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This blog exists purely as a place for me to dump random links and thoughts I have rather than emailing them to my friends. It'll have large amounts of inside jokes. Also there will probably be times when I write "you" or refer to an email. Just pretend that you are reading an email to you. If you don't know me you likely won't find anything here interesting. If you do know me you also will not find anything here interesting.
Ariely and Shin conducted an experiment on MIT students. They devised a computer game which offered players three doors: Red, Blue, and Green. You started with 100 clicks. You clicked to enter a room. Once in a room, each click netted you between 1-10 cents. You could also switch rooms (at the cost of a click). The rooms were programmed to provide different levels of rewards (there was variation within each room's payoffs, but it was pretty easy to tell which one provided the best payout).
1. Internet-only subscription for $59.
2. Print-only subscription for $125.
3. Print-and-Internet subscription for $125.
When I gave these options to 100 students at MIT' s Sloan School of Management, they opted as follows:
1. Internet-only subscription for $59—16 students
2. Print-only subscription for $125—zero students
3. Print-and-Internet subscription for $125—84 students
Au contraire! This time, 68 of the students chose the Internet-only option for $59, up from 16 before. And only 32 chose the combination subscription for $125, down from 84 before.
What could have possibly changed their minds? Nothing rational, I assure you. It was the mere presence of the decoy that sent 84 of them to the print-and-Internet option (and 16 to the Internet-only option). And the absence of the decoy had them choosing differently, with 32 for print-and-Internet and 68 for Internet-only.
An ironic aspect of this story is that in 1993, federal securities regulators forced companies, for the first time, to reveal details about the pay and perks of their top executives. The idea was that once pay was in the open, boards would be reluctant to give executives outrageous salaries and benefits. This, it was hoped, would stop the rise in executive compensation, which neither regulation, legislation, nor shareