Weekly Roundup 115: A Curated Linkfest For The Smartest People On The Web
Handpicked to satisfy your intellectual curiosity!
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The Bill Gates & Warren Buffett Wallet Problem: – via Mind Your Decisions Blog
Bill Gates meets Warren Buffett at a dinner party and the host tells them to play a game. Each person will place his wallet on the table. The person with less money in his wallet wins all the money.
Is anyone favored to win this game?
What happens when the game is repeated?
“If they send witches to jail for getting their forecasts wrong, what will happen to economists?” – Floyd Norris
Will 3d printing revolutionize manufacturing? – via Economist – Engineers and designers have been using 3D printers for more than a decade, but mostly to make prototypes quickly and cheaply before they embark on the expensive business of tooling up a factory to produce the real thing. As 3D printers have become more capable and able to work with a broader range of materials, including production-grade plastics and metals, the machines are increasingly being used to make final products too. More than 20% of the output of 3D printers is now final products rather than prototypes, according to Terry Wohlers, who runs a research firm specialising in the field. He predicts that this will rise to 50% by 2020. The printing of parts and products has the potential to transform manufacturing because it lowers the costs and risks. No longer does a producer have to make thousands, or hundreds of thousands, of items to recover his fixed costs. In a world where economies of scale do not matter any more, mass-manufacturing identical items may not be necessary or appropriate, especially as 3D printing allows for a great deal of customisation. Indeed, in the future some see consumers downloading products as they do digital music and printing them out at home, or at a local 3D production centre, having tweaked the designs to their own tastes. That is probably a faraway dream. Nevertheless, a new industrial revolution may be on the way.
Zeigarnik effect & Stopping Procrastination – Spring.co.uk – What all these examples have in common is that when people manage to start something they’re more inclined to finish it. Procrastination bites worst when we’re faced with a large task that we’re trying to avoid starting. It might be because we don’t know how to start or even where to start. What the Zeigarnik effect teaches is that one weapon for beating procrastination is starting somewhere…anywhere.
Modern Persuasion: Sexy News Anchors Distract Male Viewers – via Miller Mccune- The researchers found the men recalled “significantly more information watching the unsexualized anchor deliver news than her sexualized version.” For women, the opposite was true, but the effect was far less pronounced. Looking at the data a different way, when the anchor had a desexualized appearance, men retained more of the information she presented than women. But when she was dolled up, the men’s retention level dropped to the point where the two genders retained the same amount of content.
Behavioral Economics in Information Security– via Oreilly – This discussion brings together insights from the field of behavioral economics and recent research literature to demonstrate why 1) a pure consequence driven approach that solely relies on accountability does not promote risk reduction to the enterprise, and 2) why employees are rational in rejecting information security rules even when clear consequences are published and enforced. When it comes to following basic information security best practices, many employees appear to be irrational despite well advertised consequences: they go trigger-happy while browsing the web and download malware to their corporate laptops, they get around password complexity policies to choose the weakest passwords they can get away with , they ignore certificate errors and accept security warnings without reading them  and they inadvertently expose confidential data on social media sites .
Giving up is so very hard to do & How to achieve your goals by joining Stickk– via Telegraph – So when people sign up, they don’t simply promise to eliminate their vices, such as junk food, cigarettes or getting up at lunchtime. They make a “commitment contract” that sees them forfeit real money if they transgress. So far, more than 60,000 users have pledged almost $6 million (£3.7 million), to impressive effect: around three quarters of users prove keener to hang on to their cash than to their vices, and so succeed in their goals. In policy circles, behavioural economics has become extraordinarily fashionable, largely because its insights are presented as evidence-based and academically rigorous. Stickk.com cashes in on the fact that pledges made in public are more likely to be honoured than those kept private. Continual external monitoring is a strong deterrent against dishonesty: users nominate a “referee” who polices their behaviour by checking the scales or counting up cigarette butts. Plus, to seal the deal, committed users can add friends to their online pledge; or, to put it more brutally, widen the circle of witnesses if and when they renege on their word.
