My former professor Brian Skurnik won a price with his latest paper on the 'Illusion of Truth' effect. Here's the abstract: "Telling people that a consumer claim is false can make them misremember it as true. In two experiments older adults were especially susceptible to this "illusion of truth" effect. Repeatedly identifying a claim as false helped older adults remember it as false in the short term, but paradoxically made them more likely to remember it as true after a three-day delay. This unintended effect of repetition comes from increased familiarity with the claim itself, but decreased recollection of the claim's original context. Findings provide insight into susceptibility over time to memory distortions and exploitation via repetition of claims in media and advertising."
Saturday, November 01, 2008
Sunday, October 26, 2008
Tiger Woods: a bad golfer!
Nearly everyone thinks that Tiger Woods is an exceptional golfer. If you look at the statistics you will be surprised to see that Tiger Woods is an absolutely terrible player when you look at his performance in bunkers. It appears like a contradiction to have one of the best golfers in history to practically fail in certain aspects of the sport. How can one resolve this?
When looking at the performance of athletes or business professionals one oftentimes focuses on a dualistic view, i.e. one is good or bad at something. If you are bad at something then it follows that you should improve and become good at it. A lot of resources are put into place to advance and over time eventually one moves towards becoming "good at it". And so it goes.
The real question, however is, if the property is also "important". Maybe it is just "unimportant". What does that mean? In the example with Tiger Woods one can see by looking at the PGA statistics board that the "Tiger" is bad at bunker shots. However, if you add the second dimension of "Important/Unimportant" one can grasp to understand that this is a rather unimportant skills for Tiger. Why? Quite frankly, Tiger Woods can afford to be bad at bunker shots because he doesn't need to be good at bunker shots. Tiger Woods avoids hitting bunkers altogether therefore he doesn't need to waste his time improving his bad score but rather invests his scares resource, i.e. time, in further improving his performance on the green. The following 2x2 matrix illustrates this finding:
When looking at the performance of athletes or business professionals one oftentimes focuses on a dualistic view, i.e. one is good or bad at something. If you are bad at something then it follows that you should improve and become good at it. A lot of resources are put into place to advance and over time eventually one moves towards becoming "good at it". And so it goes.
The real question, however is, if the property is also "important". Maybe it is just "unimportant". What does that mean? In the example with Tiger Woods one can see by looking at the PGA statistics board that the "Tiger" is bad at bunker shots. However, if you add the second dimension of "Important/Unimportant" one can grasp to understand that this is a rather unimportant skills for Tiger. Why? Quite frankly, Tiger Woods can afford to be bad at bunker shots because he doesn't need to be good at bunker shots. Tiger Woods avoids hitting bunkers altogether therefore he doesn't need to waste his time improving his bad score but rather invests his scares resource, i.e. time, in further improving his performance on the green. The following 2x2 matrix illustrates this finding:
It is obvious to avoid activities on the left side and redirect resources and efforts from points "A" and "B" towards "T". The not so obvious point is "how" to do this. Depending on the type of the "game" played or the business situation you are in, a solution will be different. In a "looser-game" (see details in my other blog postings) one will likely have to improve the position in "B" and move towards point "T". In a "Winner-game" you have the opportunity to abandon points "A" and "B" and concentrate on improving "T". This is what Tiger Woods does! Professional Golf (unlike amateur golf!) is a Winner-Game and the statistics prove that TW is improving on "T" while abondoning the bunker quadrant. A corporate citizen is often confronted with a Looser-Game unlike Entrepreneurs that are more likely to be participants in a Winner-Game. This might be the reason why large corporatins accumulate many mediocre players over time while top-performers will be playing in a different game.
Moving parts & lateral brain teaser
A lateral brain teaser is a question that cannot be solved with regular logic. Here is an example:
A sun dial is the time piece with the fewest moving parts. What is the time piece with the most moving parts? Answer: an hour glass is the most common answer. I personally think that Foucault pendulum is a good answer too since the whole apparatus moves. Granted it has less parts than an hour glass.
Saturday, October 25, 2008
First mover advantage
You and I play a game where we take turns rolling a die. I win if I roll a 4. You win if you roll a 5. If I go first, what’s the probability that I win? There are several answer options but I find the one below most intuitive:
This dice problem is mentally tricky because many rounds end without a winner. It would seem necessary to keep track of an infinite series to arrive at an answer. But that’s not the case. The trick is seeing that each round is really an independent sub-game. The fact that the previous round ended without a winner does not affect the winner of the current round or any future round. This means we can safely ignore outcomes without winners.
The probability of winning depends only on the features of a single round. This simplifies the problem to a more tractable one. So now, assume that one of the players did win in a round, and then calculate the relative winning percentages. In other words, calculate the probability the first player wins given the round definitely produced a winner. To do that, we look at the distribution of outcomes. In any given round, the first player can roll six outcomes, as can the second player. How many of those thirty-six outcomes produce a winner, and how many are from the first player?
This diagram illustrates the answer:
There are exactly 11 outcomes where somebody wins, of which 6 belong to the first player. Therefore, the first player wins with a 6/11 chance, or about 54.5 percent of the time. This is the same numerical answer as Monte Carlo, but we get an explanation why it works. The first-mover advantage is caused by the fact the first player wins even if both were to roll winning numbers.
Source: http://mindyourdecisions.com
This dice problem is mentally tricky because many rounds end without a winner. It would seem necessary to keep track of an infinite series to arrive at an answer. But that’s not the case. The trick is seeing that each round is really an independent sub-game. The fact that the previous round ended without a winner does not affect the winner of the current round or any future round. This means we can safely ignore outcomes without winners.
The probability of winning depends only on the features of a single round. This simplifies the problem to a more tractable one. So now, assume that one of the players did win in a round, and then calculate the relative winning percentages. In other words, calculate the probability the first player wins given the round definitely produced a winner. To do that, we look at the distribution of outcomes. In any given round, the first player can roll six outcomes, as can the second player. How many of those thirty-six outcomes produce a winner, and how many are from the first player?
This diagram illustrates the answer:
There are exactly 11 outcomes where somebody wins, of which 6 belong to the first player. Therefore, the first player wins with a 6/11 chance, or about 54.5 percent of the time. This is the same numerical answer as Monte Carlo, but we get an explanation why it works. The first-mover advantage is caused by the fact the first player wins even if both were to roll winning numbers.
Source: http://mindyourdecisions.com
Friday, September 26, 2008
Andreas Hagenkamp & Tobi
Family friend Andreas Hagenkamp came over to visit Google during his stay in Silicon Valley.
