[User] Please transcribe this text

[Assistant] Okay, uhm, so essentially, uhm, let's say your income is $40,000. That's your income.


[User] Please transcribe this text

[Assistant] And let's say that there's a 1%, since it's Cambridge, there's a non-trivial chance you get hit by a car. Okay? Let's say there's a 1% chance


[User] Please transcribe this text

[Assistant] Probably 0.01. You'll get hit by a car every year. And if you do, you're gonna face $30,000 in medical bills. Okay? So you have a $40,000 income.


[User] Please transcribe this text

[Assistant] There's a 1% chance you get hit by a car, and if you do, you'll face $30,000 in medical bills.


[User] Please transcribe this text

[Assistant] And let's assume for the minute you'll still get to work. Your income will always be there. You're just gonna have to face a bunch of medical bills. There's a separate issue about whether you might have to miss your job. That makes this even worse. But let's ignore that. You're gonna get to go to your job, you're just gonna have to take a week and get patched up.


[User] Please transcribe this text

[Assistant] And $30,000 is nothing, by the way, for a hospital bill.


[User] Please transcribe this text

[Assistant] Okay, a typical, for example, heart attack hospital bill is well over $100,000. Okay, it's $30,000, pretty modest. Yeah.


[User] Please transcribe this text

[Assistant] Well, let's ignore that for a second. Right now we're talking about why you want insurance overall. We'll later get into who, you know, we can discuss later who should own that insurance, who should bear the risk. Right now it's just simply why you'd want insurance. Okay?


[User] Please transcribe this text

[Assistant] So, the expected cost, the expected cost of getting hit by a car, the expected value, or expected cost, because it's negative, is minus 300.


[User] Please transcribe this text

[Assistant] So every year you have a $300 expected cost of getting hit by a car. And let's say your utility function is u equals square root of c, and let's assume there's no savings. You consume all your income.


[User] Please transcribe this text

[Assistant] How much will this person be willing to pay for insurance? Well we can solve that


[User] Please transcribe this text

[Assistant] By asking, at what insurance price would they be better off being insured versus uninsured? So let's just do the math. Okay, if they're uninsured,


[User] Please transcribe this text

[Assistant] What's going to happen to them? Well, what's their expected utility? Well, there's a 0.1 chance.


[User] Please transcribe this text

[Assistant] That they are going to get hit. And so their net income will drop from 40,000 to 10,000.


[User] Please transcribe this text

[Assistant] Because I'll have to pay $30,000 in medical bills. So 0.1% chance their net income will be $10,000. And there's a 99% chance


[User] Please transcribe this text

[Assistant] Okay, that's utility without insurance. Okay, add that up and you get 199.


[User] Please transcribe this text

[Assistant] So their expected utility without insurance is $1.99. That's their expected utility. Expected utility with no insurance.


[User] Please transcribe this text

[Assistant] Now let's do the expected utility with insurance, but with insurance with an uncertain price. Let's call the price X. Okay.


[User] Please transcribe this text

[Assistant] What's the utility with insurance? Well, with insurance, there's a 0.1% chance that they get hit. 0.01, I'm sorry, it should be an 01. My bad. Wow, I can't believe you guys missed that. You guys are a little tired today. 0.01.


[User] Please transcribe this text

[Assistant] Now if I get hit with insurance, I don't have to pay my medical bill. But I do have to pay my insurance premium. So what I have is I have $40,000.


[User] Please transcribe this text

[Assistant] Minus X, which is my insurance premium. I always have to pay my insurance premium every year, no matter what. If I don't get hit,


[User] Please transcribe this text

[Assistant] Then I get my 40,000, but I also have to pay my insurance premium.


[User] Please transcribe this text

[Assistant] So basically, these things are the same. So my expected utility is square root of 40,000 minus x. That's my expected utility.


[User] Please transcribe this text

[Assistant] So how do I solve for the optimal X? Well I ask at what X am I better off than being uninsured? So I set this equal to 199. I ask at what X would I be better off than being uninsured? And if you solve that,


[User] Please transcribe this text

[Assistant] You get that the X star, the point at which you would rather be insured than uninsured, is a premium of $399.


[User] Please transcribe this text

[Assistant] You would rather have insurance at a cost of $3.99 than you would go uninsured. Okay? Clear on that?


[User] Please transcribe this text

[Assistant] You'd rather pay a premium of $3.99 than you would go uninsured.


[User] Please transcribe this text

[Assistant] Now think about what that means. Remember, the expected cost of this accent was only $300. That means that you have a $99 risk premium.


[User] Please transcribe this text

[Assistant] You are willing to pay $99 to avoid bearing this risk. That is what you're willing to pay before you're willing to pay me $43.75 to get out of that gamble. That was your risk premium. It's how much you'll pay to get out of taking a gamble.


[User] Please transcribe this text

[Assistant] I was offering a gamble. But here's the thing, being uninsured is a gamble.


[User] Please transcribe this text

[Assistant] Being uninsured is like taking the gamble. So the example I had before I locked you in the room, and you have to pay me if you want to avoid the bet, that's insurance. You are locked in this life. You're locked into being in Cambridge.


[User] Please transcribe this text

[Assistant] You're dealing with a 1% risk of getting hit by a car always. So the question is, how much will you pay to avoid the at least financial cost, forget the trauma, the financial cost of being hit by that car?


[User] Please transcribe this text

[Assistant] And the answer is you'll pay $99 above the expected damage it will do. And that is why insurance is big business.


[User] Please transcribe this text

[Assistant] Because people will pay to avoid being put in risky situations.


[User] Please transcribe this text

[Assistant] Okay, so insurance is a very profitable, now in fact of course the insurance industry is like any other industry, the supply side and competition and whether that will lead to profits and stuff like that depends on the whole supply side. This is just the demand side.


[User] Please transcribe this text

[Assistant] But the point is that there's gonna be huge demand for insurance, and people will be willing to pay much more than the insu- it costs the insurance companies. The insurance companies expect to pay $300 a year, and they're getting almost $400 a year in premium. So the insurance company makes that money. Okay? And basically, that's why insurance is big business.


[User] Please transcribe this text

[Assistant] Now, here's a couple things I'd like you to show yourself in the, you know, in your copious spare time.


[User] Please transcribe this text

[Assistant] Okay, first of all, this risk premium should be bigger as the loss gets bigger.


[User] Please transcribe this text

[Assistant] Similarly, this risk premium should fall as your income is higher. Why? Because once again, that makes you more towards the linear part.


[User] Please transcribe this text

[Assistant] The bottom line is, the bigger the risk is relative to your income, the more risk averse you become.


[User] Please transcribe this text

[Assistant] The more you move from that linear part of the curve onto the non-linear part of the curve.


[User] Please transcribe this text

[Assistant] Okay, so that's the key thing. Bigger risk rel- what matters is risk relative to your income.


[User] Please transcribe this text

[Assistant] That's going to determine your value, your value, your willingness to pay for insurance. So for example,


[User] Please transcribe this text

[Assistant] Let's think of your decision to go buy consumer electronics and the warranty. And they always offer you a warranty. Now, those warranties are expected value negative. Okay?


[User] Please transcribe this text

[Assistant] If you take the odds of your machine breaking, you're gonna buy a new stereo.


[User] Please transcribe this text

[Assistant] If people don't buy stereos anymore. You're going to buy a car stereo. Okay? People still buy those. You can buy a car stereo.


[User] Please transcribe this text

[Assistant] Okay, you take the odds of that breaking times the cost it would take to fix it.


[User] Please transcribe this text

[Assistant] Those multiplied are less than what they'll charge you for the insurance premium. It's a bad bet. But it's insurance.


[User] Please transcribe this text

[Assistant] And so the question is should you take that? Well that depends on how wealthy you are. I should never take that.


[User] Please transcribe this text

[Assistant] Because my car radio cost is tiny relative to my income.


[User] Please transcribe this text

[Assistant] Someone who's low income might decide that's a large gamble relative to my income. I don't want to take that. So I want to buy the insurance offered by the manufacturer.


[User] Please transcribe this text

[Assistant] Okay, so once again, it's all about the size of the risk relative to your income. Yeah.


[User] Please transcribe this text

[Assistant] Well that's a separate issue, we'll talk about that later, that's called moral hazard. Uhm, you might, uh, it's not moral hazard, it's just, what you're saying is, there's heterogeneity, and you know that you're, that you're actually, that for you it is a fair bet, because you're a clumsy. Well then you should definitely take it.


[User] Please transcribe this text

[Assistant] This is saying risk aversion works if you take it. Clumsiness further works in favor of you taking it. And we'll talk about that in a lecture or two when we talk about, uh, government provision of insurance. Okay?


[User] Please transcribe this text

[Assistant] So that's, so that's sort of the first application, which is thinking about insurance and why it's such big business in America. And it is, it is huge business in America. Okay?


[User] Please transcribe this text

[Assistant] The second application is thinking about our friend, the lottery.


[User] Please transcribe this text

[Assistant] Big news lately, we talked, there was a huge couple of huge lottery, uh, payouts. So let's talk about,


[User] Please transcribe this text

[Assistant] Okay, the expected value of a lottery purchase is 50%.


[User] Please transcribe this text

[Assistant] So every dollar you spend on the lottery, overall lottery options, for every dollar you spend, the expected payout is 50 cents, is a much, much less than fair bet.


[User] Please transcribe this text

[Assistant] Okay, and yet, lotteries are wildly popular. Actually, the beginnings of this country, the U.S. were financed by a lottery. Much of the money government raised initially to set up America came from a lottery. And state lotteries are a huge source of public financing right now across America. Okay, now, why do people play lotteries?