Social Impact Bonds or PPP Reinvented? – via MTEF Bayesian Heresy -The idea goes by one of two names: pay for success bonds or social impact bonds. Either way, nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus — but only if agreed-upon benchmarks show that the program is working.
Thoughts Of Hopes, Opportunities Keep People From Clinging To Failing Investments – via Medical News – It’s a common problem in the business world – throwing good money after bad. People cling to bad investments, hoping that more time, effort, and money will rescue their turkey of a project. A new study published in Psychological Science, a journal of the Association for Psychological Science, finds that changing people’s mindsets can make them more likely to abandon a failing investment.
Video: Rethinking Education: – via Open Culture – Since 2007, Michael Wesch, a Kansas State University anthropologist, has released a series of viral videos interrogating the ways in which new web technologies shape human communication and interactions with information. First came The Machine is Us/ing Us, then Information R/evolution and An Anthropological Introduction to YouTube. Now he’s back with a new video called “Rethinking Education,” a montage that pulls together sound bites of thought leaders (Tim O’Reilly, Yochai Benkler, Brewster Kahle, Ray Kurzweil, etc.) describing how technology is altering the broader educational landscape…
Persuasion: Gary Noesner on Negotiating and the FBI – via Browser – The former FBI Chief Negotiator says that negotiators need to come across as non-threatening and non-judgmental. And active listening isn’t just something you use in a hostage situation; it’s important in everyday life, too
Video: Bill Gates: Eradicating an Old Reality Once and for All – via Fora.Tv- A special message from the Government of the United Kingdom and the Bill & Melinda Gates Foundation on ridding the scourge of polio completely from the world. Polio cases have been reduced by 99% globally, but there are still over 1,000 known cases in developing countries that are crippling children.
Forbidden Fertility – via Overcoming Bias – However, humans also seem unaware of other important behaviors where more can be gained from conscious management, and where brains already seem to have something close to the required control and sensory connections. People don’t seem to know why they laugh, why they like the folks they like, or why they go to school or the doctor. Humans are unaware of their constant status moves, and are largely unaware of their overconfidence.
Dunbar’s Number: How Many Friends Can Your Brain Hold? – via WSJ -Many years ago Mr. Dunbar famously noticed that there is a tight correlation between the size of a primate’s brain and the size of the social group its species generally forms. On this basis human beings should live in groups of around 150. The neat thing about this prediction was the way it seemed to fit the number of good friends most people have, as measured by the length of address books, the size of hunter-gatherer bands, the population of neolithic villages and the strength of army units. In recent years, Facebook has also seemed to confirm the hunch, with rosters of friends often settling around the Dunbar number.
The Overselling of Education as America’s Solution – via Prospect- A better-educated workforce is widely touted as the panacea for every economic problem. Education is said to be the cure both for unemployment and income inequality. To hear leaders of the financial sector talk, the underlying problem with the economy has not been a runaway financial sector but an unqualified workforce. In a recent Reuters special report on the U.S. economy, Diane Swonk, an oft-quoted financial-sector economist, said, “The recession merely revealed a reality that has been with us for a long time. We faced a growing gap in education and skills that we tried to fill with debt and credit, which gave us the illusion of growth.”
Judging our capacity to change – via Psychologist -Organisational psychology is labouring under the illusion that people can be changed easily. That was Timothy Judge’s (University of Notre Dame) message in a polemical keynote at the Division of Occupational Psychology’s Annual Conference in Stratford, in which he argued the case for the power of nature over nurture. Whether it’s rates of desirable behaviours, like eating a healthy diet, or frowned-upon activities, like drug use and crime, Judge said dozens of studies featuring tens of thousands of twin pairs had shown the dominant influence of genetic inheritance over environmental factors.
