Saturday, February 09, 2008

Loss Aversion

A wonderful article I read from one of my favorite economists, Tim Harford.

Kind of tied in with the Stock-Market crash that happened a couple of weeks ago.. I don't invest in the stock market, more out of the fact that I really don't have the time to follow up on what is happening there to put money in it. But a couple of weeks ago - it was a Monday, if I am not mistaken - there was widespread mourning in our office. The stock market had crashed by 12% or something.. One guy told me that he lost 1.5 lakhs in a day. But something about this statement didn't make sense to me..

Knowing his liking for the stock market, I can assume safely that he had invested the money long ago. Not knowing the stocks he holds and that the market was roughly around 16,000 in November and fell to 18,000 post the crash on January 21, wouldn't he still be in the positive? How exactly did he lose money?

Anyway, the article above also caught my eye for this wonderful statement, which (pardon me my dear darling wife), I am going to reproduce in full.

..It is true that the London housing market seems (who knows?) to be in the final stages of its biggest-ever bubble. But there are special circumstances involved here, one of which is that no rational economic actor disobeys an order from his wife...

1 comment:

Anonymous said...

Sh** happens...

Can you write something on workplace conflict management for me...