arbitrary coherence

Thank you for participating in my survey.

This survey was part of my irrationalbehaviour course conducted by Prof Dan Ariely of Duke University.

I was trying to get a first hand experience of what Prof Dan calls as anchor price and arbitrary coherence.

Now for those who did not participate in my survey, here is a brief.

I asked the participants to write down the last 03 digits of their phone numbers. I then told them to think of that number in money denomination. (032 becomes Rs 32.00). I then floated 4-5 random items and asked them to bid for it, the maximum bid wins the item.

Question?? Do you think the last 03 digits of your phone number in any way influenced your decision. I hope not you say!!

Interesting synopsis of my experiment was that there was not much difference in bidding for the people with numbers between 100-780. It was all random and probably based on their perception of the intrinsic value of the product.

But what was interesting to note was the difference of bidding between the extremes. On average people with last 03 digits of more than 800 bid 60% more than people with last 03 digits below 100.

Even an arbitrary number like last 03 digits of your phone number can become an anchor for you to judge the price of a totally unrelated item(s).

disclaimer: had to delete the entries by Nitin who bid 0 for everything and my wife Shalini who went bizerk bidding Rs 3000 for a damn ball. (she says quality was awesome)

The basic idea of arbitrary coherence is this: although initial prices are “arbitrary,” once those prices are established in our minds they will shape not only present prices but also future prices (this makes them “coherent”). So, would thinking about last 03 digits of our phone number be enough to create an anchor?

Human beings are irrational beings, everything is relative, no absolutes. We don't know what we want, our wants are decided on relative basis. It doesn't matter if the basis is arbitrary or not.

A woman gets treated badly, she looks around sees that it is no big deal to be treated badly, that becomes her status quo. A slap becomes a great outcome in a world where they are burnt alive.

A contrast bias sets in as well. You go to Thomas cook shop and buy a swanky 2 lakh package to Bermuda, they upsell you the currency. You know their currency charges are a rip-off but paying a 5k extra doesn't pinch much after shelling 2 lakhs. All relative.

We don't realize that we get influenced by the environment around us in so many ways and it influences our decisions. Our decisions are not OURS. We are what Robert Cialdini calls, 'the patsies'.

Behaviour economics is an amazing field. Daniel Kahn man and Twersky have unfolded with their experiments and empirical evidence that we don't know shit, we are irrational and our decisions are biased and flawed. A very humbling experience to be honest.

AAP and Kejriwaal peeled and judged.

AAP and Kejriwaal peeled and judged basis Charlie Munger's mental models.

I normally don't write on politics, although it is a breeding ground for human misjudgement and psychological and cognitive biases. All the topics of my interest. The reason I don't write on this is because in India political debate was long dead.

I mean what do you write about, at one spectrum we have a party which is run by G family. I mean would you believe the heights of anarchy, just freaking 1 family ruling the roost for the last 6 decades. Its a shame we call ourselves a democracy. They are just passing the baton, some kind of relay race happening. From father to daughter to son to wife( pseudo sardar at helm) to son again.... and the story continues. Once you rule for 4-5 decades, a positive loop (for them at least) starts taking shape. You have accumulated wealth with your hard work (corruption) and then that money is used to win the next round of elections which gives you next 5 years to fill the coffers. It starts growing like compound interest and before you know you are way ahead from your saffron colour counterparts. I don't care what good they have done, if at all. The bottom line is that they are hierarchical family run business. People should give them a chance only if they get rid of the G tag which by the way can never happen. Congress without G will break into 5 factions. Anyways....

On the other spectrum we have a party which got so tangled in their religion that they cannot cleanse the saffron spots now. Its not easy to erase your upbringing and origins. Ask me, after my schooling, I had to unlearn a 1000 things before i was ready to learn anything. BJP/jan sangh/shiv sena all originated as a hindu protector organizations. They were fundamentalists and extremists too.

Make no mistake that was the need of the hour at that time and they have a place in history (in good books that is). Its is a general axiom of life that minorities will always be extremists. The survival instinct ensures that you will be over cautious, over protective, aggressive and fundamentalists if you are outnumbered.

I can give you an example, crack a joke on waheguru, hanuman or Ram and allah, post it on your twitter and facebook handle. You will receive death threats from Sikhs and Muslims only.

And when that kind of extremist behaviour starts getting ugly and starts receiving outside support, you need the majority fundamentalist outfits to restore the balance so to speak. So they have a place definitely, but they should not rule a country I am afraid.

