Story@BFBV: Watch Your Language!

What do you really mean when you say you are 90% sure about something? Are you really sure about what it means to be 90% sure? Probably not, according to several studies which show people are consistently overconfident about their beliefs, pretty much like the cat in the picture below: One trick that makes it… Continue reading Story@BFBV: Watch Your Language!

Story@BFBV: The 12 Angry Men Story

The jury system has been designed to be a great system of decision making. So what happens in a jury system? Watch 12 Angry Men. Its a great movie to observe psychological models at work. 12 not so angry men (or women) who are honorable and have no connection with the case are required to… Continue reading Story@BFBV: The 12 Angry Men Story

Story@BFBV: The Scott Fitzgerald Story

Fitzgerald was right. Almost always there is a reason to not to do something that you have decided to do. People hate contradictions. They make you uncomfortable. You own a stock which is ridiculously cheap. The market, however, is not cheap. What should you do? Do you ignore the market or do you focus on… Continue reading Story@BFBV: The Scott Fitzgerald Story

Story@BFBV: The Swan Story

You can never really prove the proposition that "all swans are white" even if you spot a million of them and all of them turn out to be white. But you can certainly disprove the proposition that "all swans are white" by sighting a single black swan.¬†Nassim Taleb's explains Karl Popper's powerful idea of falsification… Continue reading Story@BFBV: The Swan Story

Story@BFBV: “I Have Too Much Invested in This” Story

If you have spent a month researching an idea, it does not become more attractive than a no-brainer flash you get which you are in the shower. The attractiveness of a stock comes from the difference between its intrinsic value and its market price, and the probability of the two converging. It does not come… Continue reading Story@BFBV: “I Have Too Much Invested in This” Story

Story@BFBV: The Story of the Three-Legged Stool

I love this story of Cialdini's Three Legged Stool. The stool is stable because it has three legs. Take one away and it will fall. However, this magical stool does not fall because when one leg is taken away, another one grows to replace it. The human mind pretty much works like the three-legged-stool. You… Continue reading Story@BFBV: The Story of the Three-Legged Stool

Story@BFBV: The Swallow and Other Birds Story

It happened that a Countryman was sowing some hemp seeds in a field where a Swallow and some other birds were hopping about picking up their food. "Beware of that man," quoth the Swallow. "Why, what is he doing?" said the others. "That is hemp seed he is sowing; be careful to pick up every… Continue reading Story@BFBV: The Swallow and Other Birds Story

Story@BFBV: The Leon Festinger Story

Leon Festinger came up with one of the most brilliant ideas in social psychology: Cognitive Dissonance - the engine behind self justification of dumb things. Watch this video: When people have two contradictory thoughts in their minds, they experience dissonance. The pressure to resolve that dissonance arises from the uncomfortable feeling of holding contradictory thoughts… Continue reading Story@BFBV: The Leon Festinger Story

Story@BFBV: Chains of Habit

Mr Buffett once said, "Chains of habit are too light to be felt, until they are too heavy to be broken." Its very difficult to break a bad habit and therefore terribly important that you form the right mental habits early in life. The chains of which bad mental habits are you a prisoner of?… Continue reading Story@BFBV: Chains of Habit

Story@BFBV: The Fog of War Story

Everyone should watch Robert McNamara's "The Fog of War." I particularly liked Lesson # 7 ("Belief and Seeing are both often Wrong") which deals with confirmation bias. According to McNamara, people see what they want to see. In this particular case, US Navy "saw" torpedoes when there weren't any, and that led to the escalation… Continue reading Story@BFBV: The Fog of War Story