Wednesday, September 24, 2008
The successful entrepreneur
All it takes to start a company is about 50 bucks and a visit at the local Office Depot to pick-up some generic incorporation forms. The challenging part is to create a successful (!) company. I'm jotting down a few components that haven statistically proven to stir up a much more successful company. In fact everything you are reading has been borrowed from my former professor Greg Fairchild at Darden who has studied the significance of certain aspects.
1. "Three or more": To be successful in the long-run one should have at least three founders in the company. Sure, you always want to have an uneven number of key people to avoid voting conflicts. More importantly you think about the business differently with three or more people. If you have only two persons you will talk back and forth and hear what you already know. This helps little to advance the company in the early days. With three members you will start a dynamic that can evolve into something new and better.
2. "Sales Guy": Do have an experienced sales person on your team. Why? Well, the greatest idea is worth nothing if you can't sell it. A sales person will know what it takes to sell and pitch an idea early on. He/She will help you steer into a direction that yields cash sooner than later. Please note that you should have an experienced sales person - not a person who wants to be experienced.
3. "Serial entrepreneurs": This sounds like a contradiction but the key to success is to fail and keep trying. I'm leaving out the percentages, that I don't have with me, but your chance of ending up in a profitable business is increasing dramatically with each business in which you have failed. What does that mean? First and foremost: don't give up once you fail. Second, have realistic expectations that the next or first start-up might not be it. It would be nice but it's more likely that you will succeed in the long-run. Again, don't give up.
One little chip of information at the end. So which business yields the most millionaires? Believe it or not, and without immediate backup, I remember from my MBA class that the "Dry-Cleaning-Business" brings out the most millionaires. A surprise? :-)
1. "Three or more": To be successful in the long-run one should have at least three founders in the company. Sure, you always want to have an uneven number of key people to avoid voting conflicts. More importantly you think about the business differently with three or more people. If you have only two persons you will talk back and forth and hear what you already know. This helps little to advance the company in the early days. With three members you will start a dynamic that can evolve into something new and better.
2. "Sales Guy": Do have an experienced sales person on your team. Why? Well, the greatest idea is worth nothing if you can't sell it. A sales person will know what it takes to sell and pitch an idea early on. He/She will help you steer into a direction that yields cash sooner than later. Please note that you should have an experienced sales person - not a person who wants to be experienced.
3. "Serial entrepreneurs": This sounds like a contradiction but the key to success is to fail and keep trying. I'm leaving out the percentages, that I don't have with me, but your chance of ending up in a profitable business is increasing dramatically with each business in which you have failed. What does that mean? First and foremost: don't give up once you fail. Second, have realistic expectations that the next or first start-up might not be it. It would be nice but it's more likely that you will succeed in the long-run. Again, don't give up.
One little chip of information at the end. So which business yields the most millionaires? Believe it or not, and without immediate backup, I remember from my MBA class that the "Dry-Cleaning-Business" brings out the most millionaires. A surprise? :-)
Sunday, August 24, 2008
OODA Loop
Example of a typical Air Combat Manoeuvre, in this case the "Lufberry":
The OODA Loop is a favorite concept of mine that comes out of the military strategy field. It was first developed by war fighters and stands for "Observe Orient Decide Act". I particularly enjoy that the dimension of "speed" plays an important role in the OODA Loop.
Wikipedia states: "How does one interfere with an opponent's OODA cycle? One of John Boyd's primary insights in fighter combat was that it is vital to change speed and direction faster than the opponent. This is not necessarily a function of the plane's ability to maneuver, rather the pilot must think and act faster than the opponent can think and act. Getting "inside" the cycle — short-circuiting the opponent's thinking processes - produces opportunities for the opponent to react inappropriately.
Another tactical-level example can be found on the basketball court, where a player takes possession of the ball and must get past an opponent who is taller or faster. A straight dribble or pass is unlikely to succeed. Instead the player may engage in a rapid and elaborate series of body movements designed to befuddle the opponent and deny him the ability to take advantage of his superior size or speed. At a basic level of play, this may be merely a series of fakes, with the hope that the opponent will make a mistake or an opening will occur. But practice and mental focus may allow one to reduce the time scale, get inside the opponent's OODA loop, and take control of the situation - to cause the opponent to move in a particular way, and generate an advantage rather than merely reacting to an accident."
Thursday, July 24, 2008
Saturday, July 19, 2008
Sunday, July 13, 2008
Authors@Google: Dan Ariely
I missed Dan Ariely but thankfully his presentation at Google was recorded on YouTube.
Sunday, July 06, 2008
Why Free! is great
Have you ever grabbed for a coupon offering a free! package of coffee beans—even though you don’t drink coffee and don’t even have a machine with which to brew it? What about all those free! extra helpings you piled on your plate at a buffet, even though your stomach had already started to ache from all the food you had consumed? And what about the worthless free! stuff you’ve accumulated—the promotional T-shirt from the radio station, the teddy bear that came with the box of Valentine chocolates, the magnetic calendar your insurance agent sends you each year?
It’s no secret that getting something free feels very good. Zero is not just another price, it turns out. Zero is an emotional hot button—a source of irrational excitement. Would you buy something if it were discounted from 50 cents to 20 cents? Maybe. Would you buy it if it were discounted from 50 cents to two cents? Maybe. Would you grab it if it were discounted from 50 cents to zero? You bet!
What is it about zero cost that we find so irresistible? Why does free! make us so happy? After all, free! can lead us into trouble: things that we would never consider purchasing become incredibly appealing as soon as they are free! For instance, have you ever gathered up free pencils, key chains, and note pads at a conference, even though you’d have to carry them home and would only throw most of them away? Have you ever stood in line for a very long time (too long), just to get a free cone of Ben and Jerry’s ice cream? Or have you bought two of a product that you wouldn’t have chosen in the first place, just to get the third one for free?
What is it about free! that’s so enticing? Why do we have an irrational urge to jump for a free! item, even when it’s not what we really want?
I believe the answer is this. Most transactions have an upside and a downside, but when something is free! we forget the downside. Free! gives us such an emotional charge
that we perceive what is being offered as immensely more valuable than it really is. Why? I think it’s because humans are intrinsically afraid of loss. The real allure of free! is tied to this fear. There’s no visible possibility of loss when we choose a free! item (it’s free). But suppose we choose the item that’s not free. Uh- oh, now there’s a risk of having made a poor decision—the possibility of a loss. And so, given the choice, we go for what is free.
Source: Daniel Ariery, http://g-ecx.images-amazon.com/images/G/01/books/a-plus/Predictably-Irrational-Excerpt.pdf
Online Dating & Disappointments
Daniel Ariely is closing the gap on why we are more disappointed the more we know about a person.
