Risk, Return and a Little Utility

The title is a hangover of the financial crisis and the numerous articles woven around it in the papers over the last month. Due to un-imaginable reasons i had been regular on papers and magazines , though my itinerary to the library had been messed up in the last week. To add to that , i had been reading editorials in Hindu (OK, i think i should stop blushing) . Yeah, whatever it is, one component that never changes in my daily life is 9 hrs sleep. :)

Now, the exercise of reading papers had been very interesting, one i had an underlying saddistic pleasure to see the markets go down - not because i am anti-capitalist(which i am not) - may be a bit because the arrogance of (a few) I-bankers is reduced to zilch if not humility, and more importantly, it had been an amazing story of postponing the effects of mediocrity under the disguise of sophistication (which is only a worked up form of arrogance). Anyway, my knowledge of the subject is only limited by the spate of opinions in the news papers, so cant really give authentic comments. But the fuzzy calculations of Risk and Return has just undermined the basic thing of the real value anyone gets out of it , which is nothing but the utility (i guess) . Utility till date is one of the most difficult items to quantify and just the point that it is so specific and different for each person in each action makes it an important discussion point for all the economists.

For now, my return(immediate) from reading the papers had been to come 2nd in the DRAC quiz based around the current affairs. It had been ages since i was in that position, thanks to my team mate who has a good run at quizzes. Well, i realised the real value when my team mate waived off a question saying 'I dont know this pa, this is all Fin based question'. Given that premise , i should be equally ignorant about it, however, my knowledge of that specific information left me with a nice feeling that nothing is so incomprehensible. Yeah, it is for sure very embarrassing to know that there was an east asian crisis in the late 90's while all i knew was world cup and my crush in school. But , i kinda realise now its never too late to start reading .(however for people like me, no habit is too steady to call it so, except for sleeping).

Classes had been kind of wierd this term. They atleast are not helping in giving any direction to the Mediocre But Arrogants (except for a few). Why would anyone learn ethics now? My inopportune doubt in class seemed to have irked the prof to earn me a sub-optimal grade(how is that for social experiment in ethics class). 

Scribbled a few lines in some class few days ago :

---------

One more moment of ignorance,

One more moment we delay;

One more moment of inaction,

is the moment of action.

---------

The dance of moonlight

from the nether world

seemed so still in water

until i touched it 

and a shock rippled through

---------

It had been long since i got back to writing these pieces, may be the boring classes will help. The following blog had been a great inspiration though.

http://irrationalrationalities.blogspot.com/2008/09/for-blue.html

P.S: earned myself a small unpaid job :)

Economics and Ethics

The only thing i didnt expect that i would be so interested in B-School is Economics. Now i regret that i might not specialise in it(doesnt make much difference though). Either way, i am still a long way to be a strong numbers guy, looking into projections of economy and interest rates. But what always interested me in economics is the way it accounts for all the interactions of man kind (loaded with their stupid idiosyncrasies) and how they all mess up into theories from an armchair economist. So, i am doing this subject called Strategic Game theory for managers and another one named Strategies of co-operation and one more - Managing Public Private Partnerships this term other than the marketing subjects and the compulsory course on Managerial Ethics(Many say that its an oxymoron).

Just in this context, there is a small anecdote, which i found very interesting , (its boring and predictable , but let me take the name of joker before i start ;) ) .

So, its like this, A well known economics prof from a premier B-School was forced to take up a course on ethics as the institute planned to introduce this course (To claim that they produce Valuable managers with values and blah blah blah) . Now the prof was absolutely not interested as he was strong on the principle that Ethics are more natural than learnt or taught. However the institute persisted. So he took the course the in all its spirit. At the end, he took an exam and he gave half the students a lot more than what they were expecting and the other half of students, extremely low compared to what they were expecting. As one would expect, all the students who scored low rushed to his office asking for explanation, while none from the higher half ever turned up. He documented the same and gave it to the Admin office to prove his point it seems.

Well, i remember one of my prof telling us, if you follow ethics, you will be in Tatanagar railway station. Though too harsh to believe it, i kind of started to believe in it. Sometime in childhood, a neighbour of mine used to practice astrology. he supposedly told my mother that, when i grow old, i will care for nothing but i want  (want = materialistic needs) . I am yet to comply to that, but i see that happening slowly . 

It happened , more than a few times that i expected a help in professional help based on a personal relationship or vice versa, however , it seems all that is just against the rules of the game. I think it also falls in place with the gyan of Shri krishna that when in a war, its a duty to fight anyone. Ok, i think its getting heavy i guess. 

So, as i stick to my timeline of sleeping in the morning and staying awake in the night. There is nothing much happening. Yeah, had been reading some hazaar versions of Sub-prime crisis. And good movie for this week : Nouvo Cinema Paradiso 

Social Experiment

I should admit it , i was being a fool.

Let me explain the game. You need to choose between 1 and 2 , so is the case with 37 people in the room, with whom you don't get to talk with. So if '0' students mark 1 , all the students who marked 2 get 100 each, if 1 student marks 1 then, he gets 5 while all else get 105, so on till 37. By the time you reach  37, if all mark 1, all the students who marked 1 shall get 185.

