November 20, 2008

Effect of large monetary reward.

This is a very interesting experiment. Though, it seems counter-intuitive, it does make sense to me.

Dan Ariely
does intriguing research. His book has been on my list of must-reads for the last few months. May be I should get to it now.

He and three collaborators went to India and asked 87 people to do various tasks requiring memory, concentration, attention and creativity. They divided the 87 people and offered different monetary incentives to the three groups for the same tasks. First group got 50 cents, the second $5 and the third $50.

In real terms, these sums are much larger in India than they seem.

Their conclusions:
The people offered medium bonuses performed no better, or worse, than those offered low bonuses. But what was most interesting was that the group offered the biggest bonus did worse than the other two groups across all the tasks.

They reached similar conclusions in experiments conducted in Boston and Chicago too. For any task that requires some level of mental skill as opposed to mere mechanical effort, their research shows that large monetary reward may not have the clear motivational advantage that is usually imagined.

November 12, 2008

Bail me out!

As the complex and twisted debate (see this, this and this, for a sample) on whether to bail out large companies in general, and General Motors in particular rages on, here is something amusing.
Before you throw this letter into the proverbial round file, let’s be clear: this is the first time I have ever asked for a bailout from the Federal Reserve. I know what you’re thinking. Why do I deserve your largesse, and I do mean largesse, since I’m asking for five million big ones? The answer is simple. Like many of our nation’s financial institutions, I am simply too big to fail. If investors were allowed to witness the collapse of Freddie, Fannie, and then Andy, I can’t begin to describe what havoc it would wreak on their already frayed nerves. Actually, I can describe it: global financial calamity. I think we can both agree that, to dodge this bullet, ten million dollars is a small price to pay. (I know that I originally asked for five, but since I started writing this letter my financial situation has deteriorated in grave and unexpected ways.)

November 5, 2008

232 years later.

232 years ago, a country that held "all men are created equal" was self-evident.

Till 143 years ago, a country of "slave-warehouses":

A slave-warehouse in New Orleans is a house externally not much unlike many others, kept with neatness; and where every day you may see arranged, under a sort of shed along the outside, rows of men and women, who stand there as a sign of the property sold within. Then you shall be courteously entreated to call and examine, and shall find an abundance of husbands, wives, brothers, sisters, fathers, mothers, and young children, to be "sold separately, or in lots to suit the convenience of the purchaser;" and that soul immortal, once bought with blood and anguish by the Son of God, when the earth shook, and the rocks rent, and the graves were opened, can be sold, leased, mortgaged, exchanged for groceries or dry goods, to suit the phases of trade, or the fancy of the purchaser.

A 100 years ago, country of lynchings.

Till a half century ago, a country of Jim Crow and segregation.

In a little over 2 months from now, a country with a negro president.

This last does not erase or excuse what preceded it. Far from it.

What it does is give meaning to the American national commitment to perfect their union. It proves, in the words of the man himself, that "a government of the people, by the people and for the people has not perished from this Earth".

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