Friday, July 04, 2008
Sunday, June 22, 2008
Saturday, June 14, 2008
Fishing, Competition and Strategy
Sport fishing is one of my interests and one can wait a long time for some action while doing it. Eventually I had so much time that I started thinking about fishing in a broader context and wondered if you can draw anything away for it on a strategic level: fishing and strategy!
Like in many business situation you compete also while fishing. Most obviously you and the fish compete about who keeps the 'worm' (Note that even the worm competes for a resource, unless it's plastic, to stay away from the angler and any fish). Certainly you compete with other fishermen and nothing is probably more exciting and less close to reality than answering another fellow fisherman's question of "any bites" ? Don't forget that you are also competing with other creatures (fish, turtles and birds) who enjoy fish like you and the other anglers do.
Last but not least you compete with yourself. Once you become more successful and fished nearly every fish out there it becomes increasingly more difficult to stay successful. One might even argue that the smartest fish is the most experienced and oldest fish who is a) biggest and b) probably in the pond until the very end. How do you get him?
Let's look at means of fishing. A fishing rod helps but there are other things. Be a little bit more creative when it comes to means! Of course you can use a net with a varying 'threat-count'. What do you want to catch? A net seems like an easy way to catch any fish that is larger than the openings in your net but it's also very costly. A net is nothing else than a capital investment and it will take a long time to be successful and recoup the investment. A faster and much cheaper idea is to use dynamite. Boom and that's it. Note that this practice is usually not legal, it's more dangerous and you have no control over the result unless you like to eat fish-pieces only. This very effective method is neither sustainable nor will you earn the respect of your competition. You are running into trouble in the long-run also because everything in the pond has been wiped out and you will have to find another lake to fish in the future. Your idea with the net seemed not too bad after all and you might want to consider to put a much smaller net upstream on a connecting river. Larger fish will travel up the stream through your net - if they could. Your investment is much smaller, it's targeted and you will see results sooner exactly where you expect it. Draining the lake is another way to catch a fish. It might not be totally destructive and make it easier for you to find fish. One more option comes to mind. If you life in certain areas and like to focus on catfish you might decide to forget about a rod and net altogether. Catfish noodling is very popular and you basically use your hand to fish for catfish 1x1.
So don't limit yourself to just one method of fishing, i.e. the rod method and think creatively about what might be an appropriate fishing method. Effectiveness might not always be the way to go.
Of course you have to do your 'hygiene', i.e. your homework before you start fishing. Prepare yourself and find out everything you can about the area, the lake (depth, temperature, etc.) the containing fish and best time of fishing. This will not guarantee that you will catch anything but increase the likelihood of winning. You might be better of to experiment at the lake. Can you change a) your position, b) bait, c) means of fishing and d) time of fishing? If you are more successful at dawn there's probably a reason for it so keep fishing at dawn if it works out. A little espionage - only if it's legal! - can help too. Are there other people, what's on their hook and in their buckets?
Your positioning might help or hurt you. If you are close to your competitors (i.e. the other fishermen) you will compete for the same fish that is coming by and might end-up fighting. You can hide on the other side of the lake and stay 'under the radar'. You are also staying out of trouble. Avoid confrontations if you can: it's not giving you any more fish! In fact, fish don't like noise so it WILL hurt both of you. If you have more money try to buy a boat. This will put you on a different spot (on the middle of the lake!) where there might be bigger fish in the depth. Remember that the big fish is big for a reason: probably it stayed away from the edge of the lake for a long time and is safe in the middle in the depth.
That's your chance especially since there are not many other people usually fishing here. If you are smart you will not buy a boat but rather rent or even better loan one.
Technology, another small investment, can be your friend. With a fish-finder you can 'see' the fish even if YOU can't see it. You can safe a lot of muda (japanese for 'waste') in terms of time, effort and bait if you know where the fish a) is and where it b) is not.
Finally experience will help you a LOT! Experience means you see things that other people don't see. You will know that those little bubbles and waves on the top are from fish which will show you their location. Your experience will also tell you not too fish for trout in small lakes with a lot of sunlight as trout likes cold water. So don't fish for trout but for bass who likes warm water!
You will find more analogies if you leave your business situation and compare it to other areas in life. Of course you will also find many situations where the comparisons breaks-down and that's where it's getting interesting. Why can't you compare this situation with another one and what can you take-away from this insight?
P.s.: Eventually you find that fishing is a very competitive situation and it would be nice to get to the fish without all the 'hassle'. Especially if you are in an area where are no lakes at all you might run into a problem or challenge. Is there anything you can do except than giving up i.e. leaving the market? Often there is and you should use it to your advantage. Fish-farming is a huge business e.g. in Israel and it turns out that you can achieve magnificent yields in what one would think unproductive areas.
Like in many business situation you compete also while fishing. Most obviously you and the fish compete about who keeps the 'worm' (Note that even the worm competes for a resource, unless it's plastic, to stay away from the angler and any fish). Certainly you compete with other fishermen and nothing is probably more exciting and less close to reality than answering another fellow fisherman's question of "any bites" ? Don't forget that you are also competing with other creatures (fish, turtles and birds) who enjoy fish like you and the other anglers do.
Last but not least you compete with yourself. Once you become more successful and fished nearly every fish out there it becomes increasingly more difficult to stay successful. One might even argue that the smartest fish is the most experienced and oldest fish who is a) biggest and b) probably in the pond until the very end. How do you get him?
Let's look at means of fishing. A fishing rod helps but there are other things. Be a little bit more creative when it comes to means! Of course you can use a net with a varying 'threat-count'. What do you want to catch? A net seems like an easy way to catch any fish that is larger than the openings in your net but it's also very costly. A net is nothing else than a capital investment and it will take a long time to be successful and recoup the investment. A faster and much cheaper idea is to use dynamite. Boom and that's it. Note that this practice is usually not legal, it's more dangerous and you have no control over the result unless you like to eat fish-pieces only. This very effective method is neither sustainable nor will you earn the respect of your competition. You are running into trouble in the long-run also because everything in the pond has been wiped out and you will have to find another lake to fish in the future. Your idea with the net seemed not too bad after all and you might want to consider to put a much smaller net upstream on a connecting river. Larger fish will travel up the stream through your net - if they could. Your investment is much smaller, it's targeted and you will see results sooner exactly where you expect it. Draining the lake is another way to catch a fish. It might not be totally destructive and make it easier for you to find fish. One more option comes to mind. If you life in certain areas and like to focus on catfish you might decide to forget about a rod and net altogether. Catfish noodling is very popular and you basically use your hand to fish for catfish 1x1.
