Handpicked to satisfy your intellectual curiosity!
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Tim Harford: Trial, error and the God complex – via Ted Talks-
Leading@Google: Joseph Grenny – via Finance professor- Maybe the best argument for taking a behavioral finance class is to know what things people are prone to fall prey to and thus be ready with defenses to beat the issues. Which in a nutshell is the view that Joseph Grenny takes in his book. Here he speaks at Google about how to not fall into the same old traps.
Most Important Reads:
How to Properly Prepare for A Disaster - via Institute of Hazard Risk & Resilience- During a disaster the state is the last resort, as you can’t really rely on private institutions or companies at first. When there is a catastrophe or an extreme event you are ‘naked’ and you have to ask for your rights as a citizen. Normally the state has the means, the tools and the right to attend to you as a citizen. On the other hand, it is too expensive to operate during the first hours, days and months of a catastrophe. The private sector normally comes afterwards when rebuilding is needed and for supplying resources such as food and water. It is interesting that some researchers have argued that the last catastrophes have seen the state lagging. There is often no intervention soon after a disaster takes place. Hurricane Katrina in the US, for example, induced a lot of thinking and reflection about what are called ‘post-disaster societies’ and ‘post-state societies’. The earthquake and tsunami near Fukushima, a disaster also in a rich country, took the state government in Japan a long time to respond and it was quite a surprise.
An Example of UK Power Elite & Newscorp (Highly Recommend Looking At This!!!) - Global Sociology-
You do not talk about Fight Club if you do not notice Fight Club: Inattentional blindness for a simulated real-world assault – via I Perception- Inattentional blindness—the failure to see visible and otherwise salient events when one is paying attention to something else—has been proposed as an explanation for various real-world events. In one such event, a Boston police officer chasing a suspect ran past a brutal assault and was prosecuted for perjury when he claimed not to have seen it. However, there have been no experimental studies of inattentional blindness in real-world conditions. We simulated the Boston incident by having subjects run after a confederate along a route near which three other confederates staged a fight. At night only 35% of subjects noticed the fight; during the day 56% noticed. We manipulated the attentional load on the subjects and found that increasing the load significantly decreased noticing. These results provide evidence that inattentional blindness can occur during real-world situations, including the Boston case.
40 Years After The Stanford Prison Experiments- via Stanford Magazine- What happened in the basement of the psych building 40 years ago shocked the world. How do the guards, prisoners and researchers in the Stanford Prison Experiment feel about it now?
The Ways of Silencing - via NYT- Silencing in the sense described by Hornsby and Langton robs others of the ability to engage in speech acts, such as assertion. But there is another kind of silencing familiar in the political domain, not discussed by these authors. It is possible to silence people by denying them access to the vocabulary to express their claims.
Pay as You Go with Smartphones – via Businessweek- Sixty years after the creation of the plastic credit card, big corporate names are backing a new wave of payments technology—a tap with a phone, rather than a swipe with a credit card. Pretty much every major bank, credit-card company, wireless network operator, and a good number of Silicon Valley players are exploring the cellphone as the next ubiquitous way to spend money. Efforts such as Google’s fledgling service, Google Wallet, which begins trials this summer in New York and San Francisco, are the culmination of a decade of arduous technology development and a multiparty, cross-industry battle over who will control the $20.5 trillion global market for in-store retail transactions. Also pushing their own digital wallets are, among others, Visa (V), American Express (AXP), EBay’s (EBAY) PayPal division, and Isis, a venture of three large U.S. mobile phone carriers.
Two decades of the web: a utopia no longer – via Prospect Magazine- But studying the history of the internet is impossible without studying the ideas, biases, and desires of its early cheerleaders, a group distinct from the engineers. This included Stewart Brand, Kevin Kelly, John Perry Barlow, and the crowd that coalesced around Wired magazine after its launch in 1993. They were male, California-based, and had fond memories of the tumultuous hedonism of the 1960s.
The Influencing Machine: A Brief Visual History of the Media- via Brain Pickings- One of the coolest and most charming book releases of this year, The Influencing Machine is a graphic novel about the media, its history, and its many maladies — think The Information meets The Medium is the Massage meets Everything Explained Through Flowcharts. Written by Brooke Gladstone, longtime host of NPR’s excellent On the Media, and illustrated by cartoonist Josh Neufeld, The Influencing Machine takes a refreshingly alternative approach to the age-old issue of why we disparage and distrust the news. And as the book quickly makes clear, it has always been thus.One of the coolest and most charming book releases of this year, The Influencing Machine is a graphic novel about the media, its history, and its many maladies — think The Information meets The Medium is the Massage meets Everything Explained Through Flowcharts. Written by Brooke Gladstone, longtime host of NPR’s excellent On the Media, and illustrated by cartoonist Josh Neufeld, The Influencing Machine takes a refreshingly alternative approach to the age-old issue of why we disparage and distrust the news. And as the book quickly makes clear, it has always been thus.