[User] Please transcribe this text

[Assistant] Well there's basically four theories for why people play lotteries. The first is that people are risk loving.


[User] Please transcribe this text

[Assistant] In fact, that we're wrong, people are risk loving, and that's why they play lotteries. How do we know that theory is wrong?


[User] Please transcribe this text

[Assistant] Well, that's, that's, that's one way we might know, but how do we know more globally? You guys could just be a weird bunch. How do we know more globally? Yeah.


[User] Please transcribe this text

[Assistant] That's absolutely right theoretically, but it's theoretically wrong. In the real world, what piece of evidence can you immediately point to that I recently pointed out that could show you this is wrong? Yeaah.


[User] Please transcribe this text

[Assistant] He'll buy insurance. If there is love in him, why'd he buy insurance?


[User] Please transcribe this text

[Assistant] So clearly people aren't risk-loving. We wouldn't spend 10% of GDP on insurance. So that theory is clearly wrong. Okay? That's theory one.


[User] Please transcribe this text

[Assistant] Now the second theory is a somewhat subtler version of this theory, which is quite interesting.


[User] Please transcribe this text

[Assistant] Which is that people are both risk averse and risk loving.


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[Assistant] And then in particular, people are risk averse over small gambles, but risk loving over big gambles. So let's look at figure 20-4.


[User] Please transcribe this text

[Assistant] This is an example of what we call Friedman savage preferences, you don't need to know that. But they had this idea that maybe people are locally risk averse, but globally risk loving. Let's see what this, let's give it, let me explain this, okay? This is sort of complicated. So imagine,


[User] Please transcribe this text

[Assistant] So a gamma leads you at W1 and a gamma leads W3 at 50% chance.


[User] Please transcribe this text

[Assistant] Okay, well if we look between w1 and w3, we're on the concave part of the utility function.


[User] Please transcribe this text

[Assistant] And as a result, I will not take that gamble. That gamble leads me at point B, which is below B star.


[User] Please transcribe this text

[Assistant] Okay, so, so basically I will not take that gamble. That leaves me worse off than just having W1 plus W3 over 2 with certainty. This is just if you hold your hand,


[User] Please transcribe this text

[Assistant] If you hold your hands with W1, W3, that's just the graph we saw before. You won't take that bet.


[User] Please transcribe this text

[Assistant] But now, let's say once you get above W3, once you're rich enough, you're risk loving.


[User] Please transcribe this text

[Assistant] So let's say people are risk-averse at first, but then get risk-loving. So if you started at, if you said you were starting at W3 plus W5 over 2, I don't know if you would gamble between W3 and W5, then you might, you're risk-loving in that range. And you take it.


[User] Please transcribe this text

[Assistant] So once you get rich enough, you start to get risk loving. So I talked about before getting richer, getting more and more risk neutral as you get richer. What if it goes the other way? What if you actually get risk loving when you get richer?


[User] Please transcribe this text

[Assistant] Well then, if you think about the whole Mega Millions thing,


[User] Please transcribe this text

[Assistant] You can see that over the whole distribution, from W1 to W5, people might want to take that risk.


[User] Please transcribe this text

[Assistant] That you could actually be risk loving over an entire, over these gambles, over these giant gambles. And that's just the way people play Mega Millions.


[User] Please transcribe this text

[Assistant] That over the giant gambles, they risk loving. Even if over more moderate gambles, they risk averse.


[User] Please transcribe this text

[Assistant] You don't insure yourself for a billion dollars, you insure yourself for a few thousand dollars. Yeah.


[User] Please transcribe this text

[Assistant] Both. It's basically about, it's, it's about expect utility calculations.


[User] Please transcribe this text

[Assistant] Yes, it's true for mega-millions, you put in two dollars the chance of winning 1.6 billion. But your probability is way, way lower than 2 in 1.6 billion. So it's still unfair. Okay? So.


[User] Please transcribe this text

[Assistant] The Friedman-Savage Hypothesis is the origin of the name. Once again, this hypothesis is that what's happening is that people are first risk averse, but then risk loving.


[User] Please transcribe this text

[Assistant] Well, how could we test and actually disprove this theory? Yeah.


[User] Please transcribe this text

[Assistant] Yeah, if this is true, people would love Mega Millions but hate $10 scratch-offs.


[User] Please transcribe this text

[Assistant] In fact, the vast majority of lottery playing is not mega millions. It's $10 scratch off. Most money spent on lotteries are a $10 and $20 gambles. Will you bet a dollar to win $10 or $20?


[User] Please transcribe this text

[Assistant] That, you should be risk averse over that or best risk neutral. You shouldn't be risk loving.


[User] Please transcribe this text

[Assistant] Over those tiny gambles. And yet that's most of what lottery players do.


[User] Please transcribe this text

[Assistant] Well, no, but you've lost the dollar you spent and that dollar that I still offered you a gamble. Spend one, win 10 with a 0.05 probability.


[User] Please transcribe this text

[Assistant] Well, we're not doing loss aversion. Loss aversion is sort of hard to not think about gambling. Loss aversion is more about losing. But in the regular, you can see you shouldn't do that unless you're risk-loving, but even this theory would say you're not locally risk-loving. So this theory is out, which leaves us with two more theories. The first theory is that this is entertainment.


[User] Please transcribe this text

[Assistant] People's utility function is not just consumption, but the thrill of finding out if they want.


[User] Please transcribe this text

[Assistant] Okay? My wife, against my better judgement, went out and bought a Mega Millions ticket.


[User] Please transcribe this text

[Assistant] Okay, and she got utility out of waiting for that number to come up. And it was pretty cheap utility, cost her two bucks. So in that sense, maybe you play the lottery a lot for entertainment. That's one theory. Unfortunately, the other theory is, uh, ignorance.


[User] Please transcribe this text

[Assistant] That basically, you know, the saying is the lottery is a tax on the stupid.


[User] Please transcribe this text

[Assistant] Okay? That basically just don't understand what a bad deal this is.


[User] Please transcribe this text

[Assistant] And the problem is, we don't know which of these theories is right.


[User] Please transcribe this text

[Assistant] And they have very different implications for government policy. Okay? If the, if this theory is right, entertainment theory is right, then the government should support lotteries.


[User] Please transcribe this text

[Assistant] Where essentially the government is essentially getting paid for providing entertainment. It's what the lotters often call the voluntary tax.


[User] Please transcribe this text

[Assistant] That I am basically giving the government money that can run our schools and returning the government giving me the entertainment value of seeing whether I scratch off one. That's great. That's welfare improving. Under this theory, okay, we should be discouraging lotteries. That all we're doing is taking a bunch of ignorant people and getting them to waste their money. Yeah.


[User] Please transcribe this text

[Assistant] That's exactly this. That wouldn't explain why I paid the $20 scratch off.


[User] Please transcribe this text

[Assistant] That's an absolute reason why, go ahead, even if I was starving and played the Mega Millions. And that's the Freeman Savage Hypothesis, absolutely. But that can't explain why, in fact, in some low income communities, among some low income groups, they'll spend as much as 20% of their income every year on the lottery. A net.


[User] Please transcribe this text

[Assistant] Okay, they're losing huge amounts of money on scratch-off tickets. So the question is, is that a rational decision because they find it entertaining or an irrational decision because they just don't understand, uh, what's going on.


[User] Please transcribe this text

[Assistant] And unfortunately, uh, we know the answer, but we do know it's very important.


[User] Please transcribe this text

[Assistant] So I can't give you the answer today, I can just tell you it's an important question. I hope someday, you know, someone will figure out how to think about this because it's got very important implications.


[User] Please transcribe this text

[Assistant] So let me stop there. That's what I want to say about uncertainty. And we'll come back and do another topic on, uhm, on Wednesday.


[User] Please transcribe this text

[Assistant] You know, seeing you boys together again.


[User] Please transcribe this text

[Assistant] Uhm, okay, I want to talk today about, uhm, continue our discussion of oligopoly.


[User] Please transcribe this text

[Assistant] But in the start, we said, gee, life would just be better if everyone would just cooperate. And someone even asked me, well, why don't they just cooperate? So let's talk about that. Let's talk about cartels.


[User] Please transcribe this text

[Assistant] Now clearly, this is gonna be the best outcome. So to fix examples, let's go back to our example of last time, American United.


[User] Please transcribe this text

[Assistant] Recall last time we said that demand was of the form 339 minus Q. Price is 339 minus Q.


[User] Please transcribe this text

[Assistant] Now, we talked about the fact that if American was a monopoly in this market,


[User] Please transcribe this text

[Assistant] They would simply solve the monopolist problem. They would set marginal revenue.


[User] Please transcribe this text

[Assistant] And then reading back off the demand curve, that implies an optimal quantity of $243.


[User] Please transcribe this text

[Assistant] Now imagine that America is not a monopoly, but America and United cooperate.


[User] Please transcribe this text

[Assistant] What if they got together and said, you know what? Let's behave as if we're one monopolist.


[User] Please transcribe this text

[Assistant] Flying 96 flights and just splitting them equally. We'll do 48, you do 48.


[User] Please transcribe this text

[Assistant] So let's cartelize, let's achieve the monopoly outcome, and let's just share 50-50 the fruits of that outcome.


[User] Please transcribe this text

[Assistant] And total profits in the market, each firm would then make profits of 48.


[User] Please transcribe this text

[Assistant] Times price minus average cost, which is marginal cost, cause it's flat. Times 243 minus 147.


[User] Please transcribe this text

[Assistant] Or, since like, I'm not like you guys can do that in my head, 4608 per firm.