So don't limit yourself to just one method of fishing, i.e. the rod method and think creatively about what might be an appropriate fishing method. Effectiveness might not always be the way to go.
Of course you have to do your 'hygiene', i.e. your homework before you start fishing. Prepare yourself and find out everything you can about the area, the lake (depth, temperature, etc.) the containing fish and best time of fishing. This will not guarantee that you will catch anything but increase the likelihood of winning. You might be better of to experiment at the lake. Can you change a) your position, b) bait, c) means of fishing and d) time of fishing? If you are more successful at dawn there's probably a reason for it so keep fishing at dawn if it works out. A little espionage - only if it's legal! - can help too. Are there other people, what's on their hook and in their buckets?
Your positioning might help or hurt you. If you are close to your competitors (i.e. the other fishermen) you will compete for the same fish that is coming by and might end-up fighting. You can hide on the other side of the lake and stay 'under the radar'. You are also staying out of trouble. Avoid confrontations if you can: it's not giving you any more fish! In fact, fish don't like noise so it WILL hurt both of you. If you have more money try to buy a boat. This will put you on a different spot (on the middle of the lake!) where there might be bigger fish in the depth. Remember that the big fish is big for a reason: probably it stayed away from the edge of the lake for a long time and is safe in the middle in the depth.
That's your chance especially since there are not many other people usually fishing here. If you are smart you will not buy a boat but rather rent or even better loan one.Technology, another small investment, can be your friend. With a fish-finder you can 'see' the fish even if YOU can't see it. You can safe a lot of muda (japanese for 'waste') in terms of time, effort and bait if you know where the fish a) is and where it b) is not.
Finally experience will help you a LOT! Experience means you see things that other people don't see. You will know that those little bubbles and waves on the top are from fish which will show you their location. Your experience will also tell you not too fish for trout in small lakes with a lot of sunlight as trout likes cold water. So don't fish for trout but for bass who likes warm water!
You will find more analogies if you leave your business situation and compare it to other areas in life. Of course you will also find many situations where the comparisons breaks-down and that's where it's getting interesting. Why can't you compare this situation with another one and what can you take-away from this insight?
P.s.: Eventually you find that fishing is a very competitive situation and it would be nice to get to the fish without all the 'hassle'. Especially if you are in an area where are no lakes at all you might run into a problem or challenge. Is there anything you can do except than giving up i.e. leaving the market? Often there is and you should use it to your advantage. Fish-farming is a huge business e.g. in Israel and it turns out that you can achieve magnificent yields in what one would think unproductive areas.
Monday, May 26, 2008
Loser's versus Winner's game
Simon Ramo identified the crucial difference between a Winner's Game and a Loser's Game in his excellent book on playing strategy, Extraordinary Tennis for the Ordinary Tennis Player. Over a period of many years, he observed that tennis was not one game but two. One game of tennis is played by professionals and a very few gifted amateurs; the other is played by all the rest of us.
Although players in both games use the same equipment, dress, rules and scoring, and conform to the same etiquette and customs, the basic natures of their two games are almost entirely different. After extensive scientific and statistical analysis, Dr. Ramo summed it up this way: Professionals win points; amateurs lose points. Professional tennis players stroke the ball with strong, well aimed shots, through long and often exciting rallies, until one player is able to drive the ball just beyond the reach of his opponent. Errors are seldom made by these splendid players. Expert tennis is what I call a Winner's Game. Amateur tennis, Ramo found, is almost entirely different. Brilliant shots, long and exciting rallies, and seemingly miraculous recoveries are few and far between. On the other hand, the ball is fairly often hit into the net or out of bounds, and double faults at service are not uncommon. The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor in this game of tennis gets a higher score than the Opponent, but he gets that higher score because his opponent is losing even more points.
As a scientist and statistician, Dr. Ramo gathered data to test his hypothesis. And he did it in a very clever way. Instead of keeping conventional game scores---"Love," "Fifteen All," "Thirty-Fifteen," etc.-~amo simply counted points won versus points lost. And here is what he found. In expert tennis, about 80 percent of the points are won; in amateur tennis, about 80 percent of the points are lost. In other words, professional tennis is a Winner's Game--the final outcome is determined by the activities of the winner--and amateur tennis is a Loser's Game---the final outcome is determine d by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.
From this discovery of the two kinds of tennis, Dr. Ramo builds a complete strategy by which ordinary tennis players can win games, sets and matches again and again by following the simple strategy of losing less, and letting the opponent defeat himself.
Dr. Ramo explains that if you choose to win at tennis--as opposed to having a good time--the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur (and probably not having read Ramo's book) will play a losing game and not know it.
Although players in both games use the same equipment, dress, rules and scoring, and conform to the same etiquette and customs, the basic natures of their two games are almost entirely different. After extensive scientific and statistical analysis, Dr. Ramo summed it up this way: Professionals win points; amateurs lose points. Professional tennis players stroke the ball with strong, well aimed shots, through long and often exciting rallies, until one player is able to drive the ball just beyond the reach of his opponent. Errors are seldom made by these splendid players. Expert tennis is what I call a Winner's Game. Amateur tennis, Ramo found, is almost entirely different. Brilliant shots, long and exciting rallies, and seemingly miraculous recoveries are few and far between. On the other hand, the ball is fairly often hit into the net or out of bounds, and double faults at service are not uncommon. The amateur duffer seldom beats his opponent, but he beats himself all the time. The victor in this game of tennis gets a higher score than the Opponent, but he gets that higher score because his opponent is losing even more points.
As a scientist and statistician, Dr. Ramo gathered data to test his hypothesis. And he did it in a very clever way. Instead of keeping conventional game scores---"Love," "Fifteen All," "Thirty-Fifteen," etc.-~amo simply counted points won versus points lost. And here is what he found. In expert tennis, about 80 percent of the points are won; in amateur tennis, about 80 percent of the points are lost. In other words, professional tennis is a Winner's Game--the final outcome is determined by the activities of the winner--and amateur tennis is a Loser's Game---the final outcome is determine d by the activities of the loser. The two games are, in their fundamental characteristic, not at all the same. They are opposites.
From this discovery of the two kinds of tennis, Dr. Ramo builds a complete strategy by which ordinary tennis players can win games, sets and matches again and again by following the simple strategy of losing less, and letting the opponent defeat himself.
Dr. Ramo explains that if you choose to win at tennis--as opposed to having a good time--the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur (and probably not having read Ramo's book) will play a losing game and not know it.