Pandemics: Lessons Learnt and Future Threats – via Policy Pointers- The 16-page report of the conclusions of a meeting of health practitioners, industry experts and policymakers to reflect on the H1N1 influenza crisis, and outline the future of European pandemics preparedness
The Effects of the Financial Crisis on the Well Being of Older Americans: Evidence from the Cognitive Economics Study – via UMich – This paper uses the Cognitive Economics Study (CogEcon) to assess the effect of the financial crisis on the well-being of older Americans. Financial wealth fell by about 15 percent for the median household. These financial losses were concentrated among households with high levels of wealth and high cognitive capacities, who tend to have higher exposure to the stock market. Nonetheless, households with little financial wealth suffered declines in well-being—measured by declines in consumption—as large on average as households with substantial exposure to the stock market. Tight credit market conditions and adverse labor market outcomes account for much of the effect of the financial crisis on the consumption of these low-wealth households.
America’s Hottest Export: Arms – Via CNN- As defense giants like Boeing, Raytheon (RTN, Fortune 500), and Lockheed Martin (LMT, Fortune 500) increasingly seek to peddle their wares to well-financed (sometimes by the U.S.) international customers, they have a surprising ally: the President. “Obama is much more favorably disposed to arms exports than any of the previous Democratic administrations,” says Loren Thompson, a veteran defense consultant. Or, as Jeff Abramson, deputy director of the Arms Control Association, puts it: “There’s an Obama arms bazaar going on.”
Health benefits of falling and staying in love – via Washington Post – Loving spouses tend to encourage preventive care, reinforce healthy behaviors such as exercise and flossing, and dissuade unhealthy ones, such as heavy drinking, according to many studies. Romantic relationships also can provide a sense of meaning and purpose in life that can translate to better self-care and less risk taking, Holt-Lunstad says. (There are also practical benefits to marriage that can improve one’s health but have nothing to do with love. For instance, married people are more likely to have health insurance and be financially stable, according to the HHS.
The king of home equity fraud: – via Fortune- The truth was very different. In his ancestral homeland, Onwuhara might have been a chief. In America he became one of the world’s most successful cyberscammers, a criminal genius who used his talents to filet a poorly regulated banking and credit system. In less than three years Onwuhara stole a confirmed $44 million, according to the FBI, which believes the total may be anywhere from $80 million to $100 million. All he needed was an Internet connection and a cellphone. Onwuhara called it “washing.” He’d set up a boiler room in a fancy hotel (the Waldorf-Astoria was another favorite) to wash information on wealthy victims. Then he’d wash bank accounts. One group in his crew would do online research using databases and websites to harvest names, dates of birth, and mortgage information. They’d build profiles of victims for a second group, who would call banks posing as account holders. The callers cadged security information and passwords. Then Onwuhara would breach the accounts and wire funds from them to a network of money mules he had established in Asia. The money would be laundered and wired back to his accounts in the U.S.
All you ever wanted to know about scientology – via New Yorker – “The process of induction is so long and slow that you really do convince yourself of the truth of some of these things that don’t make sense,” Haggis told me. Although he refused to specify the contents of O.T. materials, on the ground that it offended Scientologists, he said, “If they’d sprung this stuff on me when I first walked in the door, I just would have laughed and left right away.” But by the time Haggis approached the O.T. III material he’d already been through several years of auditing. His wife was deeply involved in the church, as was his sister Kathy. Moreover, his first writing jobs had come through Scientology connections. He was now entrenched in the community. Success stories in the Scientology magazine Advance! added an aura of reality to the church’s claims. Haggis admits, “I was looking forward to enhanced abilities.” Moreover, he had invested a lot of money in the program. The incentive to believe was high.
