Beware advice from the successful

Survivorship Bias OR How a mathematician helped win a war In 1942, in the middle of the bloodiest wars ever seen, the United States military, brought together some of the brightest minds borrowed from the top universities around the country and called it, the Applied Mathematics Panel. “Here is how it worked: Somewhere inside the vast machinery of war a commander would stumble into a problem. That commander would send a request to the head of the Panel who would then assign the task to the group he thought would best be able to resolve the issue. Scientists in that group would then

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Don’t Ask, Can’t Tell

Our (lack of) self-awareness Let’s do a quick quiz to determine what makes you happy. Rate the following on a scale of 1 (very little) to 5 (a great deal) depending on how much each item causes your mood to fluctuate on any given day: How well your work day went Amount of sleep you got the preceding night How good your health is How good the weather is Whether you had sex Day of the week Now, if I were to then on a daily basis, ask you, how your day went, your response should have a relationship with your

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Have you been framed?

Nicotine addicted monks and framing You have probably heard this one about the two trappist monks. Monk 1 asked his abbot whether it would be alright to smoke while he prayed. Scandalized, the abbot says “Of Course Not! That borders on sacrilege!” Monk 2 asked his abbot whether it would be alright to pray while he smoked. “Of Course” says the abbot, “God wants to hear from us at any time” The way the same information is presented to us has an impact on how we process and react to it. This effect is called ‘Framing’. Next time you pick up a pack of

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Magazine subscriptions and the fault in our reasoning

A rupee today is worth more than a rupee tomorrow (or at any point in the future) This is the first, most fundamental lesson you learn as a student of finance. Called Time Value of Money, the idea that any money you have today can earn interest or returns in other forms making it worth more than the same amount of money at a later point in time, is a core principle of finance. Another way to look at the above statement is that inflation is constantly reducing what a fixed amount of money can buy. Hence you hear statements like “When I

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