Behaviouronomics

In 1987, an investment banker named Steven Rothstein bought a special pass called AAirpass which gave him lifetime privilege of booking first-class American Airlines tickets from anywhere to anywhere in the world for free. The pass wasn’t cheap. It cost him a quarter of a million dollars. But Rothstein was so happy with the deal that in 1989 he paid an additional $1,50,000 to buy a companion pass which allowed another person to accompany Steven in first-class.

One interesting fact about Steven’s companion pass was a clause that he added in his contract about his wife. The agreement stated: “If spouse is the companion, the spouse will be allowed to travel separately from Holder, provided that the spouse travels on the flight immediately prior to or just after the flight taken by Holder.” Steven reasoned that in the unlikely event of a crash, at least one of them would be alive for their three children. It looks like Steven took the idea of risk mitigation too far.
[Read more…] about Behaviouronomics: Selection Bias

Mark Twain famously said — It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

The video below may be a little disturbing for some but it has a very important lesson which can save you not just from financial ruins but also from life-threatening situations.
[Read more…] about Behaviouronomics: Normalcy Bias

During World War II, in the middle of 1944, the Allied forces were gaining ground against Germany. With the invasion of Normandy, Germany was on its back foot. In spite of this massive setback, Germany was not ready to let up.

On June 13, 1944, a week after Normandy, a loud buzzing sound rattled through the skies of battle-worn London. Seconds later, a never seen before flying object crashed and exploded on one of the civilian establishments in the city. Dozens perished.

British intelligence soon discovered that it was a new weapon developed by Germany. They called it V-1.

On its debut night, 9 more V-1s were fired across the English channel. Fortunately, only four of them managed to strike England. But that was just the beginning. Over the next few months, Germany shot 13,000 of those V-1s.
[Read more…] about Behaviouronomics: The Clustering Illusion

Elon Musk has built multiple billion-dollar companies — Paypal, SpaceX, and Tesla. His IQ is off the charts. But even a more remarkable thing about Musk is that he can find, attract, and retain very smart people to work with him on moonshot ideas like space travel, underground highways, electric cars, etc.

Before you can convince and retain brilliant co-workers, you need to have a robust filtering mechanism. Given a chance, very few people would  refuse an opportunity to associate with Elon Musk. Which means, he would be receiving thousands of requests.

How does Musk find these people with super thinking abilities? What is his method of separating genius problem solvers from average thinkers?
[Read more…] about Behaviouronomics: The Cargo Cult

The first iPhone was released on June 29, 2007. Steve Jobs, dawning his showman hat, unveiled Mac’s revolutionary device with much hype and media coverage. The first iPhone had a touch screen, wifi and Bluetooth connectivity, a music player, a camera, an on-screen keyboard, and a browser to surf the Internet. In the first week, 300000 iPhones were sold.

Fast forward 12 years. Apple recently came out with the iPhone 11 Pro Max which is the 16th version since the first iPhone.
[Read more…] about Behaviouronomics: Neomania