[User] Please transcribe this text

[Assistant] Okay, so each firm would achieve profits of 40 states, take the 96 flights, split them in half, and then each achieve profits of 4608.


[User] Please transcribe this text

[Assistant] Now, what we can see is that these profits are much higher than what they got in the non-cooperative equilibrium. Remember the non-cooperative equilibrium, they were each doing 64 flights.


[User] Please transcribe this text

[Assistant] At a price of, uh, the YouTube 64 flights at a price of $211. We solved that last time. So what were their non-cooperative profits?


[User] Please transcribe this text

[Assistant] Their non-cooperative profits for each firm was 64 times the 211 they were charging minus the 147 in marginal costs.


[User] Please transcribe this text

[Assistant] So their profits used to be $4,096 when they weren't cooperating. They've gone up by 12.5% to $4608 by cooperating.


[User] Please transcribe this text

[Assistant] So simply by getting together, saying, don't be an asshole, let's cooperate. Let's figure out how to make the most money.


[User] Please transcribe this text

[Assistant] Getting together, they solve the prisoner's dilemma, get to the best outcome, and make a lot more money. Okay?


[User] Please transcribe this text

[Assistant] So the question is, why don't they always do this in


[User] Please transcribe this text

[Assistant] Oligopolistic markets. And fundamentally, there's two reasons.


[User] Please transcribe this text

[Assistant] Now normal people, you'll see when I'm done, normal people would teach them in a different order than I will. But let me start with the two reasons the ordinary economists would teach them.


[User] Please transcribe this text

[Assistant] The first reason why cartels don't form is that they're fundamentally, fundamentally unstable.


[User] Please transcribe this text

[Assistant] Cartels are fundamentally unstable as long as firms are self-interested.


[User] Please transcribe this text

[Assistant] Each individual firm in a cartel has an incentive to cheat.


[User] Please transcribe this text

[Assistant] And that's because they essentially can solve the monopoly problem of poisoning by cheating. Let me explain how that works. This best see is through numbers.


[User] Please transcribe this text

[Assistant] Let's imagine that we start in this cooperative equilibrium, 48 flights each in process of 4608.


[User] Please transcribe this text

[Assistant] And now let's imagine that quietly, American increased its number of flights from 48 to 50.


[User] Please transcribe this text

[Assistant] American says, well I know I agreed 48, but on the sly I'm gonna fly two more flights and hope they don't catch me. Okay? Well what's Americans' profits? Well, their quantity is 50. Q sub a is now 50. What's the price?


[User] Please transcribe this text

[Assistant] When they're monopoly, now they're doing two more flights. Remember, they're adding two flights to the total. There used to be, there used to be 96 flights, now it goes to 98 flights. So the price falls to 241.


[User] Please transcribe this text

[Assistant] Okay, so you were thinking about them as a loan, but remember they're still united doing the flights too, they're still doing 48 flights. So there are 96 flights total, now it goes to 98, so the price falls to 241. Okay, so what's their profits? Their profits are now 50 times 241 minus 147. Or 4,700. Their profits have gone up. Okay, let me back up and do it again, because I went fast. Okay?


[User] Please transcribe this text

[Assistant] They say they're gonna do two more flights. We have to respect the demand curve.


[User] Please transcribe this text

[Assistant] So there's gonna be two more flights, the price has to fall. If the price falls...


[User] Please transcribe this text

[Assistant] Then, uh, the price has to fall 241. They now make profits of 4700.


[User] Please transcribe this text

[Assistant] Okay, well if United is caught with their pants down and continues to do 48 flights, what does United make?


[User] Please transcribe this text

[Assistant] So Americans profits are up and United's profits are down through American cheating. What happened? How by cheating did they draw, what's the intuition of why them cheating drove their profits up and United's down?


[User] Please transcribe this text

[Assistant] And in fact, if you add these up, lowered total profits in the market. What's going on? Yeah.


[User] Please transcribe this text

[Assistant] But think about the poisoning effect. Choose the poisoning effect effect. Everyone in the market.


[User] Please transcribe this text

[Assistant] Everyone sees a lower price, but only American gets more flights.


[User] Please transcribe this text

[Assistant] So they essentially get the benefit, it's like you said, they get the benefit of the extra flights, but only half the penalty of the poisoning effect.


[User] Please transcribe this text

[Assistant] So for them it is optimal to r- to lower the price and sell more. Because they share the negative effect, the negative part with United, but they get all the positive part. Once again, a monopolist, when you r- when you try to sell more and lower the price, there's a positive part which is to sell more units, but a negative part which is the poisoning effect.


[User] Please transcribe this text

[Assistant] Well here American gets all the positive part and only half the negative part. So they make money by cheating.


[User] Please transcribe this text

[Assistant] They know Americans cheating, so United wants to cheat, and the whole thing breaks apart. So our cartels are unstable.


[User] Please transcribe this text

[Assistant] Because by cheating, you get all the benefit, but only part of the cost. And so cheating is incentivized in a cartel. And therefore, cartels will break down. They're not stable. Okay?


[User] Please transcribe this text

[Assistant] So that's the primary reason economists say we don't see cartels. The other reason people like to bring up is this little thing they're illegal. But you know, we don't let stuff like that bother us as economists.


[User] Please transcribe this text

[Assistant] But they are illegal. That's another reason why we don't see cartels. Uhm, in the late 1800s, cartels were quite common in the late 1800s. Big industries like oil and railroad industries came to be dominated by a few large firms.


[User] Please transcribe this text

[Assistant] Uhm, and they tried to become cartels, but it kept breaking down. So it's been in the late 1800s with oil companies, Standard Oil, and the big railroad companies, they kept trying to have cartels and it kept breaking down. So it came up with this idea,


[User] Please transcribe this text

[Assistant] They basically, uhm, said look, we can't trust each other.


[User] Please transcribe this text

[Assistant] So we're going to, every firm is going to turn over all its decisions to a common trust.


[User] Please transcribe this text

[Assistant] And there'll be a trust that's got representatives from every firm on the board. But we will publicly commit.


[User] Please transcribe this text

[Assistant] To what we're gonna produce at what price, and therefore we can make sure there's no cheating.


[User] Please transcribe this text

[Assistant] So essentially, every firm's still involved, they're all on this trust board, but they're making that decision in a way that's at least public to them, not public to the public, but public to them, so they can make sure they're not cheating.


[User] Please transcribe this text

[Assistant] So they form these trusts and essentially cartelize and make huge profits. And it worked. It solved the stability problem because cheating could be observed more readily. Now, would it have solved it for very long? We don't know.


[User] Please transcribe this text

[Assistant] Because the government, the public got pissed, and the government came in and passed what's called anti-trust laws.


[User] Please transcribe this text

[Assistant] And antitrust laws are laws which do not permit the cartelization of oligopolistic industries in this way. So let's talk about antitrust laws and how they work or how they don't work. I want to do a couple examples. One example is the movie industry. Now the movie industry, you know, is a classic oligopolistic industry.


[User] Please transcribe this text

[Assistant] You know, there's a few players. There's new players. A24 is huge now. It didn't exist 15 years ago.


[User] Please transcribe this text

[Assistant] Uhm, but by and large it's sort of a few players you've heard of, which dominate the industry. Okay.


[User] Please transcribe this text

[Assistant] These, and the way the industry works is movie companies make and they produce the movies and then sell them to movie theaters that show the movies, they show variety of movies at any one time.


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[Assistant] Well what happened was, in the 30s and 40s, the production companies started buying up the movie theaters.


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[Assistant] And what they do when they bought the movie theater is they say to the movie theater, we now own you and you will only show our movies.


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[Assistant] So I say to the movie theater, we now own you, you know, movie theater on the corner of, you know, Lincoln and Kennedy streets, and we're MGM and you only show MGM movies.


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[Assistant] And essentially, what that meant was, essentially, they were, uh, taking over, monopolizing a given distribution network, and they essentially


[User] Please transcribe this text

[Assistant] Carved it up, they agreed, okay, you get these theaters, we'll take these theaters.


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[Assistant] And essentially, that was the way they formed their cartel, was through distribution.


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[Assistant] And the federal government jumped in and said that that was an antitrust violation. The federal government sued and won.


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[Assistant] And so that industry, that, that uhm, that was broken up.


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[Assistant] So later moves to cartelize were more hidden. So for example, uhm, in the early 2000s,


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[Assistant] Airline industries were in big trouble because oil prices were going way up due to the Iraq war and other factors. Oil prices were going way up and the airline industry was in trouble.


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[Assistant] So in 2004, British Airlines and Virgin Atlantic had secret talks about essentially cartelizing the cross-Atlantic market from the East Coast to, uh, to London. And what they did is they said, look,


[User] Please transcribe this text

[Assistant] If we sort of obviously set our prices together, people are going to notice.


[User] Please transcribe this text

[Assistant] So what we're going to do instead is we're going to add fuel surcharges to the bill. We're going to say, oh, gas oil is getting more expensive. Your price haven't changed, but there's now a fuel surcharge on your bill.


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[Assistant] And that fuel surcharge, uhm, is gonna be something you won't pay attention to, so they won't notice that we're rising it together. And these fuel surcharges rose quickly from $10 to $120 per flight.


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[Assistant] And essentially rose in lockstep. They essentially coordinated, but tried to hide it by making the coordination not over the sticker price, but over the thing at sort of the bottom of your ticket, which was the fuel surcharge.


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[Assistant] So this worked for a while, but then what happened? Well what happened was the prisoner's dilemma.


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[Assistant] Lawyers for Virgin Airlines started worrying they were going to get busted.


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[Assistant] And they said, well, if we go to the feds first and bust British Airlines, maybe we'll get a better deal. So they were sent to the prisoner that ratted.