Rule of the game (example tennis)
When we watch a sporting event like a tennis tournament we might hope for a favorite player to win and even feel upset if he loses. However, we don’t often question the rules of the tournament. Lewis Carroll, better known as the author of Alice in Wonderland, explains why the typical tournament structure often fails to award best players the top prizes and offers an alternative method.
In an elimination tournament, each player can only advance along a certain path toward the final. As each player moves through this space, the field is narrowed, until the top prizes are determined. The structure of the space critically influences who finishes well in the tournament. A competition that seems at first glance to be fairly structured to filter out the weaker players may, in fact, not be good at all at selecting the best competitors. In any competition it is not just skill and lucky breaks that determine the winners; the rules of the competition itself determine who will finish well. Many competitions are structured to correctly determine only first place; the second and third prizes are very much subject to chance.
Let us take, as an example of the present method, a Tournament of 32 competitors with 4 prizes.
On the 1st day, these contend in 16 pairs: on the 2nd day, the 16 Winners contend in 8 pairs, the Losers being excluded from further competition: on the 3rd day, the 8 Winners contend in 4 pairs: on the 4th day, the 4 Winners (who are now known to be the 4 Prize-Men) contend in 2 pairs; and on the 5th day, the 2 Winners contend together to decide which is to take the 1st prize and which the 2nd -- the two Losers having no further contest, as the 3rd and 4th prizes are of equal value.
Now, if we divide the list of competitors, arranged in the order in which they are paired, into 4 sections, we may see that all that this method really does is to ascertain who is best in each section, then who is best in each half of the list, and then who is best of all. The best of all (and this is the only equitable result arrived at) wins the 1st prize: the best in the other half of the list wins the 2nd: and the best men in the two sections not yet represented by a champion win the other two prizes. If the Players had chanced to be paired in the order of merit, the 17th best Player would necessarily carry off the 2nd prize, and the 9th and 25th best the 3rd and 4th! This of course is an extreme case: but anything within these limits is possible: e.g. any competitor, from the 3rd best to the 17th best, may, by the mere accidental arrangement of pairs, and by no means as a result of his own skill, carry off the 2nd prize. As a mathematical fact, the chance that the 2nd best Player will get the prize he deserves is only 16/31sts; while the chance that the best 4 shall get their proper prizes is so small, that the odds are 12 to 1 against its happening!
Therefore don't assume that the rules of the game favor the best. The rules of the games are oftentimes predetermined and one can either influence those or even change the entry point into the competition.
Source: BCG, Strategy institute
In an elimination tournament, each player can only advance along a certain path toward the final. As each player moves through this space, the field is narrowed, until the top prizes are determined. The structure of the space critically influences who finishes well in the tournament. A competition that seems at first glance to be fairly structured to filter out the weaker players may, in fact, not be good at all at selecting the best competitors. In any competition it is not just skill and lucky breaks that determine the winners; the rules of the competition itself determine who will finish well. Many competitions are structured to correctly determine only first place; the second and third prizes are very much subject to chance.
Let us take, as an example of the present method, a Tournament of 32 competitors with 4 prizes.
On the 1st day, these contend in 16 pairs: on the 2nd day, the 16 Winners contend in 8 pairs, the Losers being excluded from further competition: on the 3rd day, the 8 Winners contend in 4 pairs: on the 4th day, the 4 Winners (who are now known to be the 4 Prize-Men) contend in 2 pairs; and on the 5th day, the 2 Winners contend together to decide which is to take the 1st prize and which the 2nd -- the two Losers having no further contest, as the 3rd and 4th prizes are of equal value.
Now, if we divide the list of competitors, arranged in the order in which they are paired, into 4 sections, we may see that all that this method really does is to ascertain who is best in each section, then who is best in each half of the list, and then who is best of all. The best of all (and this is the only equitable result arrived at) wins the 1st prize: the best in the other half of the list wins the 2nd: and the best men in the two sections not yet represented by a champion win the other two prizes. If the Players had chanced to be paired in the order of merit, the 17th best Player would necessarily carry off the 2nd prize, and the 9th and 25th best the 3rd and 4th! This of course is an extreme case: but anything within these limits is possible: e.g. any competitor, from the 3rd best to the 17th best, may, by the mere accidental arrangement of pairs, and by no means as a result of his own skill, carry off the 2nd prize. As a mathematical fact, the chance that the 2nd best Player will get the prize he deserves is only 16/31sts; while the chance that the best 4 shall get their proper prizes is so small, that the odds are 12 to 1 against its happening!
Therefore don't assume that the rules of the game favor the best. The rules of the games are oftentimes predetermined and one can either influence those or even change the entry point into the competition.
Source: BCG, Strategy institute
Sunday, May 25, 2008
Fishing and startegy
The pike is one of the most efficient, lean predating machines in freshwater. If you put a small pike in an aquarium with a bunch of minnows it will demonstrate its predatory skills with frightening efficiency. If you separate the pike from the minnows using a sheet of perspex the pike will continue to launch its attacks for a little while. And then it will just give up. You can then remove the sheet of perspex and the pike will still believe that it can no longer catch its prey - and will simply starve to death.
This little tale is similar to the "Learned helplessness" theory which can also be found in my blog and is posted at an earlier date.
This little tale is similar to the "Learned helplessness" theory which can also be found in my blog and is posted at an earlier date.
Flies, Bees and strategy
Imagine putting half a dozen house flies and half a dozen bumble bees in glass bottle. The bottle is placed with its base towards a window and the open end towards the middle of the room. The bees are strategically aligned to fly towards the sunlight. The presence of the glass is a mystery to them. They buzz and buzz away at the bottom of the glass driving towards the sunshine - until they too die. The flies on the other hand are much less ’strategically aligned’. They fly in far more random patterns and within a few minutes most of them will have found their way to freedom.
Are you thinking aligned liked bees towards the goal or are you trying various options, some which seem to be absurd?
Are you thinking aligned liked bees towards the goal or are you trying various options, some which seem to be absurd?
Saturday, May 24, 2008
Hiring and landlords
Whenever you hire someone be cautious if you speak to their current employer as a reference. If the candidate is a non-performer chances are that the current employer dislikes him/her and is likely to get rid of the person. Consequently, the reference would be good to expedite the transition out of the company. Therefore don't only ask the current employer but the one before (!) the current position. That employer is much more likely to give you the unbiased truth. Same holds true for renters that want to move into one of your properties. Don't stick to checking their current landlord. If they are messies chances are that their current landlord wants to get rid of them and is giving you a great reference for them.
Friday, May 23, 2008
Data centers and airports
How would you create an effective network from scratch? Sure, you could experiment and then evolve over time. But what if you had to build a good network right now and couldn't experiment?
