Weekly Roundup 105: A Curated Linkfest For The Smartest People On The Web
Handpicked to satisfy your intellectual curiosity!
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Must Read Articles!
For Whom Is Parting With Possessions More Painful? – via PsychScience @ Sagepub – The endowment effect—the tendency for owners (potential sellers) to value objects more than potential buyers do—is among the most widely studied judgment and decision-making phenomena. However, the current research is the first to explore whether the effect varies across cultures. Given previously demonstrated cultural differences in self-construals and self-enhancement, we predicted a smaller endowment effect for East Asians compared with Westerners. Two studies involving buyers and sellers of a coffee mug (Study 1a) and a box of chocolates (Study 1b) supported this prediction. Study 2 conceptually replicated this cultural difference by experimentally manipulating independent and interdependent self-construals. Finally, Study 3 provided evidence for an underlying self-enhancement mechanism: Cultural differences emerged when self-object associations were made salient, but disappeared when self-object associations were minimized. Thus, the endowment effect may be influenced by the degree to which independence and self-enhancement (vs. interdependence and self-criticism) are culturally valued or normative.
Video: Merchants of Denial – via Situationist – Author David Michaels visits Google’s headquarters in Mountain View, Ca, to discuss his book “Doubt is Their Product: How Industry’s Assault on Science Threatens Your Health.”
Video: The Power of Reciprocity(Highly Recommended) – via Good Badger –
Tightwads and Spendthrifts: A Black Friday Tradition – via NSF – “Some consumers chronically spend more than they would like, and some consumers chronically spend less than they would like,” he says. Where an individual falls within the range of desiring to spend more or less largely determines whether he or she is a tightwad or a spendthrift, characteristics that determine quite a bit about a person’s spending habits. But in other buying categories, differences remain sizable. Spendthrifts spend significantly more on coffee, clothes and entertainment. When paying for restaurants and hobbies, spending trends level out again. Rick says how a spending decision is framed has a big impact on how much tightwads and spendthrifts are willing to pay. If dinner and a movie are framed as an investment in a relationship, for example, then tightwads are willing to spend more. He says these findings are important for economic models of decision making that traditionally assume people make spending decisions based on a purely cognitive appreciation of what they forego in the future by spending today.
YouTube PSAs: Comments more persuasive than videos– via Phys Org – Michigan State University researchers, studying public service announcements placed on YouTube about marijuana use, have found that the comments accompanying the PSAs are more influential among viewers than the videos themselves.
Researchers follow the money to show complicated ways people connect – via Phys Org – What are borders these days? When travel was local, borders and communities were easy to define, but now our connectivity is more complex. It’s time to think of borders differently, according to Northwestern University researchers.
Google and Money! – via NYT Review of Books -The reason Google’s search engine remains its single largest source of revenue—and why that revenue exceeds that of any other website—can most easily be understood by studying the company’s history. In 1998, when the Stanford graduate students Sergey Brin and Larry Page launched Google, the existing search engines were so inadequate that only one was capable of finding itself when queried with its own name; a search for “cars” on Lycos, one of the better search engines, returned more pornography sites than sites about cars.
How Many Friends Does One Person Need? – via SciAm – If you find relationships challenging to cultivate and maintain, then you are in good company. In his new book, evolutionary biologist Robin Dunbar argues that our ability to manage such complex social connections—love lives, work colleagues, childhood buddies and friendly acquaintances—is what drove humans to develop such large brains in the first place.
Dan Ariely: Good Decisions. Bad Outcomes – via Predictably Irrational – If you practice kicking a soccer ball with your eyes closed, it takes only a few tries to become quite good at predicting where the ball will end up. But when “random noise” is added to the situation—a dog chases the ball, a stiff breeze blows through, a neighbor passes by and kicks the ball—the results become quite unpredictable.
Does a store’s appearance affect how much money you spend in it? – via Bakadesuyo
Who am I really? Forecasting future grumpiness – via Psych Science – But is this true? We humans are notoriously bad at forecasting our emotions, for a variety of reasons. Is it possible that an Obama victory will not bring me the joy I imagine? It may depend on my personality, according to new research from the University of Liege, Belgium. Psychological scientist Jordi Quoidbach suspected that our natural disposition—for optimism or for negativity—might be a more powerful predictor of future happiness than any specific event. And he also suspected that most of us ignore our own personalities when thinking about what lies ahead—and thus miscalculate our future feelings.