With the exception of Mr Vajpayee, no member of BJP can be termed secular. And sachin tendulkar alone cannot win you a world cup. Vote for BJP if they can get rid of its origins and ties with all fundamentalist and extremist outfits.

NOW THE AAP.

Got the fancy of the world, took everybody in their stride, originated out of a protest, filled the perfect void created by 02 nincompoop national parties. The whole agenda became a wave, amazing and unprecedented mass movement. Kind of Indian version of the French revolution. David Vs. goliath and the underdog sprung a surprise and boy KEJRIWAL IS THE HONEST CM OF NEW DELHI,

 

Really!!!

So I asked my self am I a cynical person by nature or is there a genuine reason why I am not in the mass hysterical movement of these idiots.

Thanks to Charlie Munger, I have developed a very cynical mind when it comes to taking decisions of life. This has held me in good stead so far and it stands the test of time. Mr Munger basically suggests to judge a thing from 5-6 different vantage points. If you just have 01 way of thinking, you will suffer from a man with a hammer syndrome (for such a man, every problem is a nail) and he cannot see the bigger picture.

So the picture that everybody is seeing is that honest AAM aadmi is trying to bring about a change for better.

I don't see that picture because I have 04 different vantage points.

Point #1. Humility and Integrity History has it that achievers always under commit and over deliver. Idiots do the opposite. Murthy of Infosys would always downplay the results and surprise on the positive side, whereas mukesh ambani would always boast of turnarounds every quarter which never materialize.

Mr Kejriwal falls in that category, he has promised the moon, now only regret can come out of the whole equation.

Strong commitments from which he has backtracked are, 'We will never join politics' 'I have no intention to become the CM of Delhi'. 'I swear on my kids that I won't join hands with congress'. Who on freaking melodramatic earth swears on his kids.

Point# 2 Corruption:

Well all the freaking jokers who are supporting and shouting anti corruption slogans are knee deep in it. I have already written a blog on that so without reiterating myself I just have 01 thing to say. Where do you think the free water he has promised is coming from. And who do you think has benefitted from the free water fiasco.

That free water is costing Rs.163 crore per month to the state exchequer. (which you will pay via taxes). Misusing chief minister's office for political gain is biggest form of corruption".

Point # 3. Socialism.

The only system that I know works is capitalism. It has flaws, no doubt about it, huge flaws but at least IT WORKS. History has it that fascism (hitler's germany, Mussolini's Italy and Japan of 1940s), socialism (USSR, east germany, Hungary,poland,romania, Ethiopia, yugoslavia) have all CRUMBLED under the weight of their own MORALS.

Arvind Kejriwal is a socialist. You don't need a degree in fuel engineering to figure it out. Free water, free electricity, BAN FDI. All these dharnas and morchas and trade unions and chaka jaams. This son of b*&ch is turning New Delhi into a west bengal.

The only thing that is ever achieved by a dharna and shit is “Productivity loss”. Think about it. Who can actually go sit on a dharna for 5 days. You have to be UNEMPLOYED, redundant, unproductive waste of society to participate in such an act. And what about the loss to exchequer every time you go out to prove a point.

Point #4. AGENDA

My brother Rajiv Dhawan (Visionary that he is) stuck his neck out and predicted back in LOKPAL dharna days that Kejriwal has ambitions to be a CM. No body believed him and people ridiculed him( except me obviously) coz they said KEJRIWAL JI ne khud kaha hai, he has no intention to join POLITICS.

And boy was he right. Now CM seat is not enough, Kejriwal wants to be a PM. He and his party are looking to exploit every opportunity to hog the limelight and create a nation wide ruckus. He is praying for a big ticket event that catches the fancy of the world again. A nirbhaya like horrifying act, a serious corruption charge, a national shame or some catastrophe that can be cashed in at a national level.

Elections are in 2014, the desperation has reached such level that they are fabricating issues now, targeting POLICE (easy target actually, just like corruption) (it is a thankless job and everybody hates them)

Be rest assured AAP will strike again, they have to. Correcting Delhi was never their AGENDA, they have tasted blood and they want a national presence.

I hope the law of diminishing returns catch up with AAP and every corresponding dharna gets lesser and lesser audience. I also hope the public realizes that they are being played yet again.

But I know I am hoping 2 much and as they say “PEOPLE get what they deserve”.



Disclaimer: I will be voting for BJP this election. Choosing the lesser evil. Judge by actions, not by speech. Modi has turned around Gujrat into a model state and u know my views about the rest.