Economics
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Prices, incentives and why markets do what they do.
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Why adding a road can slow every driver down: Braess's paradox
You would think a free shortcut can only help. In 1968 the mathematician Dietrich Braess showed it can make every driver slower. In our four-road example…
The winner's curse: why whoever wins an auction has usually overpaid
In 1983, MBA students bid on jars of coins worth exactly $8. On average they underestimated the jars, guessing $5.13. Yet the winning bids averaged $10.01, so…