Is News Corp Finished – Senator Rockefeller Tells Feds to Investigate Fox Hacking of 9/11 Victims – via Economic Populist- I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe.”
Inside Al Qaeda’s hard drives – via NYT- And, contrary to speculation that Al Qaeda in Iraq was reliant on international donations, this wasn’t a source of funding either. The group was self-financing. In fact, the core organization of Al Qaeda in Iraq in Anbar province was so profitable that it sent revenue to associates in other provinces of Iraq, and perhaps even further afield. The group raised millions of dollars annually through activities such as simple theft and resale of valuable items such as cars, generators, and electrical cable, and hijacking truckloads of goods, such as clothing. And their internal financial record-keeping was diligent, with all the requirements of expense accounts in regular businesses. A central unit of Al Qaeda in Iraq’s hierarchy required operatives to keep records of even the smallest outlay and to turn over their “take” to upper-level leaders, who made the spending decisions.
The Psychology of NightOwls are they more creative – Psych Your Mind- The debate over whether it’s better to be a night owl or an early bird has been going on for centuries, and more often than not the early birds have indeed gotten the worm, as their natural sleep schedule corresponds with traditional business hours. The stereotypical morning person arrive at the office chipper and energized, while the evening person stumbles in, coffee in hand, and stares at the computer screen for an hour before getting to work.
This American Life: Game Changer - via American Life- A professor in Pennsylvania makes a calculation, to discover that his state is sitting atop a massive reserve of natural gas—enough to revolutionize how America gets its energy. But another professor in Pennsylvania does a different calculation and reaches a troubling conclusion: that getting natural gas out of the ground poses a risk to public health. Two men, two calculations, and two very different consequences. -
Why Everyone (else) is a Hypocrite – via Falkenblog- There are many really interesting points made in this book. For example, he points out scenarios where more information makes us unambiguously worse off. Consider if you were watching a house burn, and saw what may or may not be a little puppy in there. You are afraid of getting hurt in the fire, so don’t want to save the puppy, but you appreciate a reputation for bravery, and so don’t want to be seen as avoiding your duty to save the puppy. If a little boy comes up to you and says ‘Hey mister, are you going to save that puppy?’ you now have to make a choice between risking your life or your reputation, because the boy now made it clear to everyone that you know the puppy is there. Damn kid. This is an example of things ‘I wish I didn’t know now what I didn’t know then,’ and why people avert their eyes from evidence contrary to their thesis. If you really dug into your opponent’s arguments, you might not like what you find, so better to just attack the dopes who are against you for obviously wrong reasons, and that way you don’t have to deal with greater cognitive dissonance (eg, John Horgan defending Stephen Jay Gould without trying to understand the criticism or even look at work subsequent to 1850 on the matter in question).
The Google Stroop Effect? – via Neurocritic- Notice the logo is multi-colored (as pointed out by Neurobonkers). Seeing “Google” printed in a solid color (or in any other font, for that matter) would likely result in a Stroop effect, or a slower response time in identifying the color of the font, relative to that of a neutral word
Why chasing money and success makes us happy - via Canadian Business- To be fair, Buchholtz isn’t exactly a recovering socialist utopian; he’s a hedge fund manager, and his White House service came under Bush 43. But he’s only recently come to the belief that competition is actually “integral to our beings,” in contrast to the preachings of what he calls the “Edenists.” “We feel a natural yearning to go back to simpler times, to some Eden that exists in our Jungian memory,” he writes. But the burgeoning happiness industry takes that yearning and twists it into a belief that “if we could just stomp out competition, we could achieve self-realization and bliss.”
How Google Disrespected Mexican History – via Miller McCune- Anything can happen when Google gets involved in digitizing national treasure troves of archived information, warns a frustrated scholar.
The Billion-Dollar Bank Heist - via Newsweek- There are the bills a president signs sitting in the Oval Office and the bills that merit a Rose Garden ceremony. And then there are bills so momentous—or at least so critical to a president’s reelection prospects—that those around the commander in chief orchestrate a more elaborate ceremony. Such was the case with Dodd-Frank, the financial-reform package that President Obama signed into law last July against a backdrop of velvet curtains in a resplendent venue a few blocks from the White House.