Wonderful Post & Videos on Behavioral Conditioning think BF Skinner – via BBC
How Visual Illusions Work – via wsj – In “Sleights of Mind: What the Neuroscience of Magic Reveals About Our Everyday Deceptions” (Henry Holt, 2010), authors Stephen L. Macknik and Susana Martinez-Conde, with Sandra Blakeslee, explain the secrets of illusions—from the way magicians take advantage of the brain’s own logic to perform their tricks, to why a static drawing of lines will appear to be moving to our eyes.
Video: The Corruption Hunters – via Fora.tv & Sleight of Hand
How does investor sentiment affect stock market crises? – via Zouaoui – We test the impact of investor sentiment on a panel of international stock markets. Specifically, we examine the influence of investor sentiment on the probability of stock market crises. We find that investor sentiment increases the probability of occurrence of stock market crises within a one-year horizon. The impact of investor sentiment on stock markets is more pronounced in countries that are culturally more prone to herd-like behavior and overreaction or in countries with low institutional involvement. Results also suggest that investors’ sentiment is not a reliable predictor of stock market reversal points.
Jet Lag May Cause Stupidity – via GOOD – In addition to making you groggy and dazed, jet lag may make you stupid. A study presented November 15 at the annual Society for Neuroscience meeting finds that hamsters suffering extreme, chronic jet lag had about half the normal rate of new neuron birth in a part of the brain. What’s more, these animals showed deficits in learning and memory.
How wise are crowds? – via PhysOrg – The rise of the Internet has sparked a fascination with what The New Yorker’s financial writer James Surowiecki called, in a book of the same name, “The wisdom of crowds”: The idea that aggregating or averaging the imperfect, distributed knowledge of a large group of people can often yield better information than canvassing expert opinion.
The Great Cyberheist – via Seth’s Posterous- One night in July 2003, a little before midnight, a plainclothes N.Y.P.D. detective, investigating a series of car thefts in upper Manhattan, followed a suspicious-looking young man with long, stringy hair and a nose ring into the A.T.M. lobby of a bank. Pretending to use one of the machines, the detective watched as the man pulled a debit card from his pocket and withdrew hundreds of dollars in cash. Then he pulled out another card and did the same thing. Then another, and another. The guy wasn’t stealing cars, but the detective figured he was stealing something.
Does double checking make you trust your memory less? – via Bakadesuyo- Previous research has reliably found that repeated physical checking reduces memory confidence, vividness and detail, while memory accuracy remains relatively unaffected.
Video: Ted Talk – Denis Dutton: A Darwinian theory of beauty – via TED – TED collaborates with animator Andrew Park to illustrate Denis Dutton’s provocative theory on beauty — that art, music and other beautiful things, far from being simply “in the eye of the beholder,” are a core part of human nature with deep evolutionary origins.
Study confirms faculty union influence on institutional decision-making – via Phys Org – A new Iowa State University study of 341 public universities has found that faculty unions do exert the desired influence over institutional decision-making in areas such as salaries, appointing department chairs, teaching loads, curriculum and appointment to institution-wide committees. But that influence varies depending on the category and the institution.
Chance of Dying From Airport Backscatter Radiation About the Same as Chance of Getting Killed by Terrorists – via Daring Fireball – Peter Rez, a physics professor at Arizona State University in Tempe, did his own calculations and found the exposure to be about one-fiftieth to one-hundredth the amount of a standard chest X-ray. He calculated the risk of getting cancer from a single scan at about 1 in 30 million, “which puts it somewhat less than being killed by being struck by lightning in any one year,” he told me. While the risk of getting a fatal cancer from the screening is minuscule, it’s about equal to the probability that an airplane will get blown up by a terrorist, he added. “So my view is there is not a case to be made for deploying them to prevent such a low probability event.”
UF researcher: Certain consumer preferences may be inborn – via Phys Org – Genes that might lead to the purchase of designer jeans? Or DNA that helps to create chocoholics? People’s consumer preferences are often influenced by their genetic inheritance, according to a study by a University of Florida researcher.
