In 1997 a collection of the great and the good on the behavioral side of economics investigated a seemingly minor question. What getting a cab in the rain tells us. Cleverly they used this minor question to consider the assumptions of traditional economics. The four authors, Colin Camerer, Linda Babcock, George Loewenstein, and Richard Thaler,…
Category: Assumptions
The Tragedy of Common Sense Morality
Joshua Greene uses the Tragedy of Common Sense Morality as a central theme in his book — Moral Tribes. His suggests that our brains are actually surprisingly well adapted to solve the tragedy of the commons. In the tragedy of the commons, our personal incentives to behave uncooperatively cause disaster for everyone. Greene calls this…
The Balanced Scorecard
Today’s post is about a classic of business literature. The Balanced Scorecard from Robert Kaplan and David Norton is an approach to business strategy. It is hard to argue with the basic idea that businesses should regularly monitor a variety of success factors and report how they are succeeding on each factor. Four Perspectives In…
Thinking By The Numbers; Mostly Smart And Occasionally New
I enjoyed the book Super Crunchers. It is a couple of years old [in 2014] but it still reads well. Perhaps some of the surprise people might have had when it was published may have dissipated. In recent years things only the rare few knew about, e.g. metadata and data warehouses, have become staples of dinnertime conversation. It…
Fairness and Channel Coordination
Fairness matters in life. People are motivated to achieve fair outcomes. (Although people are generally quicker to notice shares that are unfair to them than to other people.) Given business is a human social endeavor it shouldn’t be a huge surprise that fairness matters in business too. Adding fairness concerns to models of how business works…
Hot Hands, Runs of Form and Perceptions of Randomness
World Cup [2014] post 2. It is hard to watch sport without screaming at the commentators: “what are you talking about”. I don’t say this to criticize commentators. Almost anyone forced to speak for 90 minutes straight will say a bunch of things that, to put it charitably, don’t make a lot of sense. Much…
Making Your Future Self Happy
I’m traveling to my ten-year MBA reunion [written in 2014]. As such, it seems an appropriate time to consider how we predict the future. Ten years ago I would never have predicted that I’d be a marketing professor living in Canada [now in US]. Interestingly, I wonder whether I would even have wanted to become…
Deep Rationality
Rationality is a topic which you can devote years of study to without making much progress. This is because one problem is that everyone means different things by rationality. It is not just marketers disagreeing with economists, who are disagreeing with psychologists. There are also major cleavages within disciplines. One perspective from evolutionary psychologists is…
Managerial Advice From The Trolls In Frozen
I recently read the following: “People often regret not getting rid of problem staff soon enough”. This struck me as emblematic of everything wrong with business advice. It was glib, unsupported by evidence, and designed to resonate with our biases. Better to take managerial advice from the trolls in Frozen. Regret Sure some managers will…
Scarcity Theory: A Hammer, But A Good Hammer
Mullainathan and Shafir’s new book Scarcity [written in 2014] explains that people make some debatable decisions when a resource is scarce because of the stress the shortage causes. They introduce Scarcity Theory: a hammer, but a good hammer. Poverty Leads To Worse Decision-Making The authors help explain poverty sometimes encourages people to take decisions that…
