?

It will not work. GM's move aims to catch up with other car makers. GM is already behind the new competition in the new era of vehicles. Although Tesla does not produce as many vehicles as GM does, its market value is much higher than GM's value showing investors seeing electric vehicles are the future of vehicles This can be shown that, in many countries, there are more and more electric vehicle chargers and subsidieis for buying electric vehicles. It is sensible for GM to switch to electric vehicles from its previous plan of betting on low oil prices. Currently, low prices are low , but the demand for traditional petrol vehicles is still weak. Under such circumstance, all vehicle companies should invest in electric vehicles and even driverless vehicles.

Trump wants to stop GM from closing those plants and continue to provide jobs; however, this will stop GM from swtiching its current strategic change. Trump can cut taxes or provide subsidies for GM in order to keep GM opening those plants; if GM chooses to go this path, then it is sacrificing long term gains for short term benefits, which is not wise. Of course, Trump may be able topunish GM to force it to keep the plants open; but this is not benefiical for the American economy.

Overall, Trump's intended intervention in GM's plant closure is not a wise move as here is an example that a government tries to intervene when there is no market failure; under such circumstance, the best move is to leave it to the free market.

Cyber currency

Cyber currrency was a very hot topic but now the heat has cooled down. Cyber currency's prices are positively correlated with cyber currency's public attention, when the cyber currency draws more public attention, the prices increase; and vice versa. From such phenomenon, cyber currency seems not like a proper asset that delivers reasonable returns,its innovative and hard-to-understand foundation becomes its selling point that attracts lots of people to buy cyber coins and pushes up the price. Now when people realize that cyber currency is not like the traditional fiat money and find they have some difficulty to use the cyber currency as proper money, the price landslides and the price now is below $4000..

I am never a fan of cyber currency. However, we cannot deny the impacts of cyber currency. The technology behind cyber currency, blockchain, has raisen many people's interests because of its security; many banks and financial institutions have invested in developing blockchain technology. In addition, the appearance of cyber currency has replace some functions of gold. Gold has been seen an alternative to fiat money, so when there is some political or economic uncertainty appearing in the world, the gold price increases as people see gold as the money that will not be affected by politics or economics; however, when cyber currency appeared, people see cyber currency can become an alternative to gold to be another type of safe reserve. Furthermore, many other types of cyber currency have been invented and even the most popular cyber currency, Bitcoin, has been split into two, Bitcoin and Bitcoin cash. These changes are brought by the heat of cyber currency.

Overall, because of the political stability in the world, there is no need for having many options of safe reserves as alternatives to fiat money, and people are not used to using cyber currency; however, the impacts of cyber currency are unerasable.

Shopping events

Today is Black Friday, and next Monday is Cyber Monday; both are shopping events which customers can enjoy some attractive discount rates when shopping. In China, the biggest shopping is on November 11th, almost every year broke its previous revenue record. Why do companies collaborate with each other and create these large scaled shopping events? (Not only companies within the same sector collaborate with each other, but companies across countries and sectors also collaborate with each other)

A massive shopping event can affect customers’ decision making. During a massive shopping event, customers are suddenly offered a lot more options; customers have constrained abilities to make perfect judgment when receiving too much information. In addition, companies can sell off their outdated products and start to sell new products after shopping events, this can boost companies’ sales and reduce the costs of holding old products. Furthermore, because people are paying too much attention to shopping events, they do not pay attention to the pre-event prices carefully, so they may not actually enjoy the discounts they deserve (since some retailers may increase prices before events and then put discounts on the increased prices). Furthermore, when others are buying, an individual is likely to follow others and also buy things that he or she may not actually need. This could be explained by the herding effect.

Overall, because of the incapacity of individuals, when a shopping event is becoming larger and creates more information and draw more attention, then it is actually easier for retailers to make more profits.

