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Dollar auction game by game theory pioneer Martin Shubik

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The dollar auction is a non-zero sum sequential game designed by economist Martin Shubik, a pioneer of game theory,  to illustrate a paradox brought about by traditional rational choice theory in which players are compelled to make an ultimately irrational decision based completely on a sequence of apparently rational choices made throughout the game, also known as "escalation of commitment"
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A one dollar bill is put up for auction with the following rule: the bill goes to the winner, however the second bidder also loses the amount that he bids.

The winner can get a dollar for a mere 5 cents, but only if no one else enters into the bidding war. The second-highest bidder is the biggest loser by paying the top amount they bid without getting anything back. The game begins with one of the players bidding 5 cents (the minimum), hoping to make a 95-cent profit. They can be outbid by another player bidding 10 cents, as a 90-cent profit is still desirable. Similarly, anoth…

A Pizza slice and the NY subway fare connection

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The Pizza Principle, or the Pizza-Subway Connection, in New York City, is a humorous but generally historically accurate "economic law" proposed by native New Yorker Eric M. Bram.

He noted, as reported by The New York Times in 1980, that from the early 1960s "the price of a slice of a plain, cheese or regular pizza has matched, with uncanny precision, the cost of a New York subway ride."

In 1985, the late writer, historian, and film critic George Fasel learned of the correlation and wrote about it in an op-ed for The New York Times. The term "Pizza Connection" referring to this phenomenon was coined in 2002 by New York Times columnist Clyde Haberman, who commented on the two earlier publications of the theory in the Times, and predicted a rise in subway fare.

In May 2003, The New Yorker magazine proclaimed the validity of the Pizza Connection (now called the pizza principle) in accurately predicting the rise of the subway (and bus) fare to $2.00 the week…

When Good intentions go bad

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In his book, Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business, author Frank Vermeulen cites a case where the good intentions of the government actually fell flat on its face.

The UK government had mandated all IVF clinics to publish their success rates which went up on a Government website. People then started treating this database as a ranking. The website was the government's good intention to implement transparency to empower patients and help them in decision making.

What the government failed to factor in was that a clinic's success rate wasn't just dependent on their competency but also affected by the quality of the women. Younger women would probably have a higher chance of getting pregnant over someone who is 40 plus.

However, what this resulted in was that clinic's started favoring patients who were most likely to get pregnant and rejected difficult cases. On the other hand, clinics who had expertise in treating difficult cases would …

How the British Royal Family Made Us Forget its Very-German Name

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On 17 July 1917 King George V, king of the United Kingdom from 1910 to 1936, issued a proclamationchanging the name of his Royal House to Windsor and relinquishing the use of "All German Titles and Dignities.” 2017 marks the 100th anniversary of the House of Windsor.

But before we delve into the why and how, we should know that...
...Britain itself is More Germanic than You Would Care to ImagineGenetic studies have revealed that most of the white British population owes 30% of their DNA to the ancestors of modern-day Germans! The Anglo-Saxons, a people comprising of Germanic tribes who migrated to Great Britain after the breakdown of the Roman Empire, are largely responsible for substantially altering country's genetic makeup. Guess, Britishness is as German as the Royal Family.
And The Royal Family's Current Name is Still Part GermanPrince Philip, the husband of Queen Elizabeth II, was born into the House of Schleswig-Holstein-Sonderburg-Glucksburg, a Dano-German branch of…

Attention Black Friday Shoppers: Psychology predicts if you will shop tomorrow or not

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Black Friday is an informal name for the day following Thanksgiving Day in the United States, the fourth Thursday of November. It is regarded as the beginning of the Christmas shopping season. In the 1980s, the term “Black Friday” began to be used by retailers to refer to the single day of the year when retail companies finally go “into the black” (make a profit) after being "in the red" for much of the year.
Research shows that consumers would choose to shop on Black Friday again, only if their last year's experience brought them pride rather than regret. For a consumer who bags a bargain in the sale only to find the item was further discounted at a later date, the initial feeling of pride may be tempered by the regret at having bought it too soon and not receiving an even bigger discount.
Source: The Psychology of Black Friday - how Pride and Regret influence Spending by Shalini Vohra
The opposite is true, however, if a consumer was applauded for getting a good deal. The …

The American Gun Industry Pioneered 'Product Placement'

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How Kraft's Shreddies Revamped Itself Without Changing Anything

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What do you see in the image above? Is it a diamond? Is it a rhombus? Or is it a square, rotated 45°?

In 2008, Kraft Foods Canada capitalized on this confusion to revitalize a 78-year-old brand, Shreddies. Sales of this popular breakfast cereal had stagnated. According to a consumer research done in its Canadian market, customers wanted the brand to refresh itself without it changing anything. 
How to increase sales of a product that is loved by its customers just the way it is?
Kraft Foods accepted the challenge and launched the new & improved Shreddie, the 'Diamond Shreddies'. Hunter Somerville's idea, an intern with Kraft Food's creative agency Ogilvy & Mather Canada, became the basis of this campaign - an 'angular upgrade' to the original Shreddie, devised by a team of 'cereal scientists'. 
Packs of 'Diamond Shreddies' was launched with much fanfare. The tongue-in-cheek campaign triggered a widespread debate among consumers who were in o…