# Barcelona under the wind

Today it rained a lot. I haven't seen this kind of heavy rain and strong wind here for a long time. Usually, in this kind of bad weather, I would not leave my warm room. However, it is the exam season now so there are a lot of works to do. Among all tasks, I have to go to campus and discuss the research proposal with one classmate. Actually we have found an attractive topic and are trying to combine economics and psychology as close as we can. Then, with the game I designed, no idea how to solve it... That is to say, some assumptions should be simplified in order for us to get a very good intuition about what is going on. It is a pretty interesting process, and we are really enjoying it.

Well... since I had to go to campus, I left my room in the afternoon under the heavy rain as normal. However, when I passed the twin building near Port Olimpia, the cloud above my hear shocked me. The last time that I saw cloud at such a close distance was last summer when I climbed the famous Mount Tai before came here. The difference is that, last time I was out of the city, so I was well prepared for the natural's magic; but this time, I was not expecting anything. Then, I could not stop myself from taking a turn to the opposite direction from school and go to the beach. The wind was really strong at that time, and the sea was not peaceful at all, compared to how it usually performs - actually I don't understand why the sea here is so peaceful. The waves were trying to show its anger, which had been stored for months. Although I had an umbrella in hand, it did not help at all. My shoes got wet, the mercyless rain drops hit me from every possible angle, and the wind blew as a crazy man...

I do not know which side of the sea I should love more. It was too peaceful as nothing would make a difference, so there would be no surprise. However, when it gets mad, I do not know whether I can stand the pressure. At least, I have seen both sides of the sea, and fortunately I did not miss it. That's fine than none.

# Intuition vs strictness

Just finished a very interesting class. Thijs was talking about contraction map, which should be the forth time for me to see it in class (-_-!), but there was another "big guy", who was so good at math (perhaps due to the reason that he was from and had been taught in France) that he could not stand the assumption that some economists made for the applications here. Then, I got the honor to listen to their "debate". Haha...

Maybe there are only two kinds of economists in the current academia: those who are extremely good at mathematics, and those who have been granted wonderful intuitions by somebody (maybe the god? but they may refuse to acknowledge the existence of any god). Well, if you would like to count the union and complement of those two sets to be really strict, there must be the third and forth sets - in the forth set, let's simply define it as a collection of outliners who are talent at neither math nor economic intuitions, but succeed anyway from some perspectives…. I’m so sorry but the only people who can be categorized like that I can think of now, are those so-called "media mogul" and live on their speech instead of academic contributions. But let’s ignore them here to make the world simpler 🙂

As I just said, the student in class who asked those technical questions was very good and strict at math – actually that might be the way to define whether you are really good at math: apart from those mathematical intuitions, the level of strictness shown from the way you speak can tell people what kind of formal math trainings you have received. In contrast, I don’t really know how good Thijs is at math, but he usually prefers the way to explain things intuitively – and his intuition is amazing! I don’t think it is common to find a macro guy who has that kind of great sense, or the feeling of “touch”. Then, if you combine both together, you can expect what great talk will emerge!

But to be honest, when I was listening to their opinions, although the natural reaction at that time was to smile and enjoy the debate, after it, especially now, I’m feeling somewhat upset. Which one can be cultured? The ability of math? Sure, but how long will it take if you failed to start from the very beginning? Intuition? I have no idea whether people born with that talent or it depends on the way you learned economics. Sometimes I’m worrying about I’m standing at somewhere in the middle – not really good at math, and haven’t been granted the direct sense of the real economic world. Thus, is there still any possible way left for me to do some decent work in the world of economics? Maybe it was fortunate that my foresight was not too bad: at least, I named this blog as “explore the world of economics”. Whatever I have explored, they will not put any actual constraint on myself.

# Time difference

Wandering on the Internet... aimless...

Today is Barcelona's holiday. While every citizen is enjoying their lives around the city, I have to stay in the library and work on problem sets. One, by one, by one. Like an endless sequence, since new one will continuously  enter the sequence... The only balance is to let it stay within a certain length. No way out.

Reading Chinese news report like a habit. However, when eyes are hurt by the sharp world "7th, march", the feeling of time stress comes back. Yes, time difference... Every time when I see the Chinese time, a sense of "extra precious time" follows. 7 hours late, so before the real deadline, there are still 7 hours.

Get used to chat with friends from different time zones, living in different cultures and holding different opinions. Tons of works to do, and the agenda notebook is always filled with new events. Sometimes I only want to escape from the modern digital computer world, so I bought the real notebook and draw my life with a simple pencil. However, life is still there, there... It cannot really change anything, and the modern life requires you to keep catching up as much fast variant thing as you can.

Two research proposal in two weeks... don't even know where the ideas come from, but at least I have got something to write fortunately. Social network... sometime I was too energetic for it to realize the fact that without SNA the world is still running. Therefore, what's the point? I don't know.

# Probability, Information and Economics

These days I was busy reading the biography of John Maynard Keynes, the most famous economist in the past century. One point mentioned in that book attracted my attention -- that is about his ideas on probability.

Every one who has studied macroeconomics must know a word "rational expectations". That is a great issue if talked. Simply, as the wikipedia says,

To assume rational expectations is to assume that agents' expectations are wrong at every one instance, but correct on average over long time periods. In other words, although the future is not fully predictable, agents' expectations are assumed not to be systematically biased and use all relevant information in forming expectations of economic variables.

Here  I do not want to say much about it. I'd like to mention another area, Information Economics. Typically, information economics deals with the situation that there is asymmetric information between principal and agent. Then as we all know, there is moral hazard and adverse selection. With the application of game theory, the common issues can be solved. However, seldom do I read paper discussing about the role of information in economic activities in other approaches. Therefore, followed Keynes' idea, I wonder what will happen if the spread of information is introduced into the economic activities.

Simply, probability reflects the situation that we do not know enough about how the real world functions. Therefore, we use probability to describe the combination every possible result. There is an interesting question: the normal distribution. I'll talk about it later on.

As the aim of science, we are pursuing the ability to predict. I know many people will have different ideas, but it does not matter much. At least, we want to know the mechanisms in every particular field. That is, we are pursuing "certainty" instead of "uncertainty". From uncertainty to probability, then to certainty, in this way we know much better about the real world. It is an old philosophic issue: is there a fixed point?

Then what will happen if the knowledge spreads? I have not got a clear understanding yet. The disappearance of probability is too hard to imagine. We can use "normal distribution" to describe some phenomenons, such as people's height, weight. The result is a description of a group, but not that accurate for a particular person. To predict a person's height, for example, we should get enough information, if applicable, his gene, his nutrition, and what he did in the past... Maybe it is too hard to define what is "enough". Anyway, the probability can be replaced under a special circumstance.

In the first step, I want to talk about how the spread of information influences the social activities. I think we have underestimated the importance of information in economics, or we have no applicable models to explain. I do not know whether more modern mathematical tools are needed in the explanations. As least, I need to read more about the history of probability, including the famous debate between frequency school and Bayesian. And maybe more knowledge about psychology and communication are essential. I want to talk about it later after learning measure theory.