Merchants and consumers both need labels

People’s tastes have been changing over time. Some of the changes were made by merchants’ efforts of selling their products. Merchants tend to give labels to their products, they advertise that their products are made for some particular groups of consumers, who are often considered to be the model of the society or at least admired by many other people. For example, having an iPhone signals this owner is a youth who is living comfortably or a tech enthusiasm. Moreover, when talking about afternoon tea, it sounds posh and makes people think about upper class ladies gathering and enjoying their afternoon. These are all labels. Once a company can successfully create its products’ label, then it can gain some monopoly-like power in this specific market that contains the consumer group with this label. Moreover, if this label is very desirable within the culture, then it can attract potentially more consumers who do not belong to this category yet but have very strong incentives to join the category. Under such circumstance, merchants can earn enormous profits from the labels they create.

Not only merchants need labels, customers also need labels. Customers do not want to differentiate themselves from others and give themselves some desirable and specific labels. When we live in a community, we do not know everyone around us, having labels is an efficient way to reduce the cost of forming new networks and ease the issue of information asymmetry. Having labels help people to notice or attract others with similar or desirable types.

Why are people buying lotteries?

Selling lotteries is a very profitable business and has been income sources of some governments’ welfare benefits. The potential gain of buying a lottery ticket is enormous that people can potentially earn millions of pounds from buying a single lottery ticket; however, meanwhile the chance of earning such enormous money is so tiny that it could almost be seen as zero. The expected return of buying a lottery ticket is negative, and more tickets one buys, more negative the expected return becomes; therefore, buying lotteries does not make sense if a person is rational (a rational person should be risk averse as well). However, many people still buy lottery tickets and why?

The main reason is people overestimate their winning probabilities. When they overestimate their winning probabilities, then their behaviour of buying lotteries is completely understandable, sensible and rational (if we ignore the irrationality in overestimating the probability). Because under such circumstance, even with risk averse risk preference, it is still possible to see that the utility of buying a lottery ticket is greater than the utility of not buying one.

Also people sometimes actually love risk and enjoy risk for fun, as long as the risk is minor, that is why people love Bungee and parachuting. Buying a lottery probability has the smallest cost among the risk that people are willing to take, so buying a lottery can give people fun of taking risk. Therefore, the fun gained from buying a lottery ticket and the potential money award makes buying lottery tickets very appealing even without overestimating the winning probability.

The game between Britain and the EU

France and Spain are pushing for extra EU demands on Brexit, which will further complicate Theresa May's efforts to win the Parliament support for her proposed withdrawal agreement. Yesterday I suggested that Theresa May will eventually gain the support from the pro-Brexit politicians and some anti-Brexit politicians. The negotiation with the EU is a finite horizon bargaining game with discrete choices. The outcome of a finite horizon bargaining game depends on who makes the last move.

The EU is at an advantageous position of this negotiation, because the EU has a final say about whether it will accept or decline Britain's proposed plan. The EU can offer a counter offer; the EU can offer any counter offer which can just make Britain a tiny little bit better off comparing with the no-deal scenario, and Britain will accept the offer if the British politicians are completely rational and do not react revengously, because they do not have the chance to offer any counter offer.

However, we should not expect politicians act completely rationally, it is very likely to see politicians behaving revengously, since such behaviour will win more public support for them, especially when they do not need to take full responsibility of the national fate as the Prime Minister does.

Therefore, the probability of a no deal Brexit is very high, especially when the EU is taking this path.

Brexit: a mess that will be resolved

The UK's plan for Brexit seems like a mess that the UK Prime Minister is facing coup from her party as well as her cabinet. Around 23 MPs have submitted letters to the backbench 1922 Committee, and a leadership contest requires at least 48 MPs' letters. The reason for the chaos in the UK is the pro-Brexit politicians made some unrealistic promises about the Brexit plan and the negotiation with the European Union before the referendum. Now their promises cannot be delivered by May's proposed Brexit plan which is more realistic than their promises; in order to make their voters satisfied, these pro-Brexit politicians have to fight against May's proposed plan and make her plan look like a much more compromised version. The anti-Brexit politicians will also fight against May's proposed plan and make Britain impossible to negotiate reasonable terms with the European Union and force the Parliament to start another referendum and hope the British people will vote for staying in the EU this time. Therefore, all politicians do not like May's proposed Brexit plan, leading to the chaos in today's UK politics.