There are 10 rounds. You are supposed to maximise your payoff. So if everyone thinks the same, , everyone puts 2, you end up with 100 each which is relatively ok but not the best possible, similarly, if all mark 1 , you get 185 each, but if one guy defaults then he would get 280. So there is a high chance to default.

So, lets start, first 3 rounds have no discussion among the group, so everyone is marking randomly, or rather too obviously that wasn't totally rational or irrational. So everyone was marking 2 , some poor souls kept trying marking 1 and getting meager 10s and 20s. They were trying to think ahead or may be just think random.

Now after 3 rounds there was a chance to go and discuss. So i come up with this strategy that , half the group marks 1 and half the group marks 2 and then we keep alternating, so that we average out and decrease the difference among the group. Now there was another proposal that why dont we all keep marking 1s, i felt and said that even one persons default will create chaos in the group (we are saying that 97% perfection is not good). But technically speaking that was the best strategy. The other person who suggested asked for a voting , i think i was too fed up holding and being in elections that i said, we will be together. 

But No - Why?

1)Taking a decision among Peers(of presumably equal intellect) and expecting others to implement it without asking an acknowledgment is one stupid thing to do.

2)My logic itself as i said was a bit flawed. I was working out things in my Utopia rather than in everyone's utopia (which is an oxymoron).

3)People were not looking at the absolute maximum, so they was no incentive for junta to decrease their only advantage in the game, that is relative gain. And so, my scheme had no incentive for any of them, except for a few who were looking for an order.

4)The stupidest thing to do, I told first 2 rows to mark 1 and the next 2 rows to mark 2. I didntr even realise that i was in the second 2 rows that was going to get the maximum payoff in the first round, now i felt that its a rational calculation rather than a conspiracy. I didnt realise that someone in the crowd was smirking within himself and saying "Come on  dude, stop kidding and stop making an ass out of others".

Anyway, we went in, before that, i said that if , there are around 17 people who mark 1s then we are sure that we are together, then we keep alternating. Well i forgot to introduce a character here. My favourite as it will stay on to be forever. I do not know if i should give the credit to John Nash for his game theory or Bill Finger, Bob Kane and Jerry Robinson for the creation of this character, or Christopher Nolan, Jonathan Nolan and Heath Ledger for giving him a life - Joker. So, you can assume a Joker standing within us and laughing at us every time we had our strategies (This is in no way referring to the prof, though he played the part perfectly well as needed in the game).

So, in the 4th round, there were 11 1s against the expected 18 , which i still believe is a very good number (which would have made Frodo of LOTR happy and confident of some good in the world). Anyway, but it didn't make a lot of them happy. So there on it tumbled, everyone was back to normal. I should admit that there were some good souls who kept to their word irrespective of the deviation and alternated their choices, there were 8 1s in the next round. (I was one of them :P , i have to say this as i was accused of conspiring) . Anyway, the next round was a waste, it had no rationale at all. So we get another break to discuss. As usual, i gave up and stayed silent and people said, we will all go for 2.

I felt this is accepting mediocracy due to lack of co-operation. But i went with the group and we cam with all but a few 2's in the next 2 rounds and the prof started stressing on the point of reaching the maximum obtainable payoffs. 

So, i kinda couldn't stick to the game. So, i said, "See, this isn't about getting marks, this is about proving that you can co-operate. So just do it."  thats never the way to play a game, Anti trust parties would have put me in Jail :D . But by then, people were already on the extremes, they were planning to smoke out the rats out of the hole. They wanted to ask the prof who were the defaulters. The prof gave the choice of penalising the defaulters. (My argument was Utopian or rather Gandhian(though i never liked it), that why are we fighting and giving power to an external person, after all its just a game, play it our way).

Funny that, prof asked for a leader, i wasnt ready to raise my hand because i wasnt with the argument of penalising people. And the Joker went a step ahead and asked , who of dont approve them and their proposals. I woke up late to raise my hand which anyway wouldnt have made a difference. Few rejected their proposals but majority accepted. Anyway, the prof penalised the defaulters by a deduction in the payoff, the results were obvious. 

The narration is open to discussion. But, there was something that kept running through my mind by the end of the game. It was this image of joker talking in "The Dark Knight" saying, "You know what I am? I'm a dog chasing cars. I wouldn't know what to do with one if I caught it. You know, I just do things. The mob has plans, the cops have plans, Gordon's got plans. You know, they're schemers. Schemers trying to control their worlds. I'm not a schemer. I try to show the schemers how pathetic their attempts to control things really are.... It's the schemers that put you where you are. You were a schemer, you had plans, and uh, look where that got you. I just did what I do best. I took your little plan and I turned it on itself.... You know what I noticed? Nobody panics when things go according to plan. Even if the plan is horrifying. If tomorrow I tell the press that like a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it's all, part of the plan. But when I say that one little old mayor will die, well then everyone loses their minds! ...  I'm an agent of chaos. Oh, and you know the thing about chaos? It's fair. " 

I believe there is a Joker in all of us. 

So much for the gyan. Something atlast finally made me write a good blog. If you didnt understand the game , dont bother, if you want to bother, make a table of the payoffs and work it out.

P.S : Finally some good movies : Welcome to Sajjanpur, Mumbai Meri Jaan, 13 Tzamite, In Bruges. Drona is for the demented :D