By Ravikiran Rao on November 8, 2009
Domino’s likes to announce that it doesn’t penalize its delivery boys for not meeting its 30-minute guarantees. It says so on its website, on its menus and the statement is even tagged on the uniforms of said boys. This seems like a good strategy to have – after all, you don’t want your delivery people to cause or suffer accidents. It is also a good strategy to announce. Apart from the good reputation you get, it also stops the delivery guys from giving a sob story and getting sympathetic customers to condone delays – this is assuming that Domino’s wants data on delivery performance so that it can track the efficiency of its operations.
Of course, saying that they won’t penalize delivery boys for bad performance is not the same thing as saying that they won’t reward them for good performance. The two aren’t the same, because of the endowment effect. Then again, you shouldn’t reward them every time they do an on-time delivery, because it will effectively amount to the same thing. You need to reward them for aggregate performance.
Posted in Business, Classic | Tagged Behavioural Science, Domino's, Performance incentives
By Ravikiran Rao on November 1, 2009
Sanskrit, Brahmin, Sion and Matunga?
Something to do with their pronunciations.
Posted in Classic | Tagged Question
By Ravikiran Rao on November 1, 2009
So, you’ve got a job in India. Welcome. I like the fact that a stint in India is a valuable addition to your CV. I also appreciate that your salary enables you to live among India’s rich. I also understand that you’d like to stay in yuppie enclaves as you find yourself most comfortable there. But having done that, what sense does it make for you to complain that India’s rich yuppies behave like the rich yuppies back home? If you really want to “find” yourself, well, locate yourself elsewhere. There is a lot of India for your kids to experience, if you can sacrifice the comforts of an expatriate lifestyle.
Also, most Indians aim to live their lives. We aren’t particularly interested in being a country-sized museum of anthropology for you guys to visit for extended periods when you get bored of your suburban life.
Posted in Classic | Tagged Expatriates, Hippies, Indian Culture, Yuppies
By Ravikiran Rao on October 29, 2009
One of H G Wells’ stories or novels had a character who behaved as if he was well-up on all the latest news, but had an out-of date library. If I remember correctly, that character later turns out to be an alien. Does anyone remember the name of the story? Is it from “War of the Worlds”?
Posted in Classic | Tagged H G Wells, Literature
By Ravikiran Rao on October 29, 2009
The dark lord says:
The typical arguments are made by the right too. If the economy is going good “see, the deregulation has brought about unprecedented wealth. How can you propose more regulation?”
When the economy goes bad, we get the answer “see, the crisis is brought about due to regulation in the housing mortgage market. How can you propose more regulation?”
Yes, the libertarian right makes this argument, but there is a consistency in it. We believe that most regulations do harm, and that a lightly regulated economy works best.
If the socialist left made the counter-argument, that too would be internally consistent. If you really wanted to regulate the economy all the way to the Soviet Union, you could justifiably claim that both the US and India are variants of the same system. But in my post, I wasn’t arguing with the socialist left – I don’t need to, as history has already answered them.
My argument is with those who say that “we need a free market with some regulations, but that doesn’t mean that we should be socialist”. If you hold that belief, I would expect you to believe that there is some point at which additional regulations do more harm than good, so you’d support some regulations and oppose others. But what I notice is that for supporters of regulation, the right amount of regulation is always “A little more than we have now”.
Posted in Classic | Tagged Free Markets, Government, libertarian, Regulations, Soviet Union, Thatzwhy, United States
By Ravikiran Rao on October 28, 2009
Also wields the knife
Posted in Life
By Ravikiran Rao on October 28, 2009
As Ajay Shah points out, we don’t just regulate our financial system, we micro-manage it. When things are going well in the US, and we make the case for deregulation, we get the answer: “See, even in the US, we don’t have a completely free market system. Even they have regulations. How can you propose that we junk ours?”
When things go wrong in the US, we get the answer: “See what happened to the US because they followed a free market system? How can you propose that we junk our regulations? We need mhisore.”
This bias ensures that we will always follow suit when the US moves left, never when it moves to the right.
Posted in Classic | Tagged Financial Crisis, Financial Markets, Government, Regulations, Reserve Bank of India, Thatzwhy, United States
By Ravikiran Rao on August 23, 2009
Two nights before the first communion, Father Antonio Isabel closeted himself with him in the sacristy to hear his confession with the help of a dictionary of sins. It was such a long list that the aged priest, used to going to bed at six o’clock, fell asleep in his chair before it was over. The interrogation was a revelation for Jose Arcadio Segundo. It did not surprise him that the priest asked him if he had done bad things with women, and he honestly answered no, but he was upset with the question as to whether he had done them with animals. The first Friday in May he received the communion, tortured by curiosity. Later he asked Petronio, the sickly sexton who lived in the belfry and who, according to what they said, fed himself on bats, about it, and Petronio answered him: “There are some corrupt Christians who do their business with female donkeys.” Jose Arcadio Segundo still showed so much curiosity and asked so many questions that Petronio lost his patience.
“I go Tuesday nights.” he confessed. “If you promise not to tell anyone I’ll take you next Tuesday.” (Gabriel Garcia Marquez, One Hundred Years of Solitude)
The purohit who did my upanayana when I was 8 was very wise. He confined himself to forbidding me from throwing stones at dogs.
Posted in Classic | Tagged Brahminism, Christianity, Communion, Gabriel Garcia Marquez, One Hundred Years of Solitude
By Ravikiran Rao on August 20, 2009
In late 2007, the Shanghai stock market was going through a boom. A Professor of Economics was visiting China and there he learnt that everyone, everyone was expecting the stock market to crash after the Olympics in September 2008. In other words, they assumed the market to keep rising like a Diwali rocket till then, and then fall dramatically.
The professor was amused that no one had reasoned backwards from there. Everyone expected the market to fall in September. So, what would happen in August? Wouldn’t they think, “Hey, I don’t want to get too greedy. I know that the index will rise another month, but what if it suddenly starts falling and I am caught short? I had better sell right now and book my profits.”
Now, if many people think so, prices will fall, not in September, but in August. But if everyone knows that everyone else is thinking that way, why would they wait till August? Won’t they start selling in July? And so on, by induction, if people expect the market to tank in September, prices should fall right now.
This is what traditional economics suggests. Behavioural economics argues that the professor’s analysis is incomplete. Obviously, not everyone will decide to sell in August, but some people will. What will happen in the market is the classic battle between greed and fear. Some people, overcome by greed, will hold on in the hope of making even more gains, while some people, overcome with fear, will sell. At some point, fear will overcome greed and the market will crash.
Continue reading “The Chinese Stock Market”
Posted in Examined, Response | Tagged Behavioural Science, Efficient Markets Hypothesis, Engineering, Finance, Physics, Ritwik Priya, Stock Market
By Ravikiran Rao on August 18, 2009
Isn’t this hysteria over swine flu Un-Indian? Whatever happened to fatalism?
Posted in Classic | Tagged Culture, Swine Flu
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