New Research Suggests Everybody’s Less Satisfied - via Miller McCune- A widely read 2009 study described a decline in self-reported well-being among American women. Newly published research finds this trend also holds true for men.
Prospect Theory: A Framework for Understanding Cognitive Biases – via Less Wrong- This post is on prospect theory partly because it fits the theme of replacing simple utility functions with complicated reward functions, but mostly because somehow Less Wrong doesn’t have any posts on prospect theory yet and that needs to change.
Are lone inventors more or less likely to make creative breakthroughs? – via Bakadesuyo- In contrast, we propose that collaboration can have opposite effects at the two extremes: it reduces the probability of very poor outcomes – due to more rigorous selection processes – while simultaneously increasing the probability of extremely successful outcomes – due to greater recombinant opportunity in creative search. Analysis of over half a million patented inventions supports these arguments: individuals working alone, especially those without affiliation to organizations, are less likely to achieve breakthroughs and more likely to invent particularly poor outcomes.
Why People Don’t Care About Better Forecasts - via Paul Kedrosky-The costs of creating and monitoring forecast accuracy might be higher than we expect if in general thinking about times other than the present is harder than we expect. Most animals seem to focus almost entirely on reacting to current stimuli, as opposed to remembering the past or anticipating the future. We humans are proud that we attend more to the past and future, but perhaps this is still harder than we let on, and we flatter ourselves by thinking we attend more than we do.
Inside RIM: An exclusive look at the rise and fall of the company that made smartphones smart - via BGR- Research In Motion is in the midst of a major transition in every sense of the word. Publicly, the company is portraying a very defensive image — one that is very dismissive, as if RIM is profitable and class-leading, and the media is out of line to criticize its business, as are investors. Internally, however, there’s a different story to be told. It’s a story filled with attitude, cockiness, heated arguments among the executive team and Co-CEOs, and paranoia. We’ve spoken to multiple ex-RIM executives at length about their experiences with the company over the past few years. While most speak highly of RIM and their time in Waterloo, they also each left the company due mainly to RIM’s lack of vision and leadership. Read on for an exclusive inside look at a company teetering on the edge between greatness and collapse.
Why I don’t like Larry Summers – via Rationally Speaking- have to admit to a profound dislike for former Harvard President and former Obama (and Clinton) advisor Larry Summers. Besides the fact that, at least going by a number of reports of people who have known him, he can only be characterized as a dick, he represents precisely what is wrong with a particularly popular mode of thinking in this country and, increasingly, in the rest of the world.
Male baboons get stressed when they are alpha – via Harvard
Decision Making/ Behavioral Economics/Psychology/ Risk/ Sciences:
Richard Thaler: Getting the Most Out of Social Security – via NYT- SOCIAL SECURITY may be the most beloved of all the government’s programs, partly because it requires so little thinking. You pay taxes while you work, then you and your spouse collect until you die.
How Much Does Symmetry Influence Attractiveness Ratings? - via Stefan Van Dongen has just published a very nice meta analysis of the relationship between attractiveness ratings and measures of asymmetry. The noteworthy findings include: visible asymmetries are more important to attractiveness ratings than are non visible asymmetries F1,37=7.55 (p=.01)funnel plot analyses indicate a substantial publication bias in the literature studies with large sample sizes show a near zero relationship between attractiveness ratings and asymmetry F1,36=6.97 (p=.01)
Harry Potter and the Illusion of Potential – via Invisible Gorilla Blog-Why is the story of Harry Potter so appealing? The success of the series depends on engaging characters and compelling storytelling-it’s a classic tale of good vs. evil and a coming of age story. That’s true, but many stories have those qualities. I think there’s a deeper magic at work here, one that capitalizes on a pervasive cognitive illusion. It’s a cognitive illusion that underlies almost all fantasy (and much science fiction) writing and that contributes to the success of countless movies and television shows. It involves a sort of wish fulfillment.
Internet Use Affects Memory? – via NYT- The subjects were significantly more likely to remember information if they thought they would not be able to find it later. “Participants did not make the effort to remember when they thought they could later look up the trivia statement they had read,” the authors write.