One idea came to my mind on my bike on the way to work: could you copy the size and location of airports for the efficient placement of distributed data centers? This might be a good predictor for suitable places. Why? One assumption is that airports are located at places where there is a need, either direct need or indirect need as a hub. One can also argue that over time more effective and better located airports grew whereas airports at unpopulated areas decreased in size and vanished. Finally, the cost structure is similar: high fixed costs and little variable costs.
Here are two examples: my previous hometown Charlottesville has only about 40.000 inhabitants and has a small airport. Considering the fixed costs of an airport (btw, you can compare those costs to a data center) one would only invest if there's enough return, i.e. traffic. Smaller town won't probably have an airport or only for recreational purposes. Of course large cities such as San Francisco have large airports to serve the local population. Now let's look at hubs. For hubs the economics are similar and to a part totally different from regular airports. Hubs channel traffic and require a larger size. Hence, location between centers and size are important. It is no surprise that Atlanta and Chicago are major hubs. Certainly real estate prices are cheaper than in Manhattan than in Georgia and it helps that both airports are in the middle of the country.
So why should we care? Both categories (data centers and airports) are totally different but share in their core the same characteristics. One can certainly draw useful conclusions from the case above and I challenge you to find similar cases for your business / situation.
One idea came to my mind on my bike on the way to work: could you copy the size and location of airports for the efficient placement of distributed data centers? This might be a good predictor for suitable places. Why? One assumption is that airports are located at places where there is a need, either direct need or indirect need as a hub. One can also argue that over time more effective and better located airports grew whereas airports at unpopulated areas decreased in size and vanished. Finally, the cost structure is similar: high fixed costs and little variable costs.
Here are two examples: my previous hometown Charlottesville has only about 40.000 inhabitants and has a small airport. Considering the fixed costs of an airport (btw, you can compare those costs to a data center) one would only invest if there's enough return, i.e. traffic. Smaller town won't probably have an airport or only for recreational purposes. Of course large cities such as San Francisco have large airports to serve the local population. Now let's look at hubs. For hubs the economics are similar and to a part totally different from regular airports. Hubs channel traffic and require a larger size. Hence, location between centers and size are important. It is no surprise that Atlanta and Chicago are major hubs. Certainly real estate prices are cheaper than in Manhattan than in Georgia and it helps that both airports are in the middle of the country.
So why should we care? Both categories (data centers and airports) are totally different but share in their core the same characteristics. One can certainly draw useful conclusions from the case above and I challenge you to find similar cases for your business / situation.
Saturday, May 10, 2008
Saturday, March 29, 2008
Tuesday, March 25, 2008
Monday, March 24, 2008
Sunday, March 23, 2008
Saturday, March 22, 2008
Friday, March 21, 2008
Sunday, March 16, 2008
Saturday, March 15, 2008
Clips from Negotiate to Win
- The wise negotiator frequently chooses not to negotiate.
- "It's my bottom line" is the biggest lie in negotiations.
- Only when the other side doesn't move any more can you be sure they're truly at their bottom line.
- Never say you're at your bottom line unless you are.
- Nobody likes having their first offer accepted.
- Schmoozing is the last refuge of the weak negotiator.
- It's better to bring things up now, when you've got some leverage, than later when you don't.
- Never shave a concession. Either make the whole concession that you've supposed to make, or don't make any concession at all.
- The krunch is the simplest and most frequently used tool in negotiating.
- A krunch is the only way to respond to an unreasonable offer.
- Every concession has a price, but krunches cost nothing.
- Only the final handshake seals the deal. Until then, all issues remain open.
- Never stick with an issue that's not working. Skip it and move on to something else.
- The nibble is negotiating's equivalent of a layup.
- Always persuade first. Negotiate only when persuasion fails.
- Face is humankind's third rail. Touch it and die.
- Win-win negotiating is mandatory because the other side survives the talks.
- Don't make a concession without seeking something in exchange.
- Try to avoid saying "no" to the other side. "Yes, if..." is better.
- If you ask for more (without reason) you'll get more.
- Your opening offer should be assertive but never ridiculous.
- Nibbling is part of doing a complete job as a negotiator.
- Sometimes people find satisfactions in strange places.
- Creativity is the most fickle and capricious tool in negotiating.
- The value of the concession to the other side is what matters.
- Setting your Envelopes is your most important homework task.
- Separate the people from the problem. Be hard on the problem but soft on the people.
- We make more concessions to friends.
- The quicker the deal, the greater the risk.
- The more authority you have, the more concessions you'll have.
- Always negotiate with the highest authority person you can get access to.
- Bosses give away the ranch.
- It's where you open, not when, that matters.
- Teams are inherently dangerous, and the bigger the team, the greater the risk.
- Being outnumbered means you're in a target-rich environment.
Newton: Up and down
In view of the recent ups and downs of companies, stock-prices, currencies and economies a quote from Newton is interesting: "What goes up must come down". I guess its related to the 2nd and third thermodynamic law? While researching his quotes I came across another one that touches more on social interactions, I assume: “We build too many walls and not enough bridges.”
Roller coasters > Public transportation
A colleague of mine at Google suggested that roller coasters and ski-lifts are better in nearly every dimension (speed, energy efficiency, fun, up-time, variable costs, etc.) than public transportation.
So why are we still using buses?
So why are we still using buses?
Thursday, March 13, 2008
Sunday, March 09, 2008
Saturday, March 08, 2008
"Expensive" Placebos Work Better Than "Cheap" Ones
A new study published in the American Medical Association has a new and astonishing demonstration of just how much your perception becomes your reality when it comes to prices. People in the study thought they were trying out a new kind of pain med. Instead, they got sugar pills. However, some were told their sugar pills cost $2.50, and the others were told the pills cost $0.10. People with the "pricey" sugar pill had their pain reduced much more than the "cheap" sugar pill. Does this mean that price alone pays for itself?
Source: www.consumerist.com
Source: www.consumerist.com
Saturday, February 23, 2008
Friday, February 22, 2008
Tuesday, February 19, 2008
Stirring it up
"If you think you are too small to make a difference in the world you probably have never shared a night with a mosquito in bed."
He also introduced a great map that scales countries by various factors, e.g. birth-rate, GDP, etc. http://www.worldmapper.org/
Source: CEO Stonyfield Organic Yoghurt
He also introduced a great map that scales countries by various factors, e.g. birth-rate, GDP, etc. http://www.worldmapper.org/
Source: CEO Stonyfield Organic Yoghurt
Monday, February 18, 2008
Beer game psychology
Lessons of the game
During the game emotions run high. Many players report feelings of frustration and helplessness. Many blame their teammates for their problems; occasionally heated arguments break out. After the game I ask the players to sketch their best estimate of the pattern of customer demand, that is, the contents of the customer order deck. Only the retailers have direct knowledge of that demand. The vast majority invariably draw a fluctuating pattern for customer demand, rising from the initial rate of 4 to a peak around 20 cases per week, then plunging.