Stephen Wolfram: Can he topple Google? – via Guardian – It was with this aspiration that Wolfram launched Wolfram|Alpha, a website that aims to be able to answer any factual question asked of it. Wolfram says he wanted to create an “insanely ambitious thing, like the science fiction computers of old”. Currently, for example, when we want to know something on the web, our default action is to Google it, but this just searches for words rather than calculating answers, so leads you only to what has already been written, which may or may not be what you want to know. Wolfram|Alpha, on the other hand, is an attempt to change the way we interact with knowledge on the web, to make the web more intelligent – by providing bespoke, freshly computed answers from a curated database of sourced facts.
Spring Break: College Students and Risky Behaviors– via Science Daily – College students who arrange with friends to “get their backs” are less likely to engage in risky spring break behavior, according to a new study.
How the Internet gets inside us– via New Yorker -The scale of the transformation is such that an ever-expanding literature has emerged to censure or celebrate it. A series of books explaining why books no longer matter is a paradox that Chesterton would have found implausible, yet there they are, and they come in the typical flavors: the eulogistic, the alarmed, the sober, and the gleeful. When the electric toaster was invented, there were, no doubt, books that said that the toaster would open up horizons for breakfast undreamed of in the days of burning bread over an open flame; books that told you that the toaster would bring an end to the days of creative breakfast, since our children, growing up with uniformly sliced bread, made to fit a single opening, would never know what a loaf of their own was like; and books that told you that sometimes the toaster would make breakfast better and sometimes it would make breakfast worse, and that the cost for finding this out would be the price of the book you’d just bought. All three kinds appear among the new books about the Internet: call them the Never-Betters, the Better-Nevers, and the Ever-Wasers. The Never-Betters believe that we’re on the brink of a new utopia, where information will be free and democratic, news will be made from the bottom up, love will reign, and cookies will bake themselves. The Better-Nevers think that we would have been better off if the whole thing had never happened, that the world that is coming to an end is superior to the one that is taking its place, and that, at a minimum, books and magazines create private space for minds in ways that twenty-second bursts of information don’t. The Ever-Wasers insist that at any moment in modernity something like this is going on, and that a new way of organizing data and connecting users is always thrilling to some and chilling to others—that something like this is going on is exactly what makes it a modern moment. One’s hopes rest with the Never-Betters; one’s head with the Ever-Wasers; and one’s heart? Well, twenty or so books in, one’s heart tends to move toward the Better-Nevers, and then bounce back toward someplace that looks more like home
On the enduring racial segregation in Chicago – via LongRead – This pronounced, persistent separation of the races would be worrisome, or at least curious, even if separate were equal—which of course it isn’t. The hypersegregated black neighborhoods continue to lead the city in the same wretched problems as in the 60s. In some ways, things are worse. There’s not just a lack of legitimate jobs in these areas today, but also a surplus of people without skills—and more of them have criminal records now as well, from the war on drugs. Predatory lending has multiplied the number of abandoned buildings in these neighborhoods.
Happy People Live Longer – via ScienceMag – There is a longstanding idea that happiness causes people to live longer, healthier lives. However, convincing evidence that subjective well-being (the more scholarly term for happiness) contributes to longevity and health has not been available. Recently, however, social psychologists Diener and Chan (1) showed that many kinds of studies, using different methods, conclude that happiness has a positive causal effect on longevity and physiological health.
Information technology and economic change: The impact of the printing press – via Voxeu- Despite the revolutionary technological advance of the printing press in the 15th century, there is precious little economic evidence of its benefits. Using data on 200 European cities between 1450 and 1600, this column finds that economic growth was higher by as much as 60 percentage points in cities that adopted the technology.
How class affects your brain – via Boston.com – Most of the kids who attend top colleges come from affluent families. As if that isn’t discouraging enough for kids from lower-class families, a new study at Northwestern University suggests that, even for kids who’ve already made it to a top university, coming from a lower-class background can wear them down. After talking about their own academic achievement, lower-class students ate more candy and had more trouble with self-control than more affluent students. This didn’t happen when they talked about a nonacademic topic, suggesting that lower-class students are more self-conscious about their academic status; the psychological pressure of discussing it wears them out. However, the researchers did find a way to psychologically undermine students from all backgrounds more equally: comparing them to students at an even more elite university!
