Tag Archiv: decision-making

The Problem of a US Recovery

21. March 2012

About two weeks ago, an article in the Wall Street Journal aroused market interest by suggesting a new variant of quantitative easing – a sterilised QE3, if you will. Yesterday we learned of the error in that thinking, at least according to renowned interest rate hawk and president of the Dallas Fed, Richard Fisher. Although currently not a voting member in the FOMC rotation, Mr Fisher isn’t supporting any further easing programs. In contrast, the NY Fed’s William Dudley recently insisted that, although the U.S. economy has somewhat stabilised, a self-sustaining recovery is still far off.

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Economical Decision-Making

23. September 2011

The economy is weak, stock markets are falling and bank customers are hurting. For most financial institutions, this means it is time for another round of cost-cutting. These are the moments where travel budgets are nipped, entertainment accounts are tucked, and everyone has to try to do more with less (at least until they can quietly go back to doing less with more again). Although the goal is to save millions, if not billions, this doesn’t mean that the little things are overlooked. Curiously, for a business whose wheels are oiled with information, newspaper subscriptions are often one of the first things to be cancelled.

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A Graduate-Premium Without a Degree

20. July 2011

In her opening speech at the university’s graduation ceremony, the Lady Chancellor did not waste the opportunity to attack the UK government’s policy on university fees. She slated the coalition for wanting to turn British universities into institutions reserved for ‘the privileged and for those not afraid of taking on £50,000 in debt.’

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Rational Thinking Gets in the Way of Business

14. July 2011

The recipes for business success are as varied as businesses themselves. Certainly, a degree from a top university is no guarantee nor, contrary to what one might think, is a rationally thought-out business plan. Often, passion, tenacity and a sprinkling of good luck (being in the right place at the right time) are the major ingredients.

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Investment Lesson #1 from the Women’s World Cup

29. June 2011

When that first goal went in, we could hardly contain ourselves. We cheered and swayed and waved our black-red-and-gold flags. One Mexican Wave after the other rippled through the stands and we floated jubilantly on the crest of each one. For me, as a female-footballer, the opening game of the Women’s Soccer World Cup in Berlin was particularly special.

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Power Decision Making

6. June 2011

The moratorium on extending the life of Germany’s nuclear power stations will officially come to an end next week. When Chancellor Merkel decreed it in the aftermath of the Fukushima disaster, I must concede that I doubted that government had really pulled the emergency brake on its nuclear policy

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In Praise of Analysts in Ivory Towers

20. May 2011

A friend of mine recently joined a well-known confectionary company. He is very impressed. At the moment, he says, he is just ‘getting into the swing of things’. Excitedly, he spoke about seminars and meetings over the course of which he is imbued with the firm’s philosophy. I could say the philosophy is ‘hammered’ into him, but I won’t. He is proud to be part of the firm; it chose him and he is reciprocating by singing its praises. However, what is praiseworthy about a firm that hires exceptional candidates, only to chip away at the diversity as soon as they enter the organisation?

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Choice Fatigue

14. April 2011

How many decisions have you made so far today? Feeling tired? You may not be surprised to learn that a decision-charged day will leave you mentally-fatigued and progressively worsen your decision-making ability. But did know you that this worsening takes place in a systematic way? As a rule, the greater the fatigue, the more the decision-maker will opt for the choice that is mentally the least demanding, namely the default or the status-quo. This means it is possible to predict what people will choose based solely on the number of decisions they have already made.

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Hopelessly Happy

11. April 2011

‘Hope springs eternal’, they usually say when you’re standing with your back against the wall. In truth however, this well-meant observation describes a tendency – hoping endlessly for an exit from a miserable situation – that can be counterproductive and even debilitating. Studies show that patients manage to do better when they feel certain about health and sickness.

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In a Position Of Power

30. March 2011

The Ultimatum Game is often part of my behavioural finance seminars.  I play it with the audience in order to demonstrate that people don’t always maximise utility according to the prescriptions of Homo economicus. In this money allocation simulation, the participant is told he will get €10,000 on the condition that he split it with another player.