A Collection of Psychology and advertising posts – via MindHacks
How life experiences alter what our genes do – via Deric Bownds – It has been a frustration that we are unable to pinpoint causative genetic effects in many complex diseases and behavioral abnormalities. Many think the missing information resides in our nongenetic cellular memory, which records developmental and environmental cues. “Epigenetics” has become the catch-all phrase for many environmentally influenced genetic regulatory systems involving DNA methylation, histone modification, nucleosome location, or noncoding RNA. The basic requirement for an epigenetic system is that it be heritable, self-perpetuating, and reversible. Benedict Carey has done a nice non-technical article on epigenetics, how people’s experience and environment affect the function of their genes.
Fractals in clouds – why clouds appear ‘cloudlike’ – via Learning to be terse – Clouds have distinctive shapes. Or they seem to have distinctive shapes. It turns out that is likely due to the fractal nature of clouds. Fractals, as pretty much anybody these days knows, are geometrical entities that have no intrinsic length scale. They are self-similar – that is, they repeat themselves at any scale you pick. Here’s a very nice picture of something that looks fractal.
Effects of sleep on Remembering to Remember – via Psychothalamus – Prospective memory is a class of memory that is unique in that it involves the future rather than the present or the past. Various examples of prospective memory include remembering to buy a pet monkey, or remembering to break up with your girlfriend or remembering to do that blasted thesis that you have been putting off for the umpteenth time. Hence, some researchers have called it the act of “remembering to remember” (Winograd, 1988). Although prospective memory is quite important for daily functioning and goal fulfilment, research on it has been quite sparse in comparison to other forms of memory. One big question remains: how do we remember to remember? Do we devote some resources to maintain this intention? Or is it maintained without anything being devoted to it?
Flu Fighting: Just Wash Your Hands – Often? – via Begin to Dig – We all appreciate quick fixes. Bag’s got a hole in it and no time for a proper repair? Duct tape can help. On the run and no time for a full meal? A protein bar can help. These aren’t meant as long term real fixes but emergency quickies when we just have to get from A to B. On the road and not sure of the nutrient quality in the food? A multivitamin can be a good idea for back up. Fine. Great. But sometimes, it seems, we look for quick fixes for more than emergency gap fillers. I’m talking about the flu vaccine.
Does Competition Improve Public Schools? – via Policy Pointers- This US study examines the impact of the nation’s largest private school scholarship program on the performance of students who remain in the public schools
How Value-added Teacher Data Is Like a Baseball Batting Average – via Good – The researchers behind the Brookings paper make an interesting case, drawing parallels between selective colleges’ use of SAT scores in admissions, despite the fact that they don’t have a strong correlation with freshman-year GPAs (about 35 percent). In the medical space, the patient mortality rates for various surgeries are published annually for hospitals and their surgeons, yet the rates aren’t consistent from year-to-year more than 50 percent of the time. And, in Major League Baseball, how well a hitter bats in one year is only roughly 36 percent predictive of what he’ll hit the following year.
Using invisible visual signals to see things – via Deric Bownds – Di Luca et al. have done an ingenious experiment that demonstrates that an invisible signal can be recruited as a cue for perceptual appearance. Regularities between the ‘invisible’ (below perceptual threshold) signal and a perceived signal can be unconsciously learned – perception can rapidly undergo “structure learning” by automatically picking up novel contingencies between sensory signals, thus automatically recruiting signals for novel uses during the construction of a percept.
Moving the eyes but not looking – why do we do it? – via BPS Research – You’ve probably noticed how people move their eyes about when in the midst of conversation, often in ways that have absolutely nothing to do with looking at the scene around them. In fact these ‘non-visual gaze patterns’ also occur when we’re on our own, in the complete dark, and even when our eyes are closed. The implication is these eye movements are a result of mental processes that have nothing to do with vision or social factors.
