Showing posts with label game theory. Show all posts
Showing posts with label game theory. Show all posts
Thursday, 18 September 2008
Gaming the banks
Greed is the incentive that drives hedge funds, those that don't make profits go bankrupt and die. Here is a nice article about how the Hedge funds are gaming current market conditions as controlled by US Treasury. The smartest people in the room have worked out that the US Government will pay the ransom of a Treasury bailout every time the viability the of a large corporation is threatened . We all understand that paying a ransom only helps in the short term, in the long term another hostage will be taken. Why don't the people in US treasury understand this?
Friday, 12 September 2008
Google causes United to crash
If it's in the paper it must be true? Does anyone believe this any more? How about what you read on the internet?
A reasonable person might wonder just how much research is done before so called experts make financial decisions. But if you are a financial fund manager it seems you can bet your clients money on an article you see on google without checking.
What this does show is the amount of credibility that Google has. I wonder how long it will be before scammers decide to game this for their own benefit?
The story from google perspective here.
A reasonable person might wonder just how much research is done before so called experts make financial decisions. But if you are a financial fund manager it seems you can bet your clients money on an article you see on google without checking.
What this does show is the amount of credibility that Google has. I wonder how long it will be before scammers decide to game this for their own benefit?
The story from google perspective here.
Tuesday, 19 August 2008
Why managers cheat
Evolutionary theory predicts that if there is an advantage in cheating a system then, cheating will happen. This experiment shows how that might have implications for real world managers.
...when we measure everything by rate of return on investment and profit, we're going to be measuring the capability of managers to cheat the system.
In other words they don't cheat, they are simply gaming the system.
The answer is in having carefully thought out tests. For example an anatomy course aims to teach students the name of every bone in the body. How to test? Ask each each student to name 4 bones pointed out at random by the examiner. The only way to pass this exam is to know the names of every bone in the body. Knowing the exam format will not help and there is no need for obscurity to ensure the exam process is fair.
Some might argue that such behaviour makes corporate executives no different to criminals.
...when we measure everything by rate of return on investment and profit, we're going to be measuring the capability of managers to cheat the system.
In other words they don't cheat, they are simply gaming the system.
The answer is in having carefully thought out tests. For example an anatomy course aims to teach students the name of every bone in the body. How to test? Ask each each student to name 4 bones pointed out at random by the examiner. The only way to pass this exam is to know the names of every bone in the body. Knowing the exam format will not help and there is no need for obscurity to ensure the exam process is fair.
Some might argue that such behaviour makes corporate executives no different to criminals.
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