When Muddled Modellers Model Muddles – via PsyFi Blog – If a muddled modeller models a muddle do they end up with a muddle model or a model muddle? Sadly Dr. Seuss’s most famous creation isn’t about to appear and rescue us from this conundrum. The problem is known as model risk and it’s what we often end up with when we start trying to model financial systems: a muddle rather than a model. Which helps explain how people who don’t exist can get mortgages they can’t pay.
Tyler Cowen – The Inequality That Matters – via American Interest – The use of micro-data now makes it possible to trace some high earners by income and thus construct a partial picture of what is going on among the upper echelons of the distribution. Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount. The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.
Study Links Physical Activity to Political Participation – via APS – How is going for a jog like voting for president? As far as our brains are concerned, physical activity and political activity are two sides of the same coin. Scientists found that people who live in more active states are also more likely to vote. And in an experiment, volunteers who were exposed to active words like “go” and “move” said they were more likely to vote than did people who saw words like “relax” and “stop.”
Do People Seek to Maximise Happiness?: NBER Paper – via Geary Behavior Center – Are subjective well-being (SWB) measures a good empirical proxy for utility? We evaluate one necessary assumption: that people’s preferences coincide with what they predict will maximize their SWB. Our method is to present survey respondents with hypothetical scenarios and elicit both choice and predicted SWB rankings of two alternatives. While choice and predicted SWB rankings usually coincide, we find systematic reversals. Furthermore, we identify factors—such as predicted sense of purpose, control over one‘s life, family happiness, and social status—that help explain choice controlling for predicted SWB. We explore how our findings vary with the SWB measure and the choice situation.
Weighing the Costs of Disaster: Consequences, Risks, and Resilience in Individuals, Families, and Communities – via APS – Disasters—both natural and manmade—can strike anywhere and they often hit without warning, so they can be difficult to prepare for. But what happens afterward? How do people cope following disasters? In a new report in Psychological Science in the Public Interest, a journal of the Association for Psychological Science, George Bonanno, Chris R. Brewin, Krzysztof Kaniasty, and Annette M. La Greca review the psychological effects of disasters and why some individuals have a harder time recovering than do others.
Do Rich People Have a Hard Time Reading Others’ Emotions?– via Michael Roberto- A new study published in Psychological Science by Michael Kraus, Stephane Cote, and Dacher Keltner finds that people from wealthier socioeconomic backgrounds tend to have lower emotional intelligence than those with lower socioeconomic status. In their study, these authors asked 300 people to interpret the emotional state of people in photographs and mock job interviews. Individuals of higher socioeconomic status fared quite poorly when trying to determine the emotions of the people that they were observing, as compared to those of lower socioeconomic backgrounds.
Happiness Linked to Patriotism, Especially in Poor Countries – via LiveScience – “You can hear politicians in any country declare, ‘We live in the best country in the world!’ and people cheer,” Morrison said in a statement. This idealization seems most potent for those who are worse off financially, the study found.
When it comes to persuasion: Is Sooner Better Than Later?– via Inside Influence – Sometimes, no matter how hard we try, no matter how informed we are about how to persuade others effectively, we fall short. There can be dozens of reasons why an otherwise properly employed influence strategy fails to yield the desired results when trying to convince people to do something they should, but do not necessarily want, to do. Regardless of whether you’re trying to convince someone to support your favorite charity, eat healthier, or adopt a new way of doing things at the office, one of the most common explanations for lack of persuasion success is also one of the simplest: people recognize they should change their behavior, but they just don’t feel like doing it…right now.