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[Assistant] So Virgin Atlantic went, was the prisoner that ratted, and the whole thing broke down. There were penalties more on British Airlines because Virgin Atlantic ratted on them.


[User] Please transcribe this text

[Assistant] Uh, but just like the prisoner's dilemma breaks down, it broke down in reality. And so that was something not where the law really worked, but where the, uh, the cartel was unstable.


[User] Please transcribe this text

[Assistant] Uhm, and the end result was Virgin Atlantic paid no fees, paid no penalty, and British Airlines paid more than 500 million dollars.


[User] Please transcribe this text

[Assistant] So British Airlines clearly did not study the prisoner's dilemma and did not realize that, uh, they should have gone first in ratting out Virgin, Virgin Atlantic.


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[Assistant] Uhm, now, that said, sometimes cartels operate openly in the public and get away with it.


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[Assistant] Okay, let's talk about probably the biggest open cartel in America, perhaps in America today, the National Football League.


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[Assistant] Okay, the National Football League, football is the most popular sport in America, the most profitable sport in America.


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[Assistant] There are 32 teams and there are essentially 32 businesses whose job it is to produce football wins. Okay?


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[Assistant] Now, these businesses have a huge incentive to collude with their fellow business, however.


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[Assistant] Because, because they can, because of television rights. So the New York Giants and the New York Jets.


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[Assistant] If they competed over the television rights for their area, they would compete away the profits that could be made by getting a big contract. If they collude and say no, you can only, we will only agree to a contract together.


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[Assistant] They can get a higher price for that contract. Cause it's either you give them the contract or you're out. If they competed, TV companies compete against each other and fight the price down.


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[Assistant] Okay, and in general actually this goes more than this, the league sells the rights to televised games as a package.


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[Assistant] So in fact, the National Football League literally sells explicitly, says we have a cartel of 32 teams, we are selling the monopoly right to televise these games. Somebody's got Sunday, somebody's got Thursday, somebody's got Monday night, etc. But it's a monopoly product they're selling. Now how did they get away with that? Well basically, actually in 1957, they were busted.


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[Assistant] And the court ruled that the NFL was violating anti-trust laws. Okay?


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[Assistant] Now that was for 1957, that was 60 years ago. The NFL still makes about 40 billion dollars on its television contract. What happened? Congress just exempted them.


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[Assistant] Congress said, well, you know what? We know they're violent antitrust, but we're going to pass a law which exempts them from antitrust law and let them do it. So it proves basically that Americans like football more than free markets.


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[Assistant] Uh, and basically we now have a cardinalized football industry, uh, that, uhm, uh, because Congress basically exempt them from the laws. Okay? So, those are some examples, yeaah.


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[Assistant] It's largely true for other sports leagues. It's largely true.


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[Assistant] Some of the fridges aren't explicit for football, but it's largely true for other sports leagues as well.


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[Assistant] I don't know if you have international anti-trust laws, I'm not sure how that works with international league, it's a good question. Uhm, okay, now.


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[Assistant] Okay, so let me, uhm, let me actually, uh, let me go on and talk about, let's do one more example about a time when a government made a cartel. Here's one more interesting example.


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[Assistant] Starting in the late 70s, Japan started making huge inroads into car production. And by the early 1980s, we're in recession and car manufacturers in the US are really pissed, uh, that Japan was taking so much of our market.


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[Assistant] Right now, you just have this issue that car manufacturers, uhm, wanted to, uh, limit the amount of Japanese cars coming to America. Now, you guys have been reading in the paper about international trade and why economists typically don't like limiting, uh, limiting international trade. And Reagan was, you know, a standard Republican, part of the party of free trade.


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[Assistant] But, we're gonna tell Japan if you guys were willing to agree.


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[Assistant] To a voluntary export restraint, we wouldn't mind.


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[Assistant] So what he said to Japan, they imposed something called the voluntary export constraint, which basically said,


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[Assistant] We will negotiate a deal with you where you will voluntarily agree to reduce the number of cars you send to America.


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[Assistant] The Japanese companies used to have to compete with each other to sell the cars in America. Now it's like, okay, you guys get together and limit how many cars you send. They're like, great, you've given us an ability to form a cartel.


[User] Please transcribe this text

[Assistant] By essentially telling us, get together and figure out how you're going to sell as many cars to America.


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[Assistant] So essentially, this voluntary export string is essentially cartilized, uhm,


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[Assistant] Uh, and no company could cheat. So if you had a cartel and a company tried to cheat, they couldn't sell the cars because you just wouldn't let them come into the U.S.


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[Assistant] What happened? Well, uhm, the average price of a Japanese car in America went up by $1200. Okay? U.S. auto profits did go up.


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[Assistant] And on that the estimates are that U.S. consumers are about 3 billion, overall U.S. is about 3 billion dollars worse because of this policy.


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[Assistant] Just examples of how different way, different government policies can interact with, uh, the cardinalization of industry. Yeah.


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[Assistant] And in some sense, the question is if it's true that so, for many years, tobacco industry worked this way. There was one large player, Philip Morris. Philip Morris would sort of raise the price and everyone would match.


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[Assistant] Now, as long as there's no evidence that they agreed to do that, that is not illegal.


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[Assistant] If there's evidence to agree that it's illegal, but as long as it's just like, no, we're just, this is the way it's gonna work, then that's not illegal.


[User] Please transcribe this text

[Assistant] So basically that's sort of an implicit cartel. Now, once again, what's holding it together? Nothing. A company could cheat and try to be, try to charge less. But basically that essentially, they figured they were working better as a cartel and essentially it was hard to, there was no way to bust it.


[User] Please transcribe this text

[Assistant] You could imagine you would need every company to do that. That would be a cartel enforcing way if every company had that deal in the market. But if one company has that deal, it doesn't enforce the cartel. Every company needs to have that deal.


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[Assistant] And so the question is if every company, if every company on their own organically decided we're gonna have that deal, that would essentially be a way of trying to bring, enforce a cartel, but I think that would be hard to say was an anti-trust, was an anti-trust violation. Good questions, other questions. Okay, so now let's ask why do we care about all this?


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[Assistant] We care about all this because it matters for ultimately what matters to us in this class, which is economic welfare. Okay?


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[Assistant] We've now covered three types of market structures. Perfect competition, monopoly, and oligopoly. Now let's compare them. And I'll compare them in two ways. Quantity sold, and profits, and profits, um, profits for firms.


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[Assistant] Profits earned per firm. And we're gonna stick with this United American market. Okay? We know if there's a monopoly.


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[Assistant] Each will fly 48 flights, and profits per firm will be $46.08. Okay, we solved that already. That's the cartel outcome.


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[Assistant] As we solved here, they each make profits of 44096.


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[Assistant] First of all, what's the price? Somebody raise their hand and tell me. If this is a perfectly competitive market, what would the price be? And then what would the quantity? Yeaah.


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[Assistant] So here we have for a given market a nice table which lets us compare the three different possible outcomes. And what you see is essentially, the more you can monopolize, the higher your profits, but the smaller the market. Okay? So basically, three lessons here.


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[Assistant] First of all, generally speaking, the oligopoly outcome is somewhere between the monopoly and perfectly competitive outcome. Where in between? Take 14-12.


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[Assistant] What 1412 was about is how you figure out where in between this outcome comes between these two. It's all about game theory. Okay? So that's what's exciting about game theory is this is a wide range.


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[Assistant] In game theories it says sophisticated tools that let us pin down where in this range companies will end up in the realistic case.


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[Assistant] Point two is, the more you can monopolize, the higher your profits will be.


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[Assistant] But let us come to welfare. Now I haven't computed social surplus here, but here's the cheat. I don't really need to.


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[Assistant] I don't need to cause essentially, roughly speaking social welfare is proportional to the quantity sold. In other words, we know


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[Assistant] That in a perfectly competitive market, this is the, the welfare maximizing quantity is 192.


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[Assistant] We know that as we monopolize the market, there are fewer and fewer flights.


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[Assistant] Therefore, we're creating a deadweight loss. Essentially, deadweight loss is proportional, actually it's sort of exponentially proportional, to the gap between the quantity sold and the competitive quantity. Welfare is maximized here by definition, we prove that.


[User] Please transcribe this text

[Assistant] So any reduction from that means a decrease in deadweight loss. So the more you reduce quantity, the more you lower welfare. So essentially as we go down the, down the column, we lower profits but raise social welfare. Yeaah.


[User] Please transcribe this text

[Assistant] But, although I do 96 to a processor, it would be twice that. But the bottom line is, that essentially, you've got, uh, you've got essentially more profits in this market. Okay? Other questions about that? So the bottom line is, the more competitive the market, the higher the welfare, but the lower the profits. Okay? So, that's kind of our bottom line of how we think about this. Questions about that? Okay. Next thing I want to cover.


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[Assistant] After all, most oligopoly markets are not just two firms. Car market, we talked about cars and uh, movie producing studios, they're many firms. Okay?


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[Assistant] Uhm, when there's more firms. But there's no reason you can't. It literally just becomes...


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[Assistant] Three equations of three unknowns or four equations of four unknowns. Literally as you can see, you can simply see as you take that model and add more firms, it just expands the state space, it becomes impossible to graph, but you can solve it. Eventually you've got n equations, uh, in n unknowns.


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[Assistant] The key bottom line result is that as the corno, as the number of firms gets large,


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[Assistant] The Cournot equilibrium approaches the competitive equilibrium.


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[Assistant] The elasticity. In sort of a market, this is sort of in a symmetric corneaux market of the kind we've been working with.


