Relativity is not just for physics. Nicolae Naumof posts a very good introduction to the foundational concept of relativity in behavioral economics. Through two examples he describes how we use mental references, environmental factors, and comparisons to make what are sometimes less than purely rational decisions. From Naumof: “The pond effect shows us that people …
Feeling repressed? Take two aspirin and call your central banker in the morning. By Larry M. Elkin Those of us who like to save and invest money, or who start businesses – I’m guilty on both counts – tend to be glass-half-full optimists. We do not overlook today’s challenges, but we assume that hard work …
Are You Seeing What I’m Seeing? (via Market Shadows) Courtesy of Jim Quinn of The Burning Platform Is it just me, or are the signs of consumer collapse as clear as a Lowes parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of …
Guest Article: Are You Seeing What I’m Seeing in the Economy? Read More »
When Good Incentives Lead to Bad Decisions (via http://mortgagespectator.com) Among the culprits contributing to the recent financial crisis were bank loan officers who approved mortgage loans that were doomed to fail. Many of these frontline workers were motivated by bonuses and other incentives to approve quantity over quality. Critics decried their voracity. But new …
Decision-makers perform worse as financial incentives increase Research by behavioral economist Dan Ariely (see video below) found that high financial incentives actually make individuals perform worse than when given low to moderate financial incentives. These results were most dramatic when the tasks involve cognitive elements as opposed to mechanical elements. The reason is that loss …
Do High Salaries & Bonuses Make CEOs Poor Decision-Makers? Read More »
‘Teaching’ Ethics is Not as Easy as it Seems By Holly A. Bell The perpetual drone of news stories describing corporate scandals has lead to criticisms that business schools aren’t doing enough to teach ethics. This criticism is not surprising when you look at the self-interested microeconomic decision-making models we teach based on the rational …
The rise of the adult playground (via http://www.scenereleases.eu) Glossy exercise machines are cropping up in parks, near the brightly-coloured swings and slides for children. It’s the latest bit of government “nudge theory”, writes Sophie Robehmed. Kids heading down the slide headfirst, babies talking gobbledygook in the sandpit and a golden retriever bounding…
By Holly A. Bell Like I do most mornings I started my day by going to a popular website that is supposed to bring together some of the best business articles on the web. The front page alone had 6 articles containing lists of allegedly important information you need to know. Among them: “7 Easy …
5 Reasons to Dislike Numbered Lists (Especially in Business Articles) Read More »
Oil surges on strong US manufacturing data (via AFP) World oil prices surged Monday after stronger-than-expected manufacturing data in the United States, the world’s top crude oil consumer, offset weaker figures in Europe. John Kilduff at Again Capital noted that with the beginning of the second quarter trading Monday, “there will be new money coming…
By Holly A. Bell The newspaper headlines seem to be a mix of positive and negative economic indicators lately. On the positive side we’re hearing new jobless claims and unemployment are down, corporate profits are up, and the stock market is at its highest level in years. However, the negative does seem to prevail this …
Headlines You Might See During An Economic Recovery Read More »