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No Capitulation for the Chancellor

15. March 2011

In yesterday’s post Unwonted Candour appealed to European politicians not to allow a misplaced sense of morality to prevent a reopening of the nuclear power debate because the crisis in Japan holds important lessons for policymakers. I was doubtful it would actually happen. One can therefore imagine my surprise when German Chancellor Angela Merkel announced a three-month ‘moratorium’ on extending the lifespan of the country’s ageing nuclear power plants.

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Japan Shockwaves Reach Europe

14. March 2011

Shockwaves from Japan reached Western Europe this weekend – not the earthquake, but the fear of an accident at a nuclear reactor closer to home. Demonstrations took place in France, calling for the government to review its energy policy. With 58, France has even more nuclear reactors than Japan, for half the population.

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The Lady Is Not For Turning

8. February 2011

Although German Chancellor Merkel refuses to be drawn into it, the debate about the need for legal quotas for women on the boards of German companies does not die down. In a recent interview, Employment Minister Ursula von der Leyen explained why she thinks more women decision-makers would be beneficial to the economy. Women are not better than men, she insists, they are just different. By bringing more heterogeneity into leadership groups, women could improve decision-making.

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Best Man, Worst Decision-Maker

3. February 2011

He was the world’s greatest best man. On the couple’s big day, he had organised all the logistics, been a charming host for dozens of guests, delivered a riotous speech and made a gift of an unforgettable honeymoon vacation. Even years later, he saw his duties as incomplete; he wanted to offer the pair a surprise twentieth anniversary party.

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The Tyranny of Choice

25. January 2011

Holiday at last – hello Africa! I have been musing over the possibilities for months. South Africa’s picturesque Cape Town stands out in my mind, although Namibia’s isolation and expansiveness also beckons; Zambia offers Victoria Falls, but the biodiversity of Botswana’s Okavango Delta is positively enchanting. I can’t decide.

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Goldman vs. Gold-women

16. September 2010

An ‘unchecked gender bias pervades Goldman Sachs’s corporate culture’ say three former employees in a legal action they lodged yesterday against the company. They want to turn the case into a class action suit, accusing the bank of underpaying and under-promoting women. The story prompted a little debate in our office this morning, which resulted in the question of who is better at decision-making. Who makes a better banker – women or men?

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Fidelity II: A double-edged sword

13. September 2010

The cognitive dissonance examples discussed in my last post reveal how surprisingly easy it is for people to change their beliefs and their subsequent behaviour simply as a result of an earlier action.

 Contrary to intuition, it is actually easier to ‘believe’ if one has already acted in a way that is consistent with that belief.

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Fidelity: What Gang Members and Couples Share

10. September 2010

A 25 year-old man is knocked unconscious and beaten for more than six minutes by nine members of a street gang. The assault, part of the gang’s initiation requirement known as the ‘jump in’, determines whether an initiate has the ‘heart’, mentally and physically, to roll with its members. The ‘act of love’ amounts to a beating of fists, kicks and stomps that sometimes leaves the initiate physically impaired or dead

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Eight Bread Rolls and a Thick Slice of Dissonance

28. July 2010

It has almost become a routine for a family breakfast – eight fresh, hand-made bread rolls from the traditional bakery down the road.  As she packed the goodies into a paper sachet, the assistant casually announced a special offer the store was running at the moment: for every four rolls purchased, the customer gets an extra one free. For my eight, this meant that I could get two additional rolls free. ‘Great’, I thought.

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Procrastination Killed the App

20. July 2010

 

Behavioural economics professor and author, Dan Ariely, has designed an app for the iPhone called Procrastinator. The tool allows users to set deadlines for important decisions and, when the time is up, makes the choice for them if they still cannot decide. I have been meaning to download it from iTunes… but I haven’t got around to it yet. Got a solution for that one Dr Ariely?

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Seasoned decision-making

15. July 2010

Is an 87 year-old capable of managing a $20bn fortune? The question is a crucial one for Liliane Bettencourt, the L’Oreal heiress and France’s wealthiest woman; her daughter is reportedly trying to have a judge declare her incompetent to manage her own affairs. It is intuitive to believe that elderly people are less able to make good money-related decisions, especially when one hears about the numerous scams targeting the aged. But is this really true?

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