Monthly Archives: August 2010

Most decisions are made without all the information

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Tyler Reed blogs about entrepreneurs having to make decisions with limited information.

It’s almost all unknown

I don’t disagree.  It’s just that almost every meaningful decision ever made is made without all the information.

Unknowns can be categorised a hundred different ways. One way is to think about:

  1. Unknown past information
  2. Uncertainty around the current situation or position
  3. Unknown future outcomes

Even a game like chess, where the past history of the game is easily known by good players, the current position is clearly visible and all the possible moves are knowable, it is not possible have all the information about how your opponent will react to your move.

How to deal with decision making under uncertainty – part 1

Tyler suggests that gut-based decision making can be effective much of the time – and it can. It there genuinely is no time for anything more than an instinctive reaction, you probably are best going with your gut.

Even if you have plenty of time, listening to your guy to formulate an idea is a great idea. Insight comes partly from experience and the reinforced neural pathways of our learning brain. If you stop with the gut though, you are missing out. There is a tremendous amount of research showing how ridiculously badly our instincts perform in many areas, particularly those relating to uncertainty and complexity! Continue reading →

5 Things to Learn from Monopoly

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I haven’t played Monopoly in a while (preferring Settlers of Catan, Carcasonne, Tigris and Euphrates and even Cranium), but after a recent conversation I started thinking about the game dynamics. There is surprisingly much that is relevant to the current story of our economy.

1 The Competition Commission is necessary

Monopolies serve to increase prices for consumers. In Monopoly, the “rents” charged are instantly higher as soon as a player has a monopoly on property in a certain area.

Worse than the increase in prices and decrease in supply, the additional profit for suppliers is not equal to the cost to consumers from higher prices, resulting in an overall “dead weight loss of monopoly” or an overall cost to society. Continue reading →

CPI at 3.7% for July 2010

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From Stats SA

The headline inflation rate in July 2010 (i.e. the Consumer Price Index for all urban areas in July 2010 compared with that at July 2009) was 3,7%

The official inflation rate (i.e. the percentage change in the CPI for all urban areas in July 2010 compared with that in July 2009) was 3,7% at July 2010. This rate was 0,5 of a percentage point lower than the corresponding annual rate of 4,2% in June 2010 (i.e. the Consumer Price Index for all urban areas in June 2010 compared with that in June 2009).

From June 2010 to July 2010 the Consumer Price Index for all urban increased by 0,6%

CPI Headline July 2010 = 3,7%

So this is close to the bottom of our 3% to 6% inflation targeting range. Economic growth is struggling, unemployment is high, but we haven’t reduced interest rates? Something here is a little odd.

I’ll put another $100 in Kiva, to be “microlent” to businesses and people across the world, if the next monetary policy committee meeting doesn’t cut interest rates.

More on cars and colour

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In researching my previous post on accurately measuring the risks associated with vehicle crimes based  on colour, I stumbled across another colour related risk measure.

Red cars, supposedly, attract more than their fair share of traffic fines.

Turns out this is incorrect.  Snopes.com has (as usual) an excellent article on red cars, including references to research showing red cars are not more likely to be fined than other vehicles. Unfortunately, the underlying research isn’t available online (as far as I could find).

Regulations creating operational risk (and how it relates to POPI)

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Ok, so that is an unfair title. But you’ll understand what I mean:

Zurich Financial Services has just been fined £2.3m for a data loss event incurred in 2008 in South Africa.

Zurich joins HSBC, Nationwide and Norwich Union in the club of companies fined by the FSA now.

In fairness, the fine wasn’t so much for losing the data, but rather for:

  • losing
  • unencrypted data
  • and not having monitoring and controls in place
  • so that it was only discovered and reported to regulators a year later

The South African perspective

The FSA’s seriousness about these issues is mirrored in our looming Protection of Personal Information Bill. This is not the same as the disturbing proposals for a Protection of Information Bill which covers public or government information. Continue reading →

What other people want

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Apparently, car thieves don’t want your pink car. It’s not because they don’t like the colour (although they probably don’t). It’s also not only that it’s too distinctive and will be easily spotted (see the discussion later about red cars).

It’s that nobody else wants it. The resale value is much lower than other vehicles, and the risks and costs of stealing it are no lower.

Unlike the conclusion around high risk vehicles in my post on hijacking, this actually means you should be safer in a pink car. Just not safer from ridicule.

Dutch professor, Ben Vollaard, studied theft rates for vehicles as part of his research area of the economics of crimes. The data covered 109 vehicles from 2004 to 2008. Not the largest sample size, but enough to start thinking. Continue reading →

The faces of COSATU

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Inspirational, courageous, challenging and for-the-people

Vavi takes a dig at Zuma’s pay

Cosatu deplores Aurora mine shootings

Cosatu applauds housing probe

Cosatu questions proposed Information Bill

Slightly paranoid

Cosatu accues government of fiddling with inflation figures to cheat workers out of a decent wage.

Dazed and confused, paranoid and hypocritical

Cosatu accues non-striking cops of disruption

Cosatu’s mad, bad economics

Cosatu doesn’t like inflation targeting (missing that high inflation hurts the poor most)

Violent disregard for life, society and freedom of association

Violence and intimidation at schools and hospitals

Teachers and office-based education officials were literally thrown out of their offices, teachers caught in classrooms attacked and patients forced out of hospital.

Two pairs of other people’s shoes

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Everyone reading this post has pretty comfortable shoes. All it takes to know that is that you have internet access. Would you want to swap your shoes for those of a typical South African? Quite likely unemployed, living far from work and struggling with barely functioning public transport to get to work, reliant on public healthcare (so, given the strikes at the moment, reliant on staying healthy) and not having ADT to protect your home from criminals.

Yes, and no broadband internet.

Pair #1: Citizen shoes

It is exactly because we are not a typical South Africans that we must be so careful when diving into policy debates. It is incredibly easy to argue self-serving points from the comfort of our own shoes.

Ideally, policy should be discussed under the threat or promise that you will be instantly reincarnated into a random person in our country. Free public healthcare is too expensive for the tax payers to afford?  Perhaps, but what about those who cannot afford to pay for healthcare?  What about if you were born tomorrow into a family with a single bread-winner supporting an extended family?

Continue reading →