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[Assistant] The markup is one over the number of firms times the elasticity of, times the elasticity of demand. So think about this for a second. Imagine there is one firm.


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[Assistant] When n equals 2, the firms are making half as much.


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[Assistant] When a equals three, a third, uh, it, it goes into fact, factor third, etc. What this says is n approaches infinity. We approach the competitive outcome.


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[Assistant] You know, it's sort of like my point about contested markets. You get a market that sort of


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[Assistant] Competitive enough, you're gonna shrink, you're gonna shrink the markup as more and more firms enter.


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[Assistant] Uh, that we could derive that shows that uhm, as more firms uhm,


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[Assistant] As more firms are in, uh, then you get, uh, a lower markup.


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[Assistant] Uhm, now I wanna make, there's actually, but this actually understates the case. For an important strategic reason.


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[Assistant] Which is, more firms lowers the markup in a, in a, more firm lowers the markup in a Corneau non-cooperative model.


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[Assistant] But more firms also makes a cooperative model harder.


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[Assistant] So this is for the non-cooperative model. The non-cooperative model, your profits fall as there are more firms. But it also gets harder to cooperate as there are more firms. Because there are more peop- there are more people you have to trust.


[User] Please transcribe this text

[Assistant] More people you have to keep hold of. So a great example of this actually for a long time. Mercury.


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[Assistant] The stuff we use in thermometers and such only was found in Italy and Spain. In the mines in Italy and Spain. And they had a cartel between the two countries to sell mercury.


[User] Please transcribe this text

[Assistant] What happened, other countries discovered mercury, and they couldn't keep the cartel together, and the price of mercury fell a lot.


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[Assistant] We had the question about OPEC, similar thing. OPEC was much more successful in the 1970s when essentially the only source of oil were basically these Arab nations that form OPEC.


[User] Please transcribe this text

[Assistant] What happened over time is we discovered more oil around the world, in particular in Russia, and in the US, which has sort of broken the power of this cartel to a large extent. So the reason why a bigger market


[User] Please transcribe this text

[Assistant] Is I want to talk about what is, what does all this teach us about a key policy issue? Which is the issue of mergers. What does everything we've learned here tell us about thinking about mergers? Okay, we know about mergers, happens all the time, two companies merge.


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[Assistant] Well, it turns out when companies merge and they're large enough, the federal government regulates that.


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[Assistant] The federal government gets a vote on whether that merger is going to be allowed to go forward.


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[Assistant] Either the Department of Justice or the Federal Trade Commission, depending on what industry it is.


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[Assistant] So the federal government has to decide how do you evaluate whether two firms merging is a good idea or not. And essentially what it comes down to is a simple trade-off. Economies of scale.


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[Assistant] If two firms have sort of redundant production processes and they merge, they can be more efficient.


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[Assistant] There can be positive economies of scale for emerging firms. Okay? So it's cost efficiencies basically. Economies of scale deliver cost efficiencies. On the other hand, the more firms merge, the more this end goes down, and the more markets go up, and the worse it is for consumers.


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[Assistant] So the trade-off is, do you want to reduce, is reducing n.


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[Assistant] Worth it in terms of the economies of scale. Or in other words, does the producer efficiency go up enough?


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[Assistant] Now an interesting case of this, which has been, got very big implications for all of us in America, is hospital mergers.


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[Assistant] During the decade of the 2000s, there was a rash of hospital mergers.


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[Assistant] Where hospitals said, look, here's a classic case for economies of scale, because hospitals have what's called a peak load problem.


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[Assistant] They have to have empty beds. Hospitals can't be full all the time because there might be a car accident and people need beds.


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[Assistant] So by definition, it's inefficient for hospitals to be at 100% capacity. Hospital is one of XMX's capacity.


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[Assistant] Basically approved any hospital merger that they wanted in the 2000s. Well what happened? What happened is the hospitals lied.


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[Assistant] They kept both hospitals open, kept all the empty beds, and just raised prices.


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[Assistant] So essentially the hospital mergers did not deliver any of the economies of scale they promised, but did deliver a lot of the market power we feared.


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[Assistant] So a huge cause of the increase in medical spending in the 2000s.


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[Assistant] Was these hospital mergers, which essentially took a lot of the compet- competitive pressure.


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[Assistant] Out of the medical market, uh, and didn't really deliver economies of scale. And this is the hard part about being a regulator.


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[Assistant] Most of what public policy economists do in the world is regulate. All over the world.


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[Assistant] There are thousands of economists employed all over the world, hundreds of them, tens of thousands, whose job it is to make regulatory decisions of this nature. And they're really hard. Because we've drawn nice, clean theoretical models here. But we have to know what's epsilon.


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[Assistant] Price competition. Now, the models we've been discussing so far have been what we call quantity competition. That united America can compete


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[Assistant] On how many flights to send, and then the demand curve tells them what they can charge.


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[Assistant] But in fact, in many markets, that's not how firms compete. In fact, we even mentioned it. Someone mentioned about best price offers, et cetera. They don't compete on quantity, they compete on price. And that's a different model. Named after another French economist. Bertrand, a model of Bertrand competition.


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[Assistant] Is the model of price competition is the model we call per trend competition. This model


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[Assistant] Says that basically two firms compete over what price to set.


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[Assistant] And then the quantity is determined by the price that results from that competition.


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[Assistant] So they don't compete over quantity, they compete over price. And the main curve then tells you the quantity. Okay.


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[Assistant] Now, in this case, what's really striking about Bertrand competition is that, unlike the Cournot model,


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[Assistant] Under Bertrand competition, two firms can be enough to get us to the competitive equilibrium. Why? Why do we only potentially need two firms to get the competitive equilibrium? Yeah.


[User] Please transcribe this text

[Assistant] Exactly. As long as there's profits to be made, it's like our entry exit decision, right? As long as there's profits to be made, I'm gonna come in at a price one penny below you, make one penny less profits, and steal all the business from you.


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[Assistant] So, if there's perfect competition between firms in a Bertrand sense,


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[Assistant] Idea. The Cornell competition where you need many, many firms to get close to this competitive outcome.


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[Assistant] With price competition, because firms are always kind of competing to go one penny below each other.


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[Assistant] In a market that's otherwise competitive, you can actually drive the price to a competitive price.


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[Assistant] Through essentially, you can actually drive the price down to marginal cost.


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[Assistant] It's sort of like I talked about contestable markets and as long as a profit be made, someone would enter.


[User] Please transcribe this text

[Assistant] Here as long as there's profit to be made, someone will lower their price. And that'll keep happening until price equals marginal cost. So in Bertrand competition, you actually can get


[User] Please transcribe this text

[Assistant] Close to where at to the competitive outcome of the small number of firms. Now, two points to make about this. Your first point is, well holy shit, how do I decide which one of these to use?


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[Assistant] You've just taught me, you've just spent, you know, a lecture and a half on this fancy model, spent about 37 seconds on this model.


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[Assistant] How do I know which one to use? You didn't write down any math, so I don't know what to do. I'm freaking out.


[User] Please transcribe this text

[Assistant] Okay, how do I know which one to use? Well the bottom line is, we're not going to actually do much math about portraying competition other than sort of the intuition that they're competing over price.


[User] Please transcribe this text

[Assistant] The more relevant question is, how do you think about the situations where Cournot competition is more likely and Bertrand competition is more likely? So what do you think? In what types of markets do you think Cournot competition would be more likely? And in what kinds of markets do you think Bertrand competition would be more likely?


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[Assistant] Elasticity uhm, is gonna have a similar effect in both. It's gonna basically drive the price down in both.


[User] Please transcribe this text

[Assistant] Okay, because the elasticity is higher, it draws the markup for trend, it's going to drive the elasticity, drive it down in both. So it's not necessarily about elasticity, it's something about production processes.


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[Assistant] What type of production processes are going to lend themselves to price competition versus quantity competition? Think about it this way. If I offer a price, what do I have to do?


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[Assistant] That's roughly speaking right. Basically, if there's long lags in production, I can't do price competition.


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[Assistant] So if I say I'm going to compete and people say, great, I want all your product. I'm like, great, you can have it in a year. That doesn't work. So things like auto companies are going to have a hard time with pure price competition.


[User] Please transcribe this text

[Assistant] Because if Toyota says, okay, I'm a dollar less, everyone says, okay, great, we want a million Toyotas tomorrow, they can't do it.


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[Assistant] So things which are capital intensive lag production processes. It's going to be hard to have pure...


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[Assistant] Real life of course can be some mix of these. But it'll tend more towards quantity competition.


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[Assistant] Because you really are going to depend on what you're going to sell. Because that sort of, you can't just infinitely supply it. Whereas other things, like cereal sales,


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[Assistant] Where you can sort of immediately crank up a million more boxes of cereal in like a day out of your production processes, that will be more likely to be price competition. Things with small production lags, then you'd be more likely to have price competition. Because if you lower the price, all of a sudden you dominate the market, you can meet that demand. Okay? So essentially we can think about price competition as being more likely


[User] Please transcribe this text

[Assistant] But this just gives you a sense of kind of when more, one type of competition is more likely, uh, than the other. Yeah.


[User] Please transcribe this text

[Assistant] You've jumped ahead to the last point I want to make, which is imagine you're in a Bertrand competition world like with cereal. That's a pretty awful world if you're a producer.


[User] Please transcribe this text

[Assistant] Okay, basically, that's where your markup's tiny, because any time you try to raise the price, you get undercut. What can you do? Well, we've already gotten the answer. What you can do is you can engage in product differentiation.


[User] Please transcribe this text

[Assistant] The reason why you're in Bertrand competition is because you're selling the same thing. Once I'm selling something different, I take on the features of a monopolist again.


