Results for “solve for equilibrium” 197 found
Why we feel overloaded, and can it be fixed?
The real source of our frustration is signaling with "face time."
People — and not only at work — get insulted if they are dealt with in peremptory fashion, even when the issue at hand can be resolved quickly. Imagine a visiting professor comes to give a seminar, but you can’t find time for lunch. Lunch would have been chit-chat anyway, but now the professor feels you don’t value his research — or him — very much. Can you imagine such vanity? And if others perceive your time as important, they want it all the more.
What are some possible solutions to this problem? After all, a day has only twenty-four hours and your face has (one hopes) only one side.
1. Pretend that some other privilege you offer (hand kisses? birthday cards?) is extremely costly to you. Offer this other privilege in lieu of large amounts of time.
2. Pretend to be busier than you are. Let people believe — perhaps truthfully — that everyone else receives even less time.
3. Pretend your time is unimportant. (NB: This may involve dressing down.) The hope is that no one will feel slighted if they don’t get much time. Who feels slighted not to be given free thumb tacks? But there exists another equilibrium, in which the neglected person feels all the more insulted. After all, you are not giving away even your crummy low-value time.
4. Tell people you are autistic, or that you have Asperger’s syndrome.
I await your suggestions in the comments.
Abuses at mutual funds
Mutual funds control some $7 trillion for about 95 million investors.
But to this economist, much about the industry is a puzzle. Why, for instance, do so many investors seek out funds other than minimum commission, “buy and hold” funds? This could be a significant market failure, since managed funds do not in general outperform the market and generally charge higher fees. Alternatively, we might think that investors enjoy trying to beat the market, and that they are consuming a kind of gambling service. Investment clubs, for instance, are almost certainly a bad financial idea, especially if you do them with your friends. But maybe they improve your social life.
The current abuses include the `unholy trinity’ of illegal late trading, abusive market timing and related self-dealing practices. In other words, the mutual fund keeps the good trades for itself, or offers them to favored investors. The practice now appears to be widespread, read the above link or here.
This reminds me of the equilibrium we often observe in the car dealership market. When you buy a new car, most dealers put you through hell. You have to fill out all sorts of paperwork, taking up half your day and locking you in psychologically to sticking around through protracted negotiations, based on deceit and lies. Most buyers don’t leave and go elsewhere, in part because they know they can only expect to start all over again with the same. And as long as it is not too visible, you don’t feel too bad about your initial investment decision.
I suspect we see the same kind of stickiness with mutual funds. Many investors will not be shocked by the recent revelations. But why bother switching to another fund? Once you get there, you can expect more of the same.
I’ve never seen a good analysis of which market features lend themselves to this kind of outcome. Could it be the occasional allocation of large sums of cash that lies at the root of the problem? But why can’t firms make credible commitments to honesty up front? Clearly fraud is not the norm for all industries, the restaurant sector does not work this way. I suspect legal penalties alone will never solve the problem, our best hope is that technology, and monitoring, somehow change to make mutual funds, and buying a car, more like the experience of going to a nice restaurant.