Behaviouronomics

Behaviouronomics: How to Win Russian Roulette

June 30, 2021

If you’ve been a reader of Safalniveshak for sometime you’d already be familiar with the game of Russian Roulette. For those who aren’t, here’s a quick explanation.

In fact I’ll let Nassim Taleb, author of Fooled By Randomness, do the explaining –

Imagine you are offered $10 million to play Russian roulette, i.e., to put a revolver containing one bullet in the six available chambers to your head and pull the trigger. Each realisation would count as one history, for a total of six possible histories of equal probabilities. Five out of these six histories would lead to enrichment; one would lead to a statistic, that is, an obituary with an embarrassing (but certainly original) cause of death.

Behaviouronomics: On Intelligence

April 30, 2021

Yogi Berra famously said, “In theory there is no difference between theory and practice, but in practice there is.”

Whenever one starts learning about a new field of knowledge or begins acquiring a new skill, the first confusion is always this — what’s the right combination of theory and practice?

You can devour a hundred books on swimming but nothing happens until you jump in the water. At the same time, just splashing around won’t get you anywhere unless you know the theory about how humans swim, how to move in the right way.

We’ve all acquired many skills over our life time. Some basic skills like speaking and walking are either biological or a product of our environment. Other skills which might have looked impossible for pre-historic man — like reading, writing, cycling, driving — are also so common today that we rarely pause to deconstruct how we acquired those skills.

Behaviouronomics: Of Parachutes, Road Safety, and the Second Wave

March 31, 2021

As the second wave of Coronavirus is sweeping across our country, it has left many perplexed. With more than 6.5 crore people vaccinated and the new normal of masks and sanitizers, why does the pandemic seem to be taking a U-turn?

I recently saw a news about a doctor lamenting, “I treated thousands of patients with Covid 19 for the last several months and never caught the infection. But within days of taking the vaccine, I became positive.”

How come? Is vaccine reducing the immunity? That’s absurd.

Well, we have a behavioural bias to explain the phenomenon and it’s called the Peltzman Effect. But before I get into that, here’s an interesting trivia —

Statistics reveal that even though skydiving equipment has made huge leaps forward for improving reliability, the fatality rate has stayed roughly constant when adjusted for the increasing number of participants.

Think about that for a minute and see if you can come up with an explanation.

Behaviouronomics: Not Invented Here Syndrome

February 28, 2021

When Phillips bought Sonicare, manufacturer of the very popular Sonicare toothbrush, Phillips decided to redesign and reengineer the product, though there was no compelling need to do so. This is not an uncommon phenomenon in the business world, and so there’s even a name for it.

Not invented here (NIH) syndrome.

Behaviouronomics: Placebo Effect

January 30, 2021

Just about everyone is familiar with the placebo effect — a beneficial effect, produced by a placebo drug or treatment, that cannot be attributed to the placebo’s properties, and must therefore be due to the patient’s belief in that treatment.

However, most people have only a cursory understanding of this behavioural quirk. Until the last few years, even I had a very shallow knowledge about Placebo Effect. As I read more about various cognitive biases that plague the human brain, I realized that the Placebo Effect’s implications cast their net much wider than I would have imagined.

Sometimes during my scheduled daydreaming sessions, I imagine having conversations with people from different fields. One such imaginary discussion involved a medical doctor who has a clinic near my home.