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[Assistant] So if I can get consumers to not think of my good as identical to my competitors, then I can price above marginal cost and people still buy it. The reason Bertrand competition drives price to marginal cost, it's because people views the goods as identical.


[User] Please transcribe this text

[Assistant] But if they don't feel the goods identical, then I can keep price above marginal cost. Okay?


[User] Please transcribe this text

[Assistant] And the example of breakfast cereals is the perfect way to illustrate this.


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[Assistant] So back around World War II, there were essentially basically like three types of cereal.


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[Assistant] Okay, there was Cheerios, there was Cornflakes and Quaker Oats. Okay, that's basically what cereal was. Not very exciting. Now, by the night, but by 1970, there were more than 150 breakfast cereals to choose from.


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[Assistant] Including some which are variations of Cheerios and variation of Cornflakes. In fact, you could all say in some sense all cereal is variation of Cheerios and Cornflakes and Oats. Uhm.


[User] Please transcribe this text

[Assistant] And then, uhm, and moreover now, if you go to the store today, you can actually buy generic versions of brand name cereals. So you can buy Odios or Marshmallow Maties, which are Lucky Charms. Or what are they, what's the other one I love? We buy them in these big bags. You guys are buying these generic Lucky Charms, Marshmallow Maties, generic Cap'n Crunches, like


[User] Please transcribe this text

[Assistant] You know, ahoy matey or something, I don't know. They got these generic things which you can buy which are really just the same. So, essentially,


[User] Please transcribe this text

[Assistant] What you do, what companies want to always do with their Bertrand competition is always try to product differentiate. Always try to figure out a way they can create a market where they can price, uh, above marginal cost. Okay?


[User] Please transcribe this text

[Assistant] So for example, let's take General Mills, a company that makes Cheerios.


[User] Please transcribe this text

[Assistant] Okay? They were making Cheerios, and then, and then all of a sudden odios and stuff started coming along and they weren't making money.


[User] Please transcribe this text

[Assistant] What do they do? They created different kinds of Cheerios, like Apple Cinnamon Cheerios. General Mills did not create Apple Cinnamon Cheerios out of the goodness of their heart.


[User] Please transcribe this text

[Assistant] General Mills created Apple Cinnamon Cheerios because they were getting killed in the Cheerio market. And so they tried to differentiate by having a new product.


[User] Please transcribe this text

[Assistant] And as price pushes above marginal cost, quantity sold in the market falls. It created a deadweight loss. Quantity fell. And that's bad.


[User] Please transcribe this text

[Assistant] Okay? On the other hand, apple cinnamon chairs are quite good. Okay?


[User] Please transcribe this text

[Assistant] So this actually ends up being much like our patent discussion.


[User] Please transcribe this text

[Assistant] Which is, essentially by differentiating, they've had two effects. They've lowered consumer surplus and welfare.


[User] Please transcribe this text

[Assistant] By pricing above marginal cost, but raised it by shifting out the demand curve by creating a new good that people want.


[User] Please transcribe this text

[Assistant] Even if the demand curve, let's say there's a new demand curve for apple cinnamon churros that's way out. Okay, that's great.


[User] Please transcribe this text

[Assistant] Okay, but still the fact that they're pricing above marginal cost means they'll sell fewer than they would in a competitive market. If they had invented outside of shows and sold at marginal cost, we'd still be way better off.


[User] Please transcribe this text

[Assistant] So the trade-off is essentially how far out do we shift demand by creating this new product versus how much to restrict sales by pricing it above marginal cost.


[User] Please transcribe this text

[Assistant] So essentially, uhm, now, uh, and now what we have, uh, is a market with about five firms that dominated it, and about 5,000 brands of cereal. Okay? So it's constant product differentiation, and essentially,


[User] Please transcribe this text

[Assistant] This is the trade-off with product differentiation, which is we get reduced sale, we get, uh, deadweight loss because they're not pricing at marginal cost, but we get new products that people might like. Yeah.


[User] Please transcribe this text

[Assistant] So, in some sense, this is, this is once again, this gets into the deep interesting issues of industrialization. You talk about gain theory, which is, if I can create brand loyalty,


[User] Please transcribe this text

[Assistant] By, in a way that makes you slightly better off, but keeps you in my brain forever, then that might be worse. By creating a way that makes you much better off, that might be better. So essentially, that's why, for example, you may have noticed you may be getting one or two credit card mailers.


[User] Please transcribe this text

[Assistant] That's a, you guys, are you guys getting inundated with credit card offers? Okay. It's not cause they love you guys. It's because if they hook you now, then you might stick with that credit card later.


[User] Please transcribe this text

[Assistant] So they're trying to exploit, trying to get you, they're trying to give you a good deal now.


[User] Please transcribe this text

[Assistant] So essentially, there's a trade-off, which is if that loyalty is based on real differences in quality, that might be good. If it's not, it might not be. But the welfare gets very murky. It's a good question. Other questions?


[User] Please transcribe this text

[Assistant] Okay, so these are exciting real world topics. It's more reasons to go on and study more in economics. But let's stop now. We'll come back and we'll start talking about factor markets on Monday.


[User] Please transcribe this text

[Assistant] Uhm, we were, we were just, uhm, doing some experiments.


[User] Please transcribe this text

[Assistant] Still no clue where Dr. Connors is. I haven't seen Dad look this stressed in a while.


[User] Please transcribe this text

[Assistant] Yeah, I'll run a distraction. See if you can break him free. On it.


[User] Please transcribe this text

[Assistant] It is absolutely possible for you to have great style on any budget, regardless of how low. The key is a capsule wardrobe.


[User] Please transcribe this text

[Assistant] A capsule wardrobe is a collection of pieces that are classics, that will work together with so much versatility where you can create lock after lock after lock.


[User] Please transcribe this text

[Assistant] If you're thinking what makes something a capsule item, it's something that is classic, something that is relatively neutral, something that could be worn time after time and reimagined. Worn with many of the pieces within your closet and it doesn't feel like it's been seen a thousand times over. And so.


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[Assistant] There are many key components of this capsule closet that you will see as simple, standard, but they are foundations of your closet.


[User] Please transcribe this text

[Assistant] I'm going to talk through first of all what every great capsule collection should have within it. I'm going to show you a version of these. You do not need to stick with this exact version, but get as close as possible to this to really stick with what a capsule collection means.


[User] Please transcribe this text

[Assistant] Let's start with a female capsule wardrobe. But I want to make this clear, the majority of the things that are within this capsule wardrobe work for male, female, or non-binary. The pieces that are here within this capsule wardrobe are your foundations. I'm going to talk you through each one.


[User] Please transcribe this text

[Assistant] A great piece of outerwear. This is something you should have in your closet for sure. Whether it be a trench coat, whether it be an overcoat, something heavier weight is fine. Just have a great piece of outerwear.


[User] Please transcribe this text

[Assistant] A leather jacket. A leather jacket is cool, it's easy, it shows style without making any real effort. A motor jacket is in reference to a motorcycle style jacket that was huge in the 50s. And there's versions that are a lot more toned down that definitely don't look like you're about to go ride on a motorbike. This is one of those versions.


[User] Please transcribe this text

[Assistant] If you can avoid something that actually looks like it's meant to be used for riding a motorbike, that would be best because it's a little more style as opposed to function. It does not have to be a moto jacket style. It could be a different kind of leather jacket. It also doesn't have to be real leather. It can be vegan leather if you'd rather.


[User] Please transcribe this text

[Assistant] Yes, you may not want to wear a button-up shirt every day, but eventually you will need a button-up shirt, and it can be used in a very casual, fun way as opposed to super corporate, so...


[User] Please transcribe this text

[Assistant] Have a couple. Invest in a couple. We have a white and a black. You could go for other colors that make you feel like you. For example, a navy, a brown, a beige. Stick with neutrals. It's going to be a lot easier to play around with those.


[User] Please transcribe this text

[Assistant] A great fitting suit. This does not have to be expensive. You can get something relatively inexpensive and have it tailored, but make sure it fits you to perfection.


[User] Please transcribe this text

[Assistant] Keep with a neutral. It can either be a darker neutral or a lighter neutral. For this scenario, I've gone for something lighter. A matching pant with a matching jacket. You can rework this in so many ways. This is one of the key components of your capsule wardrobe.


[User] Please transcribe this text

[Assistant] Break the suit up and you can wear it in so many different ways. It does not matter if you don't have a job that requires you to wear a corporate suit.


[User] Please transcribe this text

[Assistant] You will eventually need knitwear at some point of the year. Stick with something relatively neutral. Stick with something that really flatters your body. If you like a crew neck, go with a crew neck. If you are slightly shorter, go with a cropped.


[User] Please transcribe this text

[Assistant] I would suggest a solid grey, a solid navy, a solid black, a solid cream. Something simple that you can wear in so many different ways. I've got two here. I've got a grey.


[User] Please transcribe this text

[Assistant] And I've got this khaki color. It does not have to be these colors, just find colors that are relative neutral that you can mix and match.


[User] Please transcribe this text

[Assistant] A t-shirt is something that is so simple. You can get it from pretty much every store. You can either go for something super expensive or super inexpensive. Personally, I go for inexpensive basics and I spend my money elsewhere.


[User] Please transcribe this text

[Assistant] I go for some neutral colors and then I'll throw in maybe two or three different colors that are a little more poppy, but my foundations are usually black, white, navy, grey, brown.


[User] Please transcribe this text

[Assistant] Here I've thrown in a khaki, a khaki is relatively neutral also.