Video: Ted Talk – Using nature’s genius in architecture- via Ted- How can architects build a new world of sustainable beauty? By learning from nature. At TEDSalon in London, Michael Pawlyn describes three habits of nature that could transform architecture and society: radical resource efficiency, closed loops, and drawing energy from the sun.
Down in the Data Dumps: Researchers Inventory a World of Information – via SciAm – Data are the common currency that unites all fields of science. As science progresses data proliferate, providing points of reference, revealing trends, and offering evidence to substantiate hypotheses. Decades into the digitization of science, however, data proliferate exponentially, at times threatening to drown knowledge and information in a sea of noise.
Behavioral Economics Perspectives on Public Sector Pension Plans – via NBER – We describe the pension plan features of the states and the largest cities and counties in the U.S. Unlike in the private sector, defined benefit (DB) pensions are still the norm in the public sector. However, a few jurisdictions have shifted towards defined contribution (DC) plans as their primary savings plan, and fiscal pressures are likely to generate more movement in this direction. Holding fixed a public employee‘s work and salary history, we show that DB retirement income replacement ratios vary greatly across jurisdictions. This creates large variation in workers‘ need to save for retirement in other accounts. There is also substantial heterogeneity across jurisdictions in the savings generated in primary DC plans because of differences in the level of mandatory employer and employee contributions. One notable difference between public and private sector DC plans is that public sector primary DC plans are characterized by required employee or employer contributions (or both), whereas private sector plans largely feature voluntary employee contributions that are supplemented by an employer match. We conclude by applying lessons from savings behavior in private sector savings plans to the design of public sector plans.
Does what you say about others actually say more about you? – via Bakadesuyo -The results provide compelling evidence that how individuals generally perceive others is a stable individual difference that reveals much about the perceiver’s own personality.
Pain reduced by changing what you look at – via BBC – Contrary to many people’s compulsion to look away during a painful event such as an injection, scientists found that looking at your body – in this case the hand – reduces the pain experienced.
Does repeating yourself make you more influential? – via Bakadeusyo – Despite the importance of doing so, people do not always correctly estimate the distribution of opinions within their group. One important mechanism underlying such misjudgments is people’s tendency to infer that a familiar opinion is a prevalent one, even when its familiarity derives solely from the repeated expression of 1 group member. Six experiments demonstrate this effect and show that it holds even when perceivers are consciously aware that the opinions come from 1 speaker. The results also indicate that the effect is due to opinion accessibility rather than a conscious inference about the meaning of opinion repetition in a group. Implications for social consensus estimation and social influence are discussed.
Your Customers Don’t Make Rational Decisions – via Amex- Behavioral economics and behavioral finance are some of the most fascinating areas of study today. The disciplines combine economics, finance and psychology in ways that better model how consumers actually make decisions. In general, the study of economics is based on theoretical models that only remotely resemble the complexities of the real world. These models assume that individuals behave like machines that always know what is in their best interest, always do what is in their best interest, have complete self-control, and only care about themselves.
Medieval Matching Markets – via Econstor – This paper studies the market microstructure of preindustrial Europe. In particular we investigate the institution of the broker in markets and fairs, and develop a unique data set of approximately 1100 sets of brokerage rules in 42 merchant towns in Central and Western Europe from the late 13th to the end of the 17th century. We show that towns implemented brokerage as an efficient matchmaking institution in a two-sided market problem. Furthermore, towns differentiated seller-friendly from buyer-friendlier matching mechanisms. We show that the decision to implement matchmaking mechanisms, and whether these mechanisms would be buyer- or seller friendly, depends on the products in question and the stated policy goals of the town, as well as time and geographic variables.