Let Us Do Expected Value Math on $0 Price – via Iterative Path
When science goes backward – via Kottke – Decades ago antibiotics, vaccines, pesticides, water chlorination and other public health measures were vanquishing diseases such as malaria, yellow fever, polio, whooping cough, tuberculosis and smallpox, particularly in First World nations. In The Coming Plague: Newly Emerging Diseases in a World out of Balance (Penguin, 1995), the journalist Laurie Garrett noted that in 1967 U.S. Surgeon General William Stewart said that it was “time to close the books on infectious diseases” (Garrett’s words) and shift resources toward non-infectious killers such as cancer and heart disease. The global eradication of smallpox in 1979 seemed to fulfill Stewart’s vision. Hopes for the end of infectious disease were soon crushed, however, by the emergence of AIDS, mutant flu viruses and antibiotic-resistant forms of old killers such as tuberculosis.
Voir Dire Strategy: Who’s the Libertarian? – via keen Trial – Concepts like authoritarianism have been studied intently for decades. But what about Libertarianism? We think we know about Libertarians from examining the writing of libertarian intellectuals and politicians—but that isn’t very scientific or reliable. Recently Iyer, Koleva, Graham, Ditto & Haidt (2010) published a paper that surveys the issues thoroughly. Here we summarize a few of the highlights from the entire paper (which is certainly worth your time to review).
Hunter Launches: Hedge Fund Manager Interview Series – via Distressed Debt Investing
Herding Among FOMC Members– via Paul Kedrosky – Twice a year FOMC members submit forecasts for growth, unemplyoment and inflation to be published in the Humphrey- Hawkins Report to Congress. In this paper we use individual FOMC forecasts to assess whether these forecasts exhibit herding behavior, a pattern often found in private sector forecasts. While growth and unemployment forecast do not show herding behavior, the inflation forecasts show strong evidence of anti-herding, i.e. FOMC members intentionally scatter their forecasts around the consensus. Interestingly, anti-herding is more important for non-voting members than for voters.
Video: The reasons I don’t buy gold (Video!) – via pop Economics
Video: Memories of LTCM – Video of the Trillion Dollar Bet in 5 parts -via Finance Professor –
Venture Capitalist: Don Valentine, Sequoia Capital: “Target Big Markets” – via Value Investing World –
Video: David Einhorn on Wealth Track – via Value Investing World
The Financial Panic of 2008 and Financial Regulatory Reform – via HLS – The first signs of an impending financial crisis appeared in the US in 2007, when US real estate prices began to collapse and early delinquencies in recently underwritten sub-prime mortgages began to spike. It culminated in a genuine financial panic during September and October of 2008. The most serious recession since the Great Depression of the 1930s followed. The Federal Reserve and other organs of the US Government responded by flooding the markets with money and other liquidity, reducing interest rates, providing extraordinary assistance to major financial institutions, increasing Government spending, and taking other steps to provide financial assistance to the markets.
Dubai financial crisis: causes, bailout and after – a case study- via MPRA – This paper explains the circumstances that led Dubai to the current financial crisis that still lingers. It analyses the steps taken at various stages by the city state to ameliorate the situation including the bailout help the UAE Government eventually granted. It spotlights the role international rating agencies played in aggravating the situation and demands that their activities be brought under regulatory nets now being strengthened across the world in the context of ongoing global meltdown. Finally, it warns of challenges Dubai may be facing in years ahead and what could be done to pre-empt them. The argument is cast with a backdrop of the economic position of UAE in the Middle-East and happenings at the global level in the arena of finance – mainstream and Islamic.
Damodaran – How do you evaluate risk taking? – via Musings on Markets – I don’t begrudge the White House its victory dance that the GM bet looks like it has paid off, but it is an auspicious moment to examine how we judge risk taking, in general. As I see it, risk taking can be judged on four dimensions.
Mergers and tax competition – via Economic Logic- With increased mobility of labor and capital, Europe is currently struggling with tax competition that keeps taxes lower than is deemed healthy, in particular because of some small entities trying to poach on larger ones by attracting the larger tax payers. A response to this problem would be to merge fiscal authorities so as to reduce competition and thus get higher taxes and also allow a fairer distribution of the tax burden across jurisdictions. While this is not (yet) feasible at the European level (there is no talk of a European tax), there is plenty of evidence of within country mergers. What are they expected to bring?
When is regulation more efficient than competition? – via Voxeu- When is regulation more efficient than competition? This column provides a theoretical framework for thinking about these issues and explores its implications using electricity data from the US. It argues regulation can be more efficient than competition when investment inducement is salient, and that deregulation can be inefficiently implemented when consumer groups are too politically powerful.