[User] Please transcribe this text

[Assistant] But we've gone for a black, we've gone for a grey, so make sure that you like the cut. Is a v-neck more your story? Is a crew neck more your story? Is a soft v-neck more your story? Find the t-shirt that works best for you by trying them on, and then buy them in a few different colors. There are so many stores that offer inexpensive basics, so find the fit on one, buy it in every color they've got.


[User] Please transcribe this text

[Assistant] Now, I know many Americans will say that this is not khaki. Your version of khaki is more brown. For all of you Europeans, yes, khaki is green.


[User] Please transcribe this text

[Assistant] Denim is a major component of your capsule wardrobe. Decide on the shades of denim you like, decide on the fits of denim you like by trying on multiple options, and then once you've whittled it down to a pair of jeans that you know that you will appreciate for many years to come, they're usually the more straight leg, tapered leg, it's nothing too wild.


[User] Please transcribe this text

[Assistant] Nothing with rips, nothing with dazzled, keep it relatively simple and go for a couple of pairs of those jeans, whether it's black or blue or white, whatever your color is that you want to go for, go for a couple of pairs and that should see you through many, many, many years of wear if they're simple.


[User] Please transcribe this text

[Assistant] Here, I've got a pair of black that will go with almost anything, and a pair of blue, which is universal. It's easy to dress up dressed down.


[User] Please transcribe this text

[Assistant] And then let's not forget about accessories. You want to make sure that you've got wonderful footwear and wonderful accessories other than the footwear. So let's focus on footwear first of all.


[User] Please transcribe this text

[Assistant] A white sneaker will never go out of style. I've been harping on about this for about 20 years. I've always wanted a white sneaker because it goes with everything. And so.


[User] Please transcribe this text

[Assistant] Get a white sneaker that works well for you. These are canvas. You can throw them in the wash when they get dirty. It's great to just go down to brunch with friends. Pop to the shops. Go shopping. Like, you've always got something casual and comfortable to wear. And you don't have to think about it. It's super easy.


[User] Please transcribe this text

[Assistant] If you are the kind of person who likes a heel, go for a heel, but in a more neutral. So I've gone for a nude here. A heel just helps address up your look, but if that's not your vibe, that's fine. You can go for a flat, but something that is relatively neutral.


[User] Please transcribe this text

[Assistant] I have a flat here, just in case there's those days when you don't fancy walking around in a heel all day. There's a dressed up flat that isn't a sneaker. Go for something neutral again. A black is perfect. It's going to go with pretty much everything you get in your closet.


[User] Please transcribe this text

[Assistant] Every now and then you'll want to jazz up that outfit, go for a statement belt.


[User] Please transcribe this text

[Assistant] My rule with belts is this, it's very simple. If you need the belt to hold up your pants, you've got the wrong pants on, you're wearing the wrong size,


[User] Please transcribe this text

[Assistant] Do not wear it for function, wear it for fashion. So, go for something that makes sense for you. If you're the kind of person that likes a black belt with a gold buckle, go for that. If you like silver, if you like a pop of color, so be it. But try and keep it to something that you know you'll wear for years and years and years. Keep it simple.


[User] Please transcribe this text

[Assistant] If you are the kind of woman who likes to wear a dress and a skirt, I have an option for that also, I'm gonna show you a dress. Keep it super simple. You can go for a little black dress. Here I've gone for a little green dress.


[User] Please transcribe this text

[Assistant] Scotty straps are classic. The shape is classic. It's an A-line dress. It's a satin that's never going to go out of style. The color is relatively neutral. And it's a fit that can be reworked and reworked and reworked. It's a very simple dress.


[User] Please transcribe this text

[Assistant] Alright, let's talk about the men's capsule wardrobe. This is actually my own capsule wardrobe. Many of the items in this closet I have had for at least 10 years. That just goes to show


[User] Please transcribe this text

[Assistant] A capsule wardrobe should be timeless. The only piece that's not from my closet in this closet is this piece of outerwear. However, a trench coat is good for male or female. Anyone who's looking for a great piece of outerwear and you're looking for where to start, a trench is a great place to start.


[User] Please transcribe this text

[Assistant] 15, 20, 30 years. If I wear it every now and then, I'm not wearing it regularly. If I wear it every now and then, I can have this in my closet and still hopefully fit into it for many years to come.


[User] Please transcribe this text

[Assistant] As with the ladies capsule wardrobe, I have a moto jacket in this closet. I have had this for about...


[User] Please transcribe this text

[Assistant] Nothing else is capable of doing. I can wear this in my 20s, I can wear it in my 30s, 40s, 50s, 60s, it does not matter.


[User] Please transcribe this text

[Assistant] How old you are, a capsule wardrobe should work for any age.


[User] Please transcribe this text

[Assistant] Button-ups. I don't wear button-ups for my job. I don't need them for my job. I don't work in a corporate environment. However, I want you to start seeing button-up shirts as casual wear also. You could wear this, actually I'm going to show you with the white. You could wear this white shirt buttoned up all the way under a leather jacket.


[User] Please transcribe this text

[Assistant] And a pair of jeans and you've got a cool casual look, so please don't see button-ups as purely corporate. I have a black, I have a white, I have a blue, that's part of my capsule wardrobe, and then as soon as I started to feel comfortable with my capsule wardrobe, I started to layer on many of the colors, many of the prints.


[User] Please transcribe this text

[Assistant] Knitwear is important in your capsule wardrobe. I go for cashmere. You can go for a cheaper option. There are many cheaper options available. But I want something that's super, super cozy. I go for a neutral. We have this in a creamy, beige-y color. I've also got it in a grey. I've also got it in a black.


[User] Please transcribe this text

[Assistant] But for the purpose of this capsule wardrobe, I'm showing you one option. You only need one or two maximum. T-shirts!


[User] Please transcribe this text

[Assistant] Because it's a capsule wardrobe, keep these t-shirts very simple. I prefer a crew neck, and so I've gone for black, white, and then I'll throw in one other color. My color is brown, I love a brown. You can go for something else, a gray, a blue, whatever feels like your neutral color.


[User] Please transcribe this text

[Assistant] You will notice that within the women's wear, capsule wardrobe, and the men's, my colors are relatively muted. The reason is, this is your base, this is your foundation. You want to make sure that this is timeless.


[User] Please transcribe this text

[Assistant] Colors are often trendy. You will see a common thread throughout every major retailer. Each year there will be a new color. That is a trend that's going to date your clothes. So I keep my capsule collection very neutral because the colors in here are never going out of style.


[User] Please transcribe this text

[Assistant] Genes will always be in. Yes they have sometimes a bigger moment during a decade than other years, but


[User] Please transcribe this text

[Assistant] Jeans will never go out of style. And these colors will never go out of style. So go for something simple. Again, as with the women's, there's no rips, there's no diamantes, there's no crazy splatters. They're really simple, so they will last year after year after year. This pair of jeans, I've had since I was 16.


[User] Please transcribe this text

[Assistant] Another reason why I've been able to preserve the quality of this denim is because I don't put them in the wash. Unless I've spilled something on them, or if they're actually dirty dirty, I'll put them in the wash. Otherwise, I put them in the freezer. Putting them in the freezer kills the bacteria so it freshens them back up, so I probably wash my jeans


[User] Please transcribe this text

[Assistant] To complete your capsule wardrobe, you obviously have to work in footwear. Again, we want to stick with something that is classic so I've stuck with very neutral colors.


[User] Please transcribe this text

[Assistant] I like a boot personally. You do not have to go for a boot. If you are more of a shoe person, go for an oxford, go for a brogue, but find a black shoe that looks dressed up. You will never go wrong having a black shoe or a black boot in your closet. You never know when you're going to have to dress up a little bit more and the right shoe makes a difference with an outfit.


[User] Please transcribe this text

[Assistant] And then I think it's wise to have a brown shoe also. You never know when you're gonna need a brown shoe as opposed to a black. I again go for a boot.


[User] Please transcribe this text

[Assistant] This shoe is relatively classic. I've had it for about four years, maybe three and a half years. I wear them very regularly. Go for something that you know that you'll be able to wear regularly. Don't go for a super pointy. Don't go for a super square. That's trendy. Go for a rounder shape that you know is timeless. And finally, a belt.


[User] Please transcribe this text

[Assistant] Again, as with women's wear, don't go for a belt that is just functional. You don't need that. Get your pants altered if they're not fitting right. Go for something that looks lovely and that polishes your look.


[User] Please transcribe this text

[Assistant] And so I go with a slim belt. I go for something that's relatively fashionable as opposed to just functional. It doesn't look like a corporate belt. And so when that's wrapped around your pants, it actually looks like you've chosen to finish your look appropriately as opposed to I need a belt.


[User] Please transcribe this text

[Assistant] To hold up my pants. It's nothing outlandish, it's something super simple that will last years and years and years.


[User] Please transcribe this text

[Assistant] This right here, your capsule collection is where you should invest your money. These are things that are never going out of style.


[User] Please transcribe this text

[Assistant] Be thrifty with the trendier pieces of things that are there to layer onto your foundations.


[User] Please transcribe this text

[Assistant] The thing I want you to feel, more than anything, is confident. Like you put a look together that actually works for you.


[User] Please transcribe this text

[Assistant] You will find that within a capsule wardrobe. There's no one I've ever met that won't benefit from a capsule collection. You will be able to find your luck somewhere within this


[User] Please transcribe this text

[Assistant] With really simple styling. The beauty of a capsule wardrobe is that it's so versatile. You can mix and match every day for the next few years and feel like you have something completely fresh.


[User] Please transcribe this text

[Assistant] Why does it feel like I had the best sleep of my life?