The Paradox of success: The Effect of Growth, Competition, and Managerial Self Interest on Building Society Risk Taking & Market Structure in 1880-1939 – via Ac.Uk – Some scholars have posited that mutual banks have fewer incentives to engage in excessive risk-taking than joint-stock banks because of the unique structure of property rights in the mutual firm. This paper uses their theory as a framework to explain the divergent risk-taking behavior of building societies between the pre-war and the inter-war periods, and between large and small societies in the latter period. It is argued in this paper that the low risk-taking behaviour predicted of mutual financial institutions like building societies can only be expected of small, regional societies which were less exposed to competition than their larger, city-based counterparts which competed more aggressively for investor funds and mortgage business. In the inter-war period, increased competition between societies led to levels of risk-taking hitherto unseen in the movement, leading to calls by the movement’s leaders to consolidate the sector into the hands of a few large societies. This process of consolidation promised to benefit members and to improve the overall efficiency of societies in the movement. The actual experience however shows that these promises were largely unmet. Rather, it is shown that the only beneficiaries of firm growth were building society managers, who were able to extract higher pay from empire building.
Did Doubling Reserve Requirements Cause the Recession of 1937-1938? – via St Louis Fed – In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has been a matter of controversy. Using microeconomic data to gauge the fundamental reserve demands of Fed member banks, we find that despite being doubled, reserve requirements were not binding on bank reserve demand in 1936 and 1937, and therefore could not have produced a significant contraction in the money multiplier. To the extent that increases in reserve demand occurred from 1935 to 1937, they reflected fundamental changes in the determinants of reserve demand and not changes in reserve requirements.
Recent Bankruptcy Rulings and Their Implications for Distressed Investors – via Distressed Debt Investor -A few months ago, I introduced readers to a new author at Distressed Debt Investing, Joshua Nahas, principal of Wolf Capital Advisors. Wolf Capital is a Philadelphia based advisory firm focused on distressed debt, corporate restructuring, corporate finance advisory and capital raising services. Wolf provides advisory services to hedge funds and private equity funds on distressed investing and provides restructuring services to debtors as well as creditor committees. He wrote an incredible piece on investing in trade claims.
When Does Feeling of Fluency Matter? How Abstract and Concrete Thinking Influence Fluency Effects – via Sagepub – It has been widely documented that fluency (ease of information processing) increases positive evaluation. We proposed and demonstrated in three studies that this was not the case when people construed objects abstractly rather than concretely. Specifically, we found that priming people to think abstractly mitigated the effect of fluency on subsequent evaluative judgments (Studies 1 and 2). However, when feelings such as fluency were understood to be signals of value, fluency increased liking in people primed to think abstractly (Study 3). These results suggest that abstract thinking helps distinguish central decision inputs from less important incidental inputs, whereas concrete thinking does not make such a distinction. Thus, abstract thinking can augment or attenuate fluency effects, depending on whether fluency is considered important or incidental information, respectively.
Video: Understanding It Risks – via MIT – eorge Westerman is a Research Scientist in MIT Sloan’s Center for Information Systems Research (CISR). In this video, he discusses the following key concepts in IT risk management: how IT managers can improve alignment and understanding, both in IT and the business, by discussing IT risk considerations in terms of key enterprise risks; how organizations build effective IT risk management capability through the disciplines of foundation, the risk governance process, and risk aware culture; and how risk management is an opportunity not just to protect the firm, but to drive improvements in IT management and business outcomes.
Credit Default Swaps and the Empty Creditor Problem – via Oxford – The empty creditor problem arises when a debtholder has obtained insurance against default but otherwise retains control rights in and outside bankruptcy. We analyze this problem from an ex ante and ex post perspective in a formal model of debt with limited commitment, by comparing contracting outcomes with and without insurance through credit default swaps (CDS). We show that CDS, and the empty creditors they give rise to, have important ex ante commitment benefits: By strengthening creditors’ bargaining power, they raise the debtor’s pledgeable income and help reduce the incidence of strategic default. However, we also show that lenders will over-insure in equilibrium, giving rise to an inefficiently high incidence of costly bankruptcy. We discuss a number of remedies that have been proposed to overcome the inefficiency resulting from excess insurance.
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Visual History of Debt – via Youtube –