However, such mess will not last very long because the European Union has a deadline for Britain to make its final decision; therefore, this is not an infinite horizon bargaining game. This bargaining game has a smallest unit and the terms are discrete not continuous; so any allocation is possible in the game, which means any outcome is possible in the Brexit negotiation. I think that May would eventually gain the support from the pro-Brexit politicians, as the pro-Brexit politicians cannot allow another Brexit referendum which would be a disaster for their political career, especially if the British population changes their mind. On the other hand, the anti-Brexit politicians will not support May's proposed Brexit plan under all circumstances if they are consistent with their political belief; however, if Brexit is inevitable, then for the good of Britain, they also have to support May's proposed plan to avoid a divided nation.

Overall, at the current stage, May could only receive very little support within the Parliament; however, once the time is approaching the EU's deadline, May will receive more and more support from the pro-Brexit politicians and potentially some of the anti-Brexit politicians.

Brexit’s impact on the UK health system

People may remember from the 2016 Brexit referendum that a red bus with a famous slogan, “We send the EU £350 million a week, let’s fund our NHS instead”, played a crucial role of affecting the outcome of the referendum. However, when Britain leaves the EU, will there be any improvement in the UK health system?

Three leading health-think tanks have warned that the National Health Service (NHS) is likely to face a shortage of around 350000 staff in a decade due in part to “restrictive immigration policies exacerbated by Brexit”. I want to say that not only the staffs will find it harder to get work permits in the UK, the supply of junior doctors will also shrink as well.

Currently the EU students are enjoying local tuition fees when studying in UK universities. However, after Britain leaves the EU, these students may have to pay international student fees which are much higher than the current rate. In addition, international student fees for attending different courses are different, and the international medical student’s tuition fee rate is one of the most expensive ones. When the tuition fees for studying medicine and becoming doctors become much more expensive, it will certainly prevent some European students from studying medicine in the UK. And the number of medical students determine the supply of doctors, especially junior doctors.

Therefore, it is likely to see the supply of doctors in the UK labour market will shrink over time after Brexit.

Why are people so divided?

It has been a tough period for the UK Prime Minister May since the Brexit referendum. It is just not possible for May to make everyone happy; even it seems that no one is happy about May’s Brexit plan.  A number of ministers resigned over the matter of Brexit. British people are famous for the rationality and moderatism of its democratic politics that Winston Churchill failed to win the election just after he won a world war for Britain. However, in this time, we see a completely different story. Moreover, we do not only see this in Britain, but we also see a similar story elsewhere in the world. Why are people becoming so divided?

This is a very difficult question to provide an accurate answer, but I would like to share my thoughts on this issue. Firstly, when one person is becoming more extreme, then his or her opponent has to be more aggressive and more extreme to counter the extreme behaviour. This will pull two opposite parties further apart from each other. Secondly,  the current political questions seem like one dimensional but are actually multidimensional. For example, Brexit seems to only have two possible answers, one is “to leave the EU”, and the other is “to stay in the EU”; however, this is a multinational issue that involves migration policies, trade policies and even attitudes towards other European countries. Therefore, although people are put into two categories over the Brexit issue, they are even fighting with each other on more specific issues inside and outside their categories. Thirdly, it is easier for people to hear negative or opposite opinions nowadays. Because of the social networks (including social media) and the media, people are easier to get information, and what attracts people’s eyes the most is fight. People see that fighting over different opinions, and feel excited about it and has more incentives to join the fight, especially when they feel the side they support is losing the fight.

Overall, we are in a very divided world and we should accept different opinions, at least accept the existence of different opinions. 

Can India become the next leader of the emerging markets?

India has the second largest population in the world and since its population is still increasing at a very fast rate, we can expect India will soon take over China to become the largest population. The Indian economy is the 6th largest economy in the world and is still growing at 8.2\% (almost a double digit rate). Many people believe that India will take over China to be the next leader of the emerging markets, especially when people see that the Chinese economic growth rate has fallen below a double digit rate. However, is it really possible for India to take over China to be the next leader of the emerging markets?

