Economics-sizzling

  What exactly is heuristics? It is defined as cognitive shortcuts that simplify decision making, it essentially seen in action under the conditions of uncertainty. (Source- verywell-Cindy Chung) These heuristics advancements lead to cognitive biases. There are various heuristics like affect, availability, representative, scarcity heuristics etc. Some of the heuristics explained: Scarcity Heuristic- It is largely used by marketers to motivate customers to immediately buy things. The marketer might say that the product will be available only for a limited time and the consumers will believe that they will miss a good deal if they don’t purchase the product immediately. (Source- Takingcareofmyownbusiness.com) Example- Myntra keeps midnight sales which only last for a few hours of the night and customers immediately pick up offers since they believe that the offer won’t last for long and they won’t get a better deal than the existing on...

Hello everyone. I, Pooja Srihari (1933466) with my co-authors - S Dhanush (1933434), Uzair Muzaffar (1933442) and Khushi Pareek (1933463) in this blog are going to talk about a very interesting and a challenging probability paradox - The Sleeping Beauty. So get up and look for a pen and a piece of paper because things are about to get real (probably). The Sleeping Beauty Paradox History of the problem: The Sleeping Beauty Paradox was originally formulated in the mid-1980s by an American Philosopher Arnold Stuart Zuboff in an unpublished paper. The name “Sleeping Beauty” was given to the paradox by an American Philosopher Robert C. Stalnaker. The paradox is a thought experiment in decision theory and is very similar to the infamous Bertrand's Paradox. Both the paradoxes are counter-intuitive and have several solutions depending on the way we approach the paradox. Introduction to the paradox: Who here has not promised themselves to sleep before 10 PM, but ended up watching “10 Myster...

Introduction Have you ever played with domino tiles? (Source- Leader's Beacon) When you strike one tile all the tiles all down, it causes a chain reaction; this is nothing but the domino effect where one event sets off a chain of similar events.  This is what happened to a large extent in 2008- the housing market and financial market of USA fell and this effect spread throughout the world, globally major economies were affected What led to the Global Financial Crisis? The epic center of the Global financial crisis was in the housing market of the USA. Households borrowed more than what they could afford, banks provided loans at low-interest rates (Lund, 2018). Because of low-interest rates, the housing demand started to rise so did the housing prices. Credit was provided to subprime borrowers in the USA. Soon the housing price hit its ceiling and started to fall. Households had accumulated more debt than the value of their houses (Lund, 2018). In the housing bubble burst of 2006, t...