Stress and the City – via Deric Bownds- The number of the world’s people living in cities has increased from 30% to 50% since 1950, and by 2050 is projected to be ~70%. Many experiments, done on insects, rodents, primates, and humans, have shown that extremes of either social isolation or crowding can have harmful effects. Lederbogen et al. have now used functional magnetic resonance imaging to examine specific human brain structures that are affected by urban living, comparing people living in rural areas, towns with more than 10,000 residents, and cities with more than 100,000 residents. They replicated their findings in several separate samples, used two different stress-inducing tasks, and demonstrated that there were no effects of urbanicity on brain activation when participants performed a non-stressful cognitive task. Stress increased participants’ heart rate, blood pressure, saliva cortisol, and activity in the amygdala, with city dwellers showing the largest increases. They found that participants’ age, education, income, marital and family status, as well as aspects of their health, mood, personality and the amount of social support they had did not significantly influence the effects of urbanicity. Thus they suggest that living in a city environment changes brain response during a social stressor by a distinct, but mysterious, mechanism.
Women Are More Likely to Recall Status Products When Maximally Fertile. – via Psychology Today- Sex-specific hormones influence our consumer behaviors in a myriad of ways. See here for one of my earliest Psychology Today posts in which I discussed a study that I had conducted with one of my former graduate students (John G. Vongas) on the links between conspicuous consumption and men’s testosterone levels. I have also written several posts about the effects of the menstrual cycle on a wide range of phenomena (see here, here, here, and here). As I explain in my recently released trade book, The Consuming Instinct: What Juicy Burgers, Ferraris, Pornography, and Gift Giving Reveal About Human Nature, the menstrual cycle has a profound effect on women’s consumer choices. I have a forthcoming paper with Eric Stenstrom, my most senior graduate student, on the effects of the menstrual cycle on beautification and food consumption (I’ll discuss this study in a future post).
Business/ Entrepreneurship/Finance/ Investing:
Income Equality in Revolutionary America - via Freakonomics- We also find that free American colonists had much more equal incomes than did households in England and Wales. Indeed, New England and the Middle Colonies appear to have been more egalitarian than anywhere else in the measurable world.
Law School Economics – Job Market Weakens, Tuition Rises - via Seth’s Posterous- With apologies to show business, there’s no business like the business of law school. The basic rules of a market economy — even golden oldies, like a link between supply and demand — just don’t apply. Legal diplomas have such allure that law schools have been able to jack up tuition four times faster than the soaring cost of college. And many law schools have added students to their incoming classes — a step that, for them, means almost pure profits — even during the worst recession in the legal profession’s history.
Accounting is destiny - via Interfluidity- It makes perfect sense for banks to reduce principal on loans valued at less than par on their books, and to refuse to do so for other loans. Let’s suppose we have a loan whose direct value will increase if we offer to reduce the principal owed. That’s not a rare situation. As Salmon writes, “a sensibly modified mortgage is likely to be much more profitable for a bank than forcing a homeowner into a short sale or foreclosure and trying to sell off the home in the current market.” Under these circumstances, one effect of a principal reduction is to increase the expected present value of the cash flows associated with the loan. Ka-ching!
The Eclectic Mix:
Fantasy Island: The Strange Tale of Alleged Fraudster Pearlasia Gamboa – via Long Now- Gamboa’s tale involves secret ore deposits, hidden stocks of Soviet nuclear armaments, the Queen Mary ocean liner, portions of Antarctica, a new version of the Bible, allegations of fake deaths and miraculous resurrections, and a collection of some of the most colorful aliases ever to grace America’s criminal and civil case dockets. (According to court documents, Korem also answers to the names Tzemach Ben David Netzer Korem and Branch Vinedresser.)
The Unselfish Gene - via HBR- In 1976, evolutionary biologist Richard Dawkins wrote in The Selfish Gene, “If you wish, as I do, to build a society in which individuals cooperate generously and unselfishly towards a common good, you can expect little help from biological nature. Let us try to teach generosity and altruism, because we are born selfish.” By 2006, the tide had started to turn. Harvard University mathematical biologist Martin Nowak could declare, in an overview of the evolution of cooperation in Science magazine, “Perhaps the most remarkable aspect of evolution is its ability to generate cooperation in a competitive world. Thus, we might add ‘natural cooperation’ as a third fundamental principle of evolution beside mutation and natural selection.”
How Cuba Is Changing- via Eocnomist- I came to Havana because the word on the international version of Radio Bemba has been that Cuba is changing, and that the process has been gathering pace since Fidel’s younger brother Raúl took over as president in 2008. I wanted to see if the change was palpable—and if so, whether it was happening quickly enough to satisfy the people, and slowly enough to remain under control.
Everything you wanted to know about free shipping – via Infographics Showcase