Remember the clickety-clack of the lowly typewriter? A generation has grown up probably without seeing one in action, but they are back in demand as tools for the ultimate search pros —the spies. Last week, the chairman of the German parliament’s intelligence committee set tongues wagging by recommending the use of manual typewriters for German spies to avoid digital information leaks. The immediate provocation was the arrest of a German spy who was doing dirty work for the Americans. In return for dollars, of course.

The Germans aren’t the first spy agency to consider switching to typewriters. Last year the people in charge of Kremlin’s communications department decided to buy 20 electric typewriters to minimize the chances of information leaks.

So the typewriter has its uses after all. At a time when they are all but extinct, it’s ironical they are in demand from the very spy masters who take much credit for their reliance on the latest gadgetry. Truly an old economy solution to a new economy problem.

QWERTY VS. DVORAK LAYOUT
It should be interesting to know that the current design of typewriter and computer keyboard layouts, popularly known as QWERTY because of the arrangement of letters in that order, has nothing to do with efficiency or logic. It deliberately increased the distance between the most frequently used letters to prevent the keys from clashing with each other and getting jammed.

The man behind the QWERTY patent, Christopher Scholes, arranged the keys by putting the letters for often-typed English words in difficult-to-reach places, favouring the non-dominant left hand. The arrangement prevented the typewriter keys from getting entangled. Unfortunately, by way of habit, electronic typewriters and computers adopted the same keyboard even though jamming of keys is no longer a concern.

A competing layout, called the Dvorak Simplified Keyboard (DSK) been in existence since 1936. It was designed by Dr. August Dvorak, a former education professor.

It follows a few basic principles:

•  Vowels are all on the left home row, the most used symbols are on the left, while the most used consonants are on the right.
• The most common letters should be the easiest to type.
• The least common letters should be on the bottom row which is the hardest row to reach.
• The right hand should do more of the typing because most people are right-handed.

Numerous studies have proved that the Dvorak layout is more efficient. Many operating systems, including Windows, also provide the option to individual users to change their layout to Dvorak. But the dominance of QWERTY continues, even though the original reason for its lettering arrangement has long since ceased to matter.

THE BANDWAGON EFFECT 
QWERTY still prevails because what Game Theorists call as the Bandwagon Effect. Whether good or bad, QWERTY usage has become a social convention.  As Avinash Dixit and Barry Nalebuff explain in their The Art of Strategy, “The uncoordinated decisions of individuals keep us tied to QWERTY. It is the established system. Almost all keyboards use it. So we all learn it and are reluctant to learn a second layout. Keyboard manufacturers continue, therefore, with QWERTY. The vicious circle is complete.”

After doing some number crunching, the authors conclude that if the fraction of typists using QWERTY falls below 72%, then there is the expectation that DSK will take over. “Fewer than 72% of new typists learn QWERTY, and the subsequent fall in its usage gives new typists an even greater incentive to learn the superior layout of DSK. Once all typists are using DSK, there is no reason for a new typist to learn QWERTY, and it will die out.”

But they add a caveat. “The mathematics says only that we will end up at one of these two possible outcomes: everyone using DSK or 98% using QWERTY. It does not say which will occur. If we are starting from scratch, the odds are in favour of DSK being dominant. But we are not. History matters. The historical accident that led to QWERTY capturing nearly 100% of typists ends up being self-perpetuating…”

Looks like QWERTY is here to stay. But whether the typewriter will make a second coming or not, only the spooks can tell.

e.o.m.

In our previous blog post, we had looked at how GoTo.com introduced the concepts of real-time auctioning of online ads and pay per click advertising. Google later adapted it and refined it further to create the AdWords behemoth, which today is the single largest source of revenue for the company. In the last financial year, advertising accounted for $50 billion of Google’s $55 billion annual revenues in 2013.

We had also seen that the auctioning system built from the ground up by Eric Veach for Google charged only a penny more than the second highest bid for the AdWords auction winner for a given keyword. This was surprisingly similar to the Vickery Auction model used by the US Federal Reserve to auction government securities. William Vickery was an economist and Nobel laureate. Veach had created his real-time auctioning system without being aware of the Vickery model! Simply amazing.
HOW THE VICKERY MODEL WORKS
In the traditional Vickery auction, “all bids are placed in a sealed envelope. When the envelopes are opened to determine the winner, the highest bid wins. But there’s a twist. The winner doesn’t pay his or her bid. Instead, the winner only has to pay the second highest bid,” says Avinash Dixit and Barry Nalebuff in their celebrated Game Theory work, The Art of Strategy. 

Notice that this is slightly at variance with the real-time AdWords auctions, which takes place online, and where the winner has to pay only a penny more than the next highest bid. Dixit and Nalebuff explain using clear illustrations that in a Vickery auction, bidders have the ‘Dominant Strategy’ of bidding their true valuation. They go on to define Dominant Strategy as the best play of an auction participant, no matter what others are doing.

English and Japanese auctions are two other formats which exist at slight variance to the Vickery Auction model. In the English Auction used by auctioneers like Sotheby’s or Christie’s, the auctioneer stands in a room calling out bids which increase at every call. The authors say that in an English auction, “a bidder learns something about what others think the item is worth by seeing some of their bids”. Their advice to bidders in an English Auction is that they have to bid until the price exceeds their ‘Value’, and then drop out. Dixit and Nalebuff define Value as the bidder’s “walkaway number…the highest price at which the bidder will still want to win the item”.

In the Japanese Auction, “all the bidders start with their hands raised or buttons pressed. The bidding goes up via a clock. The clock might start at 30, and then proceed to 31, 32…and upwards. So long as your hand is raised, you are in the bidding. You drop out by lowering your hand. The catch is that once you lower your hand, you can’t put it back up again. The auction ends when only one bidder remains.

“An advantage of the Japanese Auction is that it’s always clear how many bidders are active. In an English Auction, someone can remain silent even though they were willing to bid all along. The person can then make a surprise entry late in the contest.”

So in the Japanese auction, everyone sees where everyone drops out. In contrast, the authors say, bidders in a Vickery Auction doesn’t get a chance to learn anything about the other bids  until the auction is all over. Again, in both the Japanese and English auctions, what the winning bidder has to pay is the second highest bid amount.

THE DUTCH AUCTION
Google is also famous for using the Dutch auction to pick buyers for its shares when it first went for a stock market listing in 2004. Dixit and Nalebuff say that in the Dutch Auction, which is used to sell flowers in the Netherlands at places like Aalsmeer, the process is the reverse of the Japanese Auction. Here the auction starts with a high price that declines. “Imagine a clock that starts at 100 and then winds down to 99, 98…The first person to stop the clock wins the auction and pays the price at which the clock was stopped.”

e.o.m.