[User] Please transcribe this text

[Assistant] I'm still alive.


[User] Please transcribe this text

[Assistant] Lotta work to do. And as usual, looks like I gotta do it myself.


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[Assistant] I have to talk to Doctor Connors. He said he knows how to destroy it. Wait, what about Harry?


[User] Please transcribe this text

[Assistant] Hey, got a report that Mr. Negative's near Feast in Chinatown. But nothing from Miles.


[User] Please transcribe this text

[Assistant] Two things. This armed group calls themselves hunters.


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[Assistant] That's what I'm thinking. Could be front page material for your article.


[User] Please transcribe this text

[Assistant] Aww, for me? You shouldn't have.


[User] Please transcribe this text

[Assistant] Oh, sturdy and flexible. Hmm. I wonder.


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[Assistant] Aunt May was so proud of her work at Feast. And he broke bad in a big way. I just hope that doesn't mean everything he ever touched was corrupted.


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[Assistant] An inner demon mask. Lee's old superpower gang. Craven better not be trying for the same with his hunters.


[User] Please transcribe this text

[Assistant] Almost an exact replica. Must have been probing it for weaknesses. Can never be too careful with scorpion.


[User] Please transcribe this text

[Assistant] Hey MJ, I have another name for you. Craven. Seems like he's the boss of these guys. And he's here on some kind of hunt.


[User] Please transcribe this text

[Assistant] Whatever it is, it definitely involves Scorpion and Lee. Mind looking into this Kraven guy in the meantime and letting Miles know what's up?


[User] Please transcribe this text

[Assistant] I get bringing Scorpion and Lee on a hunt, but Black Cat's a thief.


[User] Please transcribe this text

[Assistant] Scorpion. Martin Lee. Black Cat. This Craven guy's putting together quite the team.


[User] Please transcribe this text

[Assistant] He's not teaming up with super villains for some hunt. There is prey. Felicia.


[User] Please transcribe this text

[Assistant] As you look at these images, I want you to think about your future. Your hopes and your dreams. Ah, yes. I'm getting good data.


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[Assistant] Training the sable paid off sooner than I'd hoped. A zoo. Hunters has to be around here somewhere. Some kind of genome raid out.


[User] Please transcribe this text

[Assistant] A three hundred year old sleeping dart will never work. You are so certain, are you? Show me then. Show him too.


[User] Please transcribe this text

[Assistant] In this module, I want to introduce you to how Git works and how you can use it to achieve various powerful ends. And I'm going to be talking about and showing you how you can use Git on the command line to do things such as version control,


[User] Please transcribe this text

[Assistant] Or how to clone repositories, how to fork, make pull requests and merge repositories and a whole bunch of really, really exciting things.


[User] Please transcribe this text

[Assistant] Let's talk about version control in its simplest form. Let's say that I create a new code file and I write a few lines in it. Now I decide to put it under version control using git and let's say that I call this save point number one. Now this is my first version.


[User] Please transcribe this text

[Assistant] So later on, as I progress, I write maybe a few more lines of code and at this point I decide to make another save point and I call this my second version.


[User] Please transcribe this text

[Assistant] Further down the line, I accidentally screw up my entire code file and it's irreparable and I get to the point where I would rather burn my entire code file rather than having to try and fix it.


[User] Please transcribe this text

[Assistant] You do get into these situations because very often your code is interlinked and each class depends on another and.


[User] Please transcribe this text

[Assistant] Sometimes you can screw up in a way where, you know, all hope is lost and I simply just want to roll back to the last save point. I can do that using git. You can either compare your current code file, so the current mess that you've made against a previous version, so at any of the save points before,


[User] Please transcribe this text

[Assistant] Alternatively, you can simply just roll back to a previous version and it doesn't have to be the one that was immediately previous. You can go as far back or as far forwards as you like, as long as you know which version you want.


[User] Please transcribe this text

[Assistant] In the next lesson, I'm going to show you version control using Git locally on your computer. And we're going to use the command line to do this. I'll see you there.


[User] Please transcribe this text

[Assistant] Should be a shortcut to Connors Lab near Central Park. I've gotta find a way to get through to Harry. He's in there. I know I can reach him. Just hope he doesn't hurt Connors.


[User] Please transcribe this text

[Assistant] I talked to Dr. Connors. He says you're too far gone, but I know that's not true. Harry, I messed up. I was terrible to you. Your dream, our dream.


[User] Please transcribe this text

[Assistant] It's the meteorite that the symbiote alive thinks. He's using it to transform the city. I know where it is.


[User] Please transcribe this text

[Assistant] You ready? Uh, Miles.


[User] Please transcribe this text

[Assistant] I've been meaning to talk to you about something. I mean, I have been talking to you all the time. It's great to talk. So many good talks. I just haven't been talking to you about what I should have been talking to you about. Pete. Wait.


[User] Please transcribe this text

[Assistant] If anything had been needed to give an impetus to Jack McMurdo's popularity among his fellows, it would have been his arrest and acquittal.


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[Assistant] As a man on the very night of joining the lodge should have done something which brought him before the magistrate, was a new record in the annals of the society.


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[Assistant] Already he had earned the reputation of a good boon companion, a cheery reveler, and withal a man of high temper, who would not take an insult even from the all-powerful boss himself.


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[Assistant] But in addition to this, he impressed his comrades with the idea that among them all there was not one whose brain was so ready to devise a bloodthirsty scheme, or whose hand would be more capable of carrying it out.


[User] Please transcribe this text

[Assistant] He'll be the boy for the clean job," said the altars to one another, and waited their time until they could set him to his work. McGinty had instruments enough already.


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[Assistant] But he recognized that this was a supremely able one.


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[Assistant] He felt like a man holding a fierce bloodhound in leash.


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[Assistant] There were curs to do the smaller work, but some day he would slip this creature upon its prey.


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[Assistant] A few members of the lodge, Ted Baldwin among them, resented the rapid rise of the stranger, and hated him for it.


[User] Please transcribe this text

[Assistant] But they kept clear of him, for he was as ready to fight as to laugh.


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[Assistant] But if he gained favour with his fellows, there was another quarter, one which had become even more vital to him, in which he lost it.


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[Assistant] Etty Shafter's father would have nothing more to do with him, nor would he allow him to enter the house.


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[Assistant] Etty herself was too deeply in love to give him up altogether, and yet her own good sense warned her of what would come from a marriage with a man who was regarded as a criminal.


[User] Please transcribe this text

[Assistant] One morning, after a sleepless night, she determined to see him, possibly for the last time, and made one strong endeavor to draw him from those evil influences which were sucking him down.


[User] Please transcribe this text

[Assistant] She went to his house, as he had often begged her to do, and made her way into the room which he used as his sitting-room.


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[Assistant] He was seated at a table with his back turned and a letter in front of him.


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[Assistant] A sudden spirit of girlish mischief came over her. She was still only nineteen.


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[Assistant] He had not heard her when she pushed open the door. Now she tiptoed forward and laid her hand lightly upon his bended shoulders. If she had expected to startle him, she certainly succeeded.


[User] Please transcribe this text

[Assistant] But only in turn to be startled herself.


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[Assistant] With a tiger spring he turned on her, and his right hand was feeling for her throat.


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[Assistant] At the same instant with the other hand he crumpled up the paper that lay before him. For an instant he stood glaring.


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[Assistant] Then astonishment and joy took the place of the ferocity which had convulsed his features.


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[Assistant] And to think that you should come to me, heart of my heart, and I should find nothing better to do than want to strangle you? Come then, darling," and he held out his arms.


[User] Please transcribe this text

[Assistant] But she had not recovered from that sudden glimpse of guilty fear which she had read in the man's face. All her woman's instinct told her that it was not the mere fright of a man who is startled. Guilt. That was it. Guilt and fear. "'What's come over you, Jack?' she cried. "'Why are you so scared of me?'


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[Assistant] Oh Jack, if your conscience was at ease, you would not have looked at me like that.


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[Assistant] Sure, I was thinking of other things. When you came tripping so lightly on those fairy feet of yours.


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[Assistant] I knew it. Why else should you hold it from me? Was it to your wife that you were writing? How am I to know that you are not married, man? You a stranger that nobody knows. I am not married, Etty.


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[Assistant] See now, I swear it, you're the only one woman on earth to me by the cross of Christ, I swear it." He was so white with passionate earnestness that she could not but believe him. Well then, she cried. Well then, she cried, why will you not show me the letter?


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[Assistant] "'I'll tell you a kushla,' said he. "'I'm under oath not to show it.'


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[Assistant] And just as I wouldn't break my word to you, so I would keep it to those who hold my promise.


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[Assistant] It's the business of the lodge, and even to you it's a secret. And if I was scared when a hand fell on me, can't you understand it when it might have been the hand of a detective?


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[Assistant] He'll do better for you some of these days, I'm thinking. Now your mind is easy once again, is it not?


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[Assistant] How can it ever be at ease, Jack, when I know that you are a criminal among criminals when I never know the day that I may hear you're in court for murder? McMurder de Scoura, that's what one of the boarders called you yesterday. It went through my heart like a knife. Sure, hard words break no bones. But they were true.


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[Assistant] Give it up, Jack. For my sake. For God's sake, give it up.


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[Assistant] It was to ask you that I came here today. Oh, Jack, see, I beg it of you on my bended knees, kneeling here before you. I implore you to give it up.


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[Assistant] He raised her and soothed her with her head against his breast.


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[Assistant] Sure, my darling. You don't know what it is you're asking.


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[Assistant] How could I give it up when it would be to break my oath and to desert my comrades?


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[Assistant] If you could see how things stand with me, you could never ask it of me.