Archive for May 10th, 2016

What China can teach us about the future of banking?

May 10, 2016

One has to rub his eyes on reading title of this post. I did too.  Lessons of Banking from China? That too on future? Really?

But Spontaneous Finance Blog thinks so.  And the lessons are not about how China made the right banking policy etc. But how it made the policy which led to troubles:

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How game theory can help you do a better job of parenting..

May 10, 2016

The title of this article instead should be how can we examples from parenting to explain game theory to students. But it is written as other way round. Economics excels in using examples from normal life and converting into highly abstract theory. After all that is how most economists justify their wage premiums in the society.

The examples pointed in the article are used by many parents without having any idea of game theory. Instead game theory is usually taught as this really complex set of ideas which have nothing to do with game or theory..

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Helicopters on a Leash…

May 10, 2016

The title reminds you of those war movies where suddenly due to some upcoming.ongoing catastrophe some leader (mostly US) says something like “time to act”. And the next scene is of helicopters and jets begin to make noises ready to fly and conquer the enemy/enemies.

However, the post is to do with central banks using helicopters to drop money. This is obviously the most discussed topic in global economy. Should one leash the helicopters? Adair Turner says time yes we should leash these helicopters on the dead economies:

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Endowment bias due to modern capitalism?

May 10, 2016

David Berreby has this fascinating post summarising this paper on what drives endowment bias.  What is endowment bias? There is a cup to be traded. AS a buyer you are willing to pay Re 1 for it but as a seller you want Rs 5 for the same cup. If one believes in markets, then price of the cup should be same whether you are a buyer or seller. This is called endowment bias where you value something more just because you owe it. This is one the classic anomalies pointed by behavioral economics.

The question is what drives this bias? In this experiment on hunter gatherers they start to show endowment bias as exposed to markets:

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