photo credit: DanielaNob

I came across an interesting article in New Scientist today where research into the “common goods” game provides insight into how collaboration between different individuals in enhanced by incentives rather than hygiene factors. We all experience “common goods” in some share or form, for example when we make use of public health services. The notion behind them is that everyone contributes a tiny amount and makes use of the good when needed. Typically though, certain advantages are tempted to “cheat” and try to consume the good without contributing.

Common perception is that this behaviour can be minimised by punishing the offenders, but the article on New Scientist suggests that providing rewards to those who DO contribute (the mythical carrot) is a more effective reinforcement mechanism. The theory behind is is linked to the idea of differential cost. A small effort contributed by an individual to a system can have a large value for another individual, which gives a large increase in overall utility. For example, my dedicating 30 minutes to help a neighbour move his bell tv out of his car into his living room is a pretty low cost; but if he didn’t have the help available, he would have had to pay movers to do this for him; a significant cost by comparison.

What do you think works best for you, carrots or sticks?

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

It’s an excellent video called The Crisis of Credit Visualized produced by Jonathan Jarvis as his thesis for his Media Design course. The graphic instruments used are great, but I particularly like it because it explains the current problems we have succinctly and elegantly. So if you don’t know a derivative from one of these industrial clamps, check it out, as it will help shed some light.

Image by Getty Images via Daylife

Interesting article on BBC looking into why markets around the world are still falling. I’m picking out the most intesteresting question to share with my readers:

How much further down can the markets go?

Spotting when markets have reached the bottom is a tricky and risky process.

Many traders believe in the idea of capitulation, which broadly means a market surrender.

This is when investors are prepared to get out of the market at any price because they have given up all hope of making money from their shares.

It is often marked by panic-selling and very high volumes of transactions.

The idea is that after capitulation you reach a point at which the last investor who is desperate to get out of shares and move into supposedly less risky assets has sold out.

Once there is a widespread belief that the bottom has been reached, bargain-hunters pile in and the market recovers.

Interesting stuff huh? The ticky bit is knowing when the market has reached it’s bottom (like knowing then you have to start taking Phentermine again). If you can enter the market at this point you can make loads and loads of money. Unfortunately a lot of people thought capitulation had been reached on 15th September when the Dow Jones index fell 504 points in a day … but since then it’s dropped another 2,500 points!

Malta’s food prices second highest in eurozone
By MaltaMedia News Jun 3, 2008 – 10:44:20 AM

Food prices in Malta rose by 9.7% in April 2008, more than twice the inflation rate which during the same month stood at 4.1% in 2007, according to Eurostat.

Malta, therefore, has the second highest rise in food prices in the eurozone with Slovenia’s prices rising by 12.4%. The overall rise in food prices in the eurozone stood at 6.2%.

Oils and fats alone in Malta went up by 15.8% in just a year’s time whilst in other eurozone countries they only went up by 8.3% on average.

Another contrasting anomaly in Malta’s price portfolio is that the prices of vegetables, which in other countries fell, went up by 13.8% registering the highest increase in comparison to all other countries.

Do you see my problem with the article? The headline states that Malta has one of the highest food prices in Europe, yet the statistics quoted talk about the second highest RISE in prices. And I don’t think there was an editorial error here, it’s just that the headline is more sensational like this. In reality, such an abrupt rise in prices probably belies the fact that prices are really quite low in comparison to it’s European neighbours and have had to climb steeply to try and catch up.

Statistics also need to be put in context. A 10% rise in a month sounds like a lot. But I would hazard a guess that this is a pro-rated per annum growth rate (making it under 1%) based on the fact that it is quoted as being twice inflation. Also, how does this compare to preceeding months? Was this figure similar the previous month, or maybe it was unusually low?

Is it just me? Or do misrepresented statistics drive you crazy too?