Web application development - for profit and market growth
Ukraine has a difficult economic situation, which is constantly changing. Why does modern business in Kiev require the development of web applications? Obviously, without modern and efficiently running software, no…

Continue reading →

Personnel Outsourcing Benefits
Undoubtedly, the human resource is very important and valuable in any company or enterprise. Personnel decide a lot in the development and operation of the enterprise. And it does not…

Continue reading →

At your own risk: why are dangerous investments in your own business
Most wealthy people want to save money and protect them from inflation. But what to do with your own assets? At the dawn of my career, I heard the phrase…

Continue reading →

Manipulation and deception: how not to fall into the trap of a simpleton hunter

The Mann, Ivanov and Ferber Publishing House has published the book The Hunt for the Simpleton. The economics of manipulation and deception. ” The authors are two Nobel laureates in economics, identity economics researcher George Akerlof and Yale professor Robert Schiller.

The market economy has become a favorable environment for misleading consumers. There are so many “hunters” in the world who are inventive and smart that each of us throughout our lives at least once, but will fall into their bait. It is unlikely that the book will help to completely protect readers from this, but the authors gave examples to recognize seller fraud or dangerous schemes in the economy.

They offer to make sure that hunting for simpletons has a significant impact on our lives. As a result, people make decisions that are not profitable for them.

Personal financial security

If we show caution in 99% of cases, then in the remaining one percent we will behave as if money does not matter much. It is this behavior that entrepreneurs monitor, cleverly setting traps. Someone is prone to careless spending on the eve of the New Year and Christmas holidays, someone is ready to lay out a fortune for the wedding of their dreams. As a result, people do not sleep at night, thinking about how to pay their bills and pay off all debts on loans.

Car dealership owners know that every buyer has already formed the perfect image of a car, carefully imposed by advertising. And they are able to inspire the client with the need for additional equipment, various “stuff”. Car dealers use flattery, persuasion, play on the psychology of the client. Only one who recognizes such tricks can buy a car and not stay aground.

Another trick is to use credit cards to pay for purchases. The authors cite the results of research by psychologist Richard Feinberg, who found that credit card holders leave 13% more tips than those who pay exclusively in cash. Another study in the northeastern United States found that credit card holders buy more products in a single shopping trip. Of course, other factors influence customer behavior. It is even more difficult to assess how the research results are applicable to Russia and other countries of the world.

But supermarket owners in the United States have already taken this trick into service. Despite the fact that they usually pay a bank commission to Visa, Mastercard and others for operations, most often they do not include this commission in customer accounts. The buyer thinks that it is profitable for him to pay with a credit card, and does not even notice how he began to sweep the goods from the shelves.

Macroeconomic stability and sellers of “rotten avocados”

The hunt for simpletons in financial markets is the main cause of crises leading to a deep recession. A prime example is the 2008 crisis. Investment managers who purchased packages of sub-standard securities did not want to get involved in a dubious transaction. But deception and manipulation led to extremely grave consequences that affected not only the economic system of America, but the whole world.

“If I have a reputation as a seller of excellent ripe avocados, then new opportunities open up before me. I can sell you medium-quality avocados for the price of first-class fruit. But in doing so, I jeopardize my reputation, although I am fishing for a simpleton in your face, ”the authors write.

The same story, only on a larger scale, lies at the heart of the financial crisis, raging in the economy so far. The reputation of the largest rating agencies in the United States has been building for almost a century on the basis of determining the rating of bonds, which was used to assess the likelihood of bankruptcy of the issuer. In the late 1990s and early 2000s, agencies set themselves an ambitious task – to determine the rating of new securities, financial derivatives. Due to the novelty and complexity of these securities, it was not easy for customers to evaluate the fairness of their rating. Derivatives were secured by mortgage loans with a high risk of bankruptcy, but customers trusted rating agencies.

Why did the sale of “rotten avocados” (that is, revalued securities) lead to a massive crisis? Large commercial and investment banks, hedge funds and other organizations are large borrowers. For example, large investment banks finance about 95% of their assets through borrowed capital. Derivatives cost almost nothing, that is, they turned out to be “rotten avocados”. When the truth became clear, the cost of such securities fell sharply. It turned out that the debt of such financial organizations far exceeds the amount of their assets.

The hunt for a simpleton played a key role in creating this “soap bubble” and the collapse of the whole scheme.

Political lobbying and election manipulation

The American voter never has complete information about the candidate, and this is why he immediately gets hooked. In addition, the voter can also be caught in psychological bait – for example, they respond to advertisements with a candidate.

Experience comes in the process
A novice entrepreneur thinks that in order to start doing something on his own, he needs experience, he needs to learn how to be a good specialist, he needs to…

...

Procurement of the enterprise and their significance
Procurement plays a key role in the life of any company. It is important to monitor the amount of consumables needed for the office of the office and other details,…

...

Interpersonal training
How to turn work into pleasure? To do this, it’s worth going through business communication trainings, which will explain to you how to understand communication skills and interpersonal interaction. The…

...

Hong Kong Company Incorporation by Bridges Wealth Management Solutions
Tightening tax control leads to the fact that many businessmen are trying to open a company in offshore zones such as Hong Kong and Singapore. Offshore experts recommend contacting Bridges…

...