"After all, it isn't my fault", people tell me, "if a huge surge in demand wiped out my stock and forced me to run a backlog. Then you tricked me - just when the tap began to flow, you made the customers go on the wagon, so I got stuck with all this excess inventory." Blaming the customer for the cycle is plausible. It is psychologically safe. And it is dead wrong. In fact, customer demand begins at four cases per week, then rises to eight cases per week in week five and remains completely constant ever after.
This revelation is often greeted by disbelief. How could the wild oscillations arise when the environment is virtually constant? Since the cycle isn't a consequence of fickle customers, players realize their own actions must have created the cycle. Though each player was free to make their own decisions, the same patterns of behavior emerge in every game, vividly demonstrating the powerful role of the system in shaping our behavior.
Research reported in Sterman (1989) shows how this occurs. Most people do not account well for the impact of their own decisions on their teammates - on the system as a whole. In particular, people have great difficulty appreciating the multiple feedback loops, time delays and nonlinearities in the system, using instead a very simple heuristic to place orders. When customer orders increase unexpectedly, retail inventories fall, since the shipment delays mean deliveries continue for several weeks at the old, lower rate. Faced with a growing backlog, people must order more than demand, often trying to fix the problem quickly by placing huge orders. If there were no time delays, this strategy would work well. But in the game, these large orders stock out the wholesaler. Retailers don't receive the beer they ordered, and grow increasingly anxious as their backlog worsens, leading them to order still more, even though the supply pipe line contains more than enough. Thus the small step in demand from four to eight is amplified and distorted as it is passed to the wholesaler, who reacting in kind, further amplifies the signal as it goes up the chain to the factory. Eventually, of course, the beer is brewed. The players cut orders as inventory builds up, but too late - the beer in the supply line continues to arrive. Inventories always overshoot, peaking at an average of about forty cases.
Faced with what William James called the "bloomin', buzzin' confusion" of events, most people forget they are part of a larger whole. Under pressure, we focus on managing our own piece of the system, trying to keep our own costs low. And when the long-term effects of our short-sighted actions hit home, we blame our customer for ordering erratically, and our supplier for delivering late. Understanding how well intentioned, intelligent people can create an outcome no one expected and no one wants is one of the profound lessons of the game. It is a lesson no lecture can convey.
The patterns of behavior observed in the game - oscillation, amplification, and phase lag - are readily apparent in the real economy (figure 4), from the business cycle to the recent boom and bust in real estate. The persistence of these cycles over decades is a major challenge to educators seeking to teach principles and tools for effective management. Though repeated experience with cycles in the real world should lead to learning and improvement, the duration of the business cycle exceeds the tenure of many managers. In real life the feedback needed to learn is delayed and confounded by change in dozens of other variables. By compressing time and space, and permitting controlled experimentation, management flight simulators can help overcome these impediments to learning from experience.
But the biggest impediments to learning are the mental models through which we construct our understanding of reality. By blaming outside forces we deny ourselves the opportunity to learn - recall that nearly all players conclude their roller coaster ride was caused by fluctuating demand. Focusing on external events leads people to seek better forecasts rather than redesigning the system to be robust in the face of the inevitable forecast errors. The mental models people bring to the understanding of complex dynamics sytematically lead them away from the high leverage point in the system, hindering learning, and reinforcing the belief that we are helpless cogs in an overwhelmingly complex machine.
During the game emotions run high. Many players report feelings of frustration and helplessness. Many blame their teammates for their problems; occasionally heated arguments break out. After the game I ask the players to sketch their best estimate of the pattern of customer demand, that is, the contents of the customer order deck. Only the retailers have direct knowledge of that demand. The vast majority invariably draw a fluctuating pattern for customer demand, rising from the initial rate of 4 to a peak around 20 cases per week, then plunging.
"After all, it isn't my fault", people tell me, "if a huge surge in demand wiped out my stock and forced me to run a backlog. Then you tricked me - just when the tap began to flow, you made the customers go on the wagon, so I got stuck with all this excess inventory." Blaming the customer for the cycle is plausible. It is psychologically safe. And it is dead wrong. In fact, customer demand begins at four cases per week, then rises to eight cases per week in week five and remains completely constant ever after.
This revelation is often greeted by disbelief. How could the wild oscillations arise when the environment is virtually constant? Since the cycle isn't a consequence of fickle customers, players realize their own actions must have created the cycle. Though each player was free to make their own decisions, the same patterns of behavior emerge in every game, vividly demonstrating the powerful role of the system in shaping our behavior.
Research reported in Sterman (1989) shows how this occurs. Most people do not account well for the impact of their own decisions on their teammates - on the system as a whole. In particular, people have great difficulty appreciating the multiple feedback loops, time delays and nonlinearities in the system, using instead a very simple heuristic to place orders. When customer orders increase unexpectedly, retail inventories fall, since the shipment delays mean deliveries continue for several weeks at the old, lower rate. Faced with a growing backlog, people must order more than demand, often trying to fix the problem quickly by placing huge orders. If there were no time delays, this strategy would work well. But in the game, these large orders stock out the wholesaler. Retailers don't receive the beer they ordered, and grow increasingly anxious as their backlog worsens, leading them to order still more, even though the supply pipe line contains more than enough. Thus the small step in demand from four to eight is amplified and distorted as it is passed to the wholesaler, who reacting in kind, further amplifies the signal as it goes up the chain to the factory. Eventually, of course, the beer is brewed. The players cut orders as inventory builds up, but too late - the beer in the supply line continues to arrive. Inventories always overshoot, peaking at an average of about forty cases.
Faced with what William James called the "bloomin', buzzin' confusion" of events, most people forget they are part of a larger whole. Under pressure, we focus on managing our own piece of the system, trying to keep our own costs low. And when the long-term effects of our short-sighted actions hit home, we blame our customer for ordering erratically, and our supplier for delivering late. Understanding how well intentioned, intelligent people can create an outcome no one expected and no one wants is one of the profound lessons of the game. It is a lesson no lecture can convey.
