Marginal Revolution

Todd Kendall wishes to know

...why is it that in every Mexican (or at least, every Tex-Mex) restaurant, there are always 10-20 "combination plates" that each match three seemingly random food items?  Trying to buy the items a la carte involves a substantially higher total price than buying the combo plate.

We all know that bundling can be an effective form of price discrimination but I wonder if that is the case here.  Most of these dishes are just different forms of slop.  Can it really be that someone loves the quesadillas but not the burritos, or vice versa, and that restaurants can capture more consumer surplus by forcing the two to be consumed together?  I am skeptical.  More likely behavioral economics is at work.  Most buyers don't even know the differences between all these fine Mexican culinary art forms, especially as practiced in the United States.  But if they're getting three different kinds of dishes, well, surely they can assume they will be getting something they want.  Slop or no slop.  There is diversification and a feeling that the restaurant's best dish will not be left unsampled.

One implicit prediction is that the very best Mexican restaurants in America will not resort to this kind of subterfuge and indeed they don't.

Do you have any alternative hypotheses?

My favorite things Arizona

There is Barbara Eden and Linda Ronstadt but what other directions can I find?  I'll try not to resort to retirees, such as Joe Garagiola.  Here goes:

1. Jazz: Charles Mingus's Ah Um is one of the ten jazz albums that everyone should own.

2. Country and Western: Marty Robbins is good but otherwise I draw a blank.

3. Movie director: Steven Spielberg.  In case you don't already know them, Duel and Sugarland Express are two of his best movies.  I'm also an advocate of Artificial Intelligence, a brilliant movie about the moral superficiality of human beings.  E.T. was his nadir.

4. Real business cycle theorist: Ed Prescott teaches at Arizona State (which by the way  was just rated as having the hottest students of any school).  If you think through his oeuvre, Prescott has at least three major contributions: time consistency (1977 with Kydland), real business cycle theory, and his work on the equity premium with Mehra.  That's impressive.

5. Painter and European emigre: Max Ernst lived for twelve years in Sedona.

6. Textiles: Navajo blankets from the 1880-1910 period rank among America's greatest artistic contributions.  You can buy a first-rate piece for no more than $60,000.

7. Author: Zane Grey fits the category but he doesn't count as a favorite.  Am I missing anyone important or is this simply not a literary state?

8. Movie, set in:  You have some real winners, including Psycho, Raising Arizona, and the still underrated Tombstone.  3:10 to Yuma I haven't seen yet.

The bottom line: The list is spotty in parts but the peaks are very high.  I'm also of the opinion that the Northern Rim of the Grand Canyon is the single best sight I've seen, ever.  I also love The Biltmore Hotel but alas I am not at that particular lodging right now...

Interpreting Tylerian Science Fiction

Earlier this week Tyler wrote:

I was thinking of writing a science fiction story.  In this world human capital is incredibly valuable.  Even if you lose all your wealth you can earn back lots very quickly, at least if you are talented and well-educated....The level of risk-taking is very high and capitalist enterprise starts to collapse...Production resumes only when a) managers precommit to costly drug addictions, so that they again fear pecuniary losses and b) shareholders find altruistic managers and also initiate charitable contributions to India.  They threaten to cut off those contributions if managers perform poorly.

Some of you were perhaps wondering what on earth this means.  (Recall my post on Tyler v. Alex.)  Perhaps I can help.  Here is a recent item from the NYTimes.

BlackRock, the publicly traded asset manager, and a hedge fund firm, Highfields Capital Management, are backing a new company seeking to raise $2 billion to buy delinquent residential mortgages.

Private National Mortgage Acceptance will be run by Stanford L. Kurland, former president of Countrywide Financial Corporation, the largest American home-loan provider, the companies said Monday in a statement.

The Cone of Silence

Jason Kottke quotes from Arsenals of Folly, the new Richard Rhodes book about the nuclear arms race.  The scene is the 1986 meeting between Gorbachev and Reagan in Reykjavik, Iceland.

Back at the American Embassy, Shultz assembled Donald Regan, John Poindexter, Paul Nitze, Richard Perle, Max Kampelman, Kenneth Adelman, and Poindexter's military assistant, Robert Linhard, inside what Adelman calls "the smallest bubble ever built" -- the Plexiglas security chamber, specially coated to repel electromagnetic radiation and mounted on blocks to limit acoustic transmissions, that is a feature of every U.S. Embassy in the world. Since the State Department had seen no need for extensive security arrangements for negotiating U.S. relations with little Iceland, the Reykjavik Embassy bubble was designed to hold only eight people. When Reagan arrived, the air-lock-like door swooshed and everyone stood up, bumping into each other and knocking over chairs in the confusion. Reagan put people at ease with a joke. "We could fill this thing up with water," he said, gesturing, "and use it as a fish tank." Adelman gave up his chair to the president and sat on the floor leaning against the tailored presidential legs, a compass rose of shoes touching his at the center of the circle.