India has a huge of gender discrimination against females. There is intensive literature which finds that female politicians are more likely to generate higher economic growth in India. In addition, there is a high criminal rate among Indian political participants and people are shocked by how evil these politicians are. However, once a bill was proposed to forbid criminals from entering politics, all Indian political parties just voted against the bill, so this bill has never been passed. So the Indian politics is not impressive at all.

Moreover, India has many states, and different districts have different languages and cultures. When people are speaking different language, it is harder for people to cooperate. Although Indian people can learn English and many do know how to speak English, they still cooperate with higher costs.

Overall, it is not easy for India to take over China to be the next leader of the emerging markets. I do not think India can manage that in the next decade.

Is it sensible to see risk seeking people?

There are three categories of risk attitudes: risk aversion, risk seeking (or risk loving) and risk neutral. Risk attitude is determined by people's preferences between certain returns and uncertain lotteries which deliver the same expected return rate as the certain return assets. If a person prefers certain assets over uncertain lotteries which deliver the same expected returns, then this person is risk aversive; if a person is indifferent, then this person is risk neutral; if a person prefers the lottery which delivers uncertain returns, then this person is risk seeking. Based on the definition, it does not sound sensible that a person is risk seeking. Therefore, is it sensible for a person to be risk seeking?

For ordinary people, it is not sensible to be risk seeking. Because why does anyone want to take unnecessary risk but merely gain the same expected return? No one is likely to take unnecessary risk, unless people want to play for entertainment, like buying state lottery or going to casinos. If people just seek risk for entertainment, then it is not able to see these people are risk seeking, because they gain utility (fun) from falling to less preferred states, they are not doing for investment. However, it is possible for people to seek risk, which is criminals. Crimes are very risky but why do criminals want to take the risk? Because many of these criminals are not wealthy, they do not have much money to supporting their own life without crimes. Because they are already in the less preferred state, they are not afraid of taking the risk because for them, it is still better than certainty, as they do not have sufficient skills and experiments to have proper jobs.

Overall, for ordinary people, it is not sensible to be risk seeking; however, for the people in extreme poverty, seeking risk is not a bad choice.

Stock Market is never stable

On Monday, the stock market fell sharply that the S&P 500 index fell by 1.97\% and Nasdaq index fell by 2.78%. Apple's shares are traded below $200 per share because Apple's suppliers provided weak outlooks, which let investors believe Apple has reached its peak. Since Apple was the first company to reach one trillion dollar market value, Apple's share price affected the entire stock market, especially the technology companies' share prices. However, is there any actually event that negatively affects the outputs of the industries? The answer is 'no, maybe there is one coming'.

The stock market is built on expectation instead of actual outcomes. Actual outcomes may be important, but if the expectation about the future is perfect enough, investors will choose to ignore the awful output at the moment. Moreover, even if the actual output is brilliant, if the expectation falls, investors' confidence will still be damaged and the stock performance will not improve at all. Overall, actual outcomes at the moment is important because it is a factor that helps investors to make their expectations. Then any factor is important as long as it is relevant to investors' expectations.

Share price is not stable as investors hold different opinions and expectations. If investors were able to be consistent with their expectations, the market will be stable affect the adjustment. However, investors are not consistent, their expectations and opinions are influenced by the market price. Since investors are always changing their expectations and different people hold different opinions, there will not be a stable market price.

The new US political environment

The Democratic party won the House of Representatives and they now have the power to start impeach federal officers as well as the president. Donald Trump is not unhappy about a Democratic-controlled House, especially when it comes to his tax return and the possible impeachment. Trump twittered "If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!" However, can Trump really play this game?

Both the US president and the House can choose to cooperate with the other or fight against the other. If both choose to cooperate with each other, the outcome for the country will be maximised, and it will be the most efficient outcome. However, it does not mean either the president or the House maximise his or the Democratic party's individual benefit, especially for the Democratic party. When everything goes very well, it will make Trump more likely to win his re-election in 2020; however, the Democratic party wants to win the 2020 presidential campaign. For Trump, it is going to be a hard time for him to be a president, as he cannot do whatever he wants. For the Democratic party, its best strategy is to fight against Trump. Firstly, the president is often considered to take the majority of responsibility. This means that people tend to blame the president more for any problem caused by the conflict between the president and the House. Secondly, the House stays relatively low profile, comparing with the President, especially this one. People are more likely to notice the mistake made by the president than that made by the House. Thirdly, fighting against Trump can win more public support, especially when the president is unpopular.