The patterns of behavior observed in the game - oscillation, amplification, and phase lag - are readily apparent in the real economy (figure 4), from the business cycle to the recent boom and bust in real estate. The persistence of these cycles over decades is a major challenge to educators seeking to teach principles and tools for effective management. Though repeated experience with cycles in the real world should lead to learning and improvement, the duration of the business cycle exceeds the tenure of many managers. In real life the feedback needed to learn is delayed and confounded by change in dozens of other variables. By compressing time and space, and permitting controlled experimentation, management flight simulators can help overcome these impediments to learning from experience.
But the biggest impediments to learning are the mental models through which we construct our understanding of reality. By blaming outside forces we deny ourselves the opportunity to learn - recall that nearly all players conclude their roller coaster ride was caused by fluctuating demand. Focusing on external events leads people to seek better forecasts rather than redesigning the system to be robust in the face of the inevitable forecast errors. The mental models people bring to the understanding of complex dynamics sytematically lead them away from the high leverage point in the system, hindering learning, and reinforcing the belief that we are helpless cogs in an overwhelmingly complex machine.
Sunday, February 17, 2008
Luck
Many years ago, the Founder of our University of Virginia, Thomas Jefferson, said, “I’m a great believer in luck. I find that the harder I work, the more I have of it.” He suggests that our efforts can at least tilt the odds, away from bad luck and toward good. Many readers are living proof of our efforts (and good results) at tilting the odds: we wear seat belts, avoid smoking, eat right, follow doctor’s orders, and so on. I agree with Jefferson that we can tilt some odds in some gambles. But as Lincoln might have said, it is not possible to tilt all the odds all the time.
Source: http://darden.edu/html/DeansBlog.aspx
Source: http://darden.edu/html/DeansBlog.aspx
Saturday, February 16, 2008
Threat Rigidity Hypothesi
When organizations are confronted by a threat, the tendency, at all levels, is to centralize decision making and restrict information.
Effects on Individuals
* Cognitive effects: restrictions in information that can be perceived (the individual relies heavily on prior expectations or internal beliefs about the environment, and is not able to process new information; also, one tends to narrow attention to dominant cues and exclude peripheral cues).
* Behavioral effects: individuals fail to pay attention to warnings or follow directions
Effects on Groups
* A threat leads to an increase in intragroup relationships and a decrease in intergroup ties.
* If a threat is attributed to an external source and it is expected that the group will meet it successfully, then increased cohesiveness, seeking for consensus, leadership support, and pressure for uniformity is predicted. Reaching consensus, however, will often involve the restriction of information, ignoring divergent solutions, downplaying the role of deviant positions, constriction of control (more influence for the dominant members). This may lead to faulty group decision making (Groupthink).
Organizational level effects
* At the organizational level, threats result from resource scarcity, competition, or reduction in market size. Organizations respond by:
o Reduced information processing (caused by overloaded communications channels), reliance on prior knowledge, and a reduction in communication complexity.
o Constriction of control through centralization of authority and increased formalization of procedures.
o Increased focus on conserving resources through cost-cutting and efficiency improvements
Source: Staw, Sandelands, and Dutton (1981) – Threat-rigidity effects in organizational behavior: A multilevel analysis
Effects on Individuals
* Cognitive effects: restrictions in information that can be perceived (the individual relies heavily on prior expectations or internal beliefs about the environment, and is not able to process new information; also, one tends to narrow attention to dominant cues and exclude peripheral cues).
* Behavioral effects: individuals fail to pay attention to warnings or follow directions
Effects on Groups
* A threat leads to an increase in intragroup relationships and a decrease in intergroup ties.
* If a threat is attributed to an external source and it is expected that the group will meet it successfully, then increased cohesiveness, seeking for consensus, leadership support, and pressure for uniformity is predicted. Reaching consensus, however, will often involve the restriction of information, ignoring divergent solutions, downplaying the role of deviant positions, constriction of control (more influence for the dominant members). This may lead to faulty group decision making (Groupthink).
Organizational level effects
* At the organizational level, threats result from resource scarcity, competition, or reduction in market size. Organizations respond by:
o Reduced information processing (caused by overloaded communications channels), reliance on prior knowledge, and a reduction in communication complexity.
o Constriction of control through centralization of authority and increased formalization of procedures.
o Increased focus on conserving resources through cost-cutting and efficiency improvements
Source: Staw, Sandelands, and Dutton (1981) – Threat-rigidity effects in organizational behavior: A multilevel analysis
Tuesday, February 05, 2008
Sunday, February 03, 2008
Thursday, January 31, 2008
"Bonus" and "Rebate"
Think of a "Bonus" as a "Rebate" to Save More
Tax rebates, year-end bonuses, mail-in savings—they're all just money coming in, but the difference in labels can have a serious impact on what we do with it, according to a Harvard researcher quoted in today's New York Times. In a study, half of the participants were given $50 and told it was a "bonus," and the other half received a "rebate." The results:
When unexpectedly contacted one week later, participants who got a "rebate" reported spending less than half of what those who got a "bonus" reported spending ($9.55 versus $22.04, respectively).
Tax rebates, year-end bonuses, mail-in savings—they're all just money coming in, but the difference in labels can have a serious impact on what we do with it, according to a Harvard researcher quoted in today's New York Times. In a study, half of the participants were given $50 and told it was a "bonus," and the other half received a "rebate." The results:
When unexpectedly contacted one week later, participants who got a "rebate" reported spending less than half of what those who got a "bonus" reported spending ($9.55 versus $22.04, respectively).
Sunday, January 20, 2008
Decision rules in Ms Pac Man
From a research project in Artificial intelligence where the researchers trained computers to succeed in playing Ms Pac-Man:
When the agent has to make a decision, she checks her rule list, starting with the rules with highest priority. In Ms. Pac-Man, ghost avoidance has the highest priority because ghosts will eat her. The next rule say that if there is an edible ghost on the board, then the agent should chase it, because eating ghosts results in the highest points.
One rule that the researchers found to be surprisingly effective was the rule that the agent should not turn back, if all directions are equally good. This rule prevents Ms. Pac-Man from traveling over paths where the dots have already been eaten, resulting in no points.
What are your heuristics? When are the rules of the game changing and are you changing your actions?
When the agent has to make a decision, she checks her rule list, starting with the rules with highest priority. In Ms. Pac-Man, ghost avoidance has the highest priority because ghosts will eat her. The next rule say that if there is an edible ghost on the board, then the agent should chase it, because eating ghosts results in the highest points.
One rule that the researchers found to be surprisingly effective was the rule that the agent should not turn back, if all directions are equally good. This rule prevents Ms. Pac-Man from traveling over paths where the dots have already been eaten, resulting in no points.
What are your heuristics? When are the rules of the game changing and are you changing your actions?
Tuesday, January 01, 2008
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