Story@BFBV: The Smoking Man Story

Don't ignore base rates. Base rates are boring but incredibly useful. It's easy to be swayed into smoking when you encounter a 99-year old man who smokes three packs a day. They questions to ask are: Of a 1,000 people who smoke, how many will live to be 99? And of a 1,000 people who… Continue reading Story@BFBV: The Smoking Man Story

Story@BFBV: The CFL Story

People find it easier to switch to CFLs when they are told how much they stand to lose (higher electricity bills) if they don't switch, as opposed to how much they stand to gain (lower electricity bills) if they do switch. Framing matters a lot. Learn to use frames correctly to be more persuasive and… Continue reading Story@BFBV: The CFL Story

Story@BFBV: The Man with a Hammer Story

Don't try to explain things by thinking of one reason and then latching on to it. Big outcomes are rarely caused because of one reason. Ask "what else can cause this outcome." In the Milgram experiment people gave what they thought were electric shocks to innocent strangers. What caused that? Was it authority bias alone?… Continue reading Story@BFBV: The Man with a Hammer Story

Story@BFBV: The Jumping Buffett Story

Problems are solved better if you jump over the jurisdictional boundaries of multiple disciplines and grab the best ideas. When Warren Buffett shut down the textile operations of Berkshire Hathaway, he used ideas from microeconomics (Competition), game theory (prisoners' dilemma), psychology (contrast effect, commitment bias, deprival super reaction) and finance (IRR). Had he just stuck… Continue reading Story@BFBV: The Jumping Buffett Story

Story@BFBV: The S Curve Story

This will result in at least two kinds of errors. First, fear of losing your unrealized gains on the great picks in your portfolio will make you sell too early. Think of the man who sold Infosys after the IPO because it had risen by 50% from its IPO price so quickly. Second, it will… Continue reading Story@BFBV: The S Curve Story

Story@BFBV: The X-Ray Story

Doctors who see lots of chest X-Rays are much less likely to smoke than doctors who don't. Vivid images are very influential. If you see a slick and glossy annual report, be aware of this bias. Ask if you being fooled here? See this report as an example. Stock is down 90% from its high.… Continue reading Story@BFBV: The X-Ray Story

Story@BFBV: The Whistleblower Story

Whistleblowers are effective saints of civilization who cause good changes to happen because they have the ability to overcome huge biases like authority bias and social proof. You see people just don't copy actions of others, they also copy their inactions. So if no one is speaking up, no one will speak up. Whistleblowers break… Continue reading Story@BFBV: The Whistleblower Story