Behaviouronomics

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

A few weeks back I surprised myself by doing something I thought I would never do. I sold my position in a stock that had been the largest holding in my portfolio for a long time.

I first started buying this stock almost a decade back and had never sold a single share of this company. I continued to accumulate it through its ups and downs in this period. At one point, this company constituted more than 40% of my entire stock portfolio. I don’t need to tell you that it was my high confidence stock.

So what made me exit it all of a sudden?
[Read more…] about Behaviouronomics: The Concorde Fallacy

During World War II, the United States created a classified program called The Statistical Research Group (SRG). Its purpose was to help the US army solve problems using equations and formulae. In other words, SRG was into wartime math.

One interesting problem military gave SRG was about making sense of bullet holes in American planes. When those fighter planes came back from the battle, they were usually covered with bullet holes inflicted by the enemy guns. The military wanted to figure out the most optimum way to put the armor on the plane.

Well, couldn’t they armor the whole plane?
[Read more…] about Behaviouronomics: The Case of Missing Bullet Holes