Although some people think that the Democratic party is good for the US, it is still a political party which tends to serve its party's interest, it will fight against the president and create a less efficient outcome.

Who is playing with you

I would like to start a question that if there are 25 people in a room, what the probability of two people sharing their birthday. What is your answer? The correct answer is above 0.5. Generally the people who ask this question expect that the answer they will get is lower than the correct answer. However, since this is a very famous question, if people ask the others who are familiar with the question, the answer they will get is going to be correct or very close to the correct answer; under such circumstance, people do not get the answers they expect. Therefore, to get what you want is dependent of who you are dealing with.

Sometimes people ask some questions to economists, they might feel economists act selfishly to some extend. However, this does not mean some economists are selfish, it is just about the way of how economists think questions, economists tend to think questions from the economics prospectives.

In the real world, sometimes people are thinking about who they are dealing with are the ordinary people or always the same group of people who share similar characteristics, especially when they are dealing with people who they are not familiar with; however, this is not true.

Overall, when people are dealing with the others who share some specific characteristics, they should expect that the outcome will drift away from the outcome they expect when dealing with randomly selected people whose characteristics are not special and match the mean of the entire population.

The market is up again

The US stock market rose sharply after the US midterm election, which was the largest surge since 1982. Both the Dow Jones Industrial Average and S&P 500 surged 4.3 percent and 3.9 percent. How is the US stock market related to the midterm election?

The Democratic party controls the House now, but still has not managed to take the control of the Senate. The US stock market seems to favour both political parties. Do people still remember what happened to the US stock market after Donald Trump won the 2016 presidential election? The US stock market dropped during the pre-market period but rose sharply once the market opened. The reason given to the market response after the US presidential election is that the market loved Trump's proposed tax policy. However, this time the Democratic party controls the House, it could mean that the Democratic party can block Trump's proposed aggressive stimulus fiscal policy. Based on the reason given to the market rise after the presidential election, today's market surge does not make much sense. The Democratic party is a left-wing party, comparing with the Republican party. The Democratic party prefers the ideology of social equality, and taxing wealthier people and companies; the ideology of the Democratic party should not be preferred by the US stock market.

Therefore, the stock market does not really love any particular political ideology, unless the ideology creates actual impacts on the financial market. The investors merely love news that could create some excitement in the financial market, and the news does not need to have any actual impact on the market, the market just loves the excitement.

Is Midterm that important?

The US midterm election has been under the spotlight for several weeks, the news media around the world has all been discussing about how important the US midterm election is. The US midterm election is definitely a great opportunity for both of the US political parties, especially for the Democratic Party. The importance of the midterm election is undoubted for the US domestic politics; however, is the midterm election similarly important for the global politics and the global economy?

If the prediction of the polls is correct, the Democratic party is likely to control the House and the Republican party is likely to defend its control over the Senate, and this is the most likely scenario. If the Democratic party controls the House, the investigation of Donald Trump's finances and Russian interference in the 2016 US presidential election; however, since the Democratic party does not control the Senate, the Democratic party cannot successfully impeach the current US president. However, this is not important for the global economy; what is really important for the global economy is how the US midterm determines the US future foreign policy. As long as Donald Trump is the US president and the Republican party controls the Senate, the US president will still have his influence over the US foreign policy and the US future foreign policy can hardly change, especially the US foreign policy against China. When the Democratic party can start to influence the US foreign policy, the US foreign policy regarding its policy in Europe, North America could return to its initial route before Trump became the US president. However, since Trump and the Republican party have convinced some of the US population about how Chinese take the US jobs, it would be unpopular for the US government to become friendly. Moreover, the political systems of the US and China are different, which can lead to further conflicts between the two countries; China has become the second most powerful country in the world, so China easily becomes the potential target of the US.

Overall, the midterm election is not very likely to have significant impacts on the US future foreign policy, so the importance of the midterm election may not be as important as many people expect in terms of its impact on the global economy and politics.

How should a person lie?

I think that all people lie to others to some degree, and some lies are considered to be 'good lies', which tend to benefit others instead of the lie tellers. However, I want to focus on the lies that solely serve the lie tellers' own interests, and discuss how people tell lies to benefit themselves the most from a game theory prospective.

A person cannot always lie to others under all circumstances, especially he or she cannot let others know he or she will definitely lie regardless whatever the circumstance is; because if he or she does so, the other participants or players can design their strategies accordingly and telling lies would not be very efficient of serving the lie teller's interest.

A lie teller is possible to create an unfair game and benefit himself or herself only if he or she has an advantage of information; otherwise, he or she will not be able to make his or her lies effective. Moreover, the lie maker needs to have some chances to offer the lie tellee to gain some benefits. Then if the lie tellee knows he or she may be told a lie, since the probability of being told a lie is not 100 per cent, he or she may randomly choose whether he or she choose to trust the liar or not.

Because the liar has information advantage, even if he or she does not always lie (always lying is the best strategy), once he or she forces others to play the game with him or her, the expected outcome will be positive, and the lie tellee's expected outcome will be negative. Therefore, this is not a fair game and the liar can benefit from randomly telling a lie.

Explanation of increasing wealth gap from microeconomics prospective

This explanation of increasing wealth gap from microeconomics prospective comes from the work of Marina Halac, Ilan Kremer and Eyal Winter, 'Raising Capital from Heterogeneous Investors'. Suppose a company requires a certain amount of money to start its project (assume as long as the money is sufficient, the project will succeed) and there are two investors available, one is a wealthier investor and the other is a less wealthy investor, but either can pay the project alone. Under such circumstance, the company has to get the money from both investors. To convince the two investors, a company has to ensure one investor's dominant strategy is to invest his or her money, then when having one investor secured, the other investor will follow as he or she knows the project will succeed. Here comes a question which investor the company should pay more in order to guarantee his or her investment. The answer is the wealthier investor, because once the wealthier investor invests, the probability of succeed increases more significantly, so the risk premium paid to the wealthier is actually proportionally lower and the less wealthy investor only gets an ordinary interest rate, since his or her investment is risk-free; overall, the company will pay less comparing with proposing to the less wealthy investor first

This answer is also true when it comes to a larger number of investors problem. The company always proposes to the wealthy investors first, so the wealthy investors get better deals than the less wealthy investors. Under such circumstance, the wealthy investors become wealthier after investment, and the less wealthy investors do not change as they are offered the risk-free interest rate. After several periods of investment, the wealth gap between the wealthier investors and the less wealthy investors will increase over time. This can at least partially explain the increasing wealth gap in the real world.

I find the result is rather brutal that their work could potentially imply investment, this kind of economic activities, naturally make the richer rich, if companies behave rationally.

Starting with information

People like communicating with each other to exchange information, sometimes they exchange information for their own serious purposes, or they exchange information (or gossip) merely for entertainment purposes. Both kinds of purposes are completely fine. Information is almost starts of everything. Technology is developed in labs or offices, the information has to be passed from labs or offices to factories in order to produce hi-tech products. The information has to be passed from traders to brokers in order to make stock exchange happen.

Information is a very important concept in the game theory. A game's outcome can be very different between a setup with communication and a setup without communication. Although people may not tell truth, as they may strategically lie to other players in order to get more profits, people can predict others' strategies, especially when we expect all people work for the best of their interests. Moreover, when people communicate with each other, they are exchanging very complex information including people's emotion and some unexplainable expression as well, these kinds of information are difficult to be modelled, and also important when people are making their decisions. People do express their emotional feelings; therefore, it is reasonable for people to receive emotional expression as part of information they receive, though it is not sensible in the eyes of economists.

Overall, people are exchanging information all the time in all different forms. Some form of information is very complex and almost impossible to be modelled, such as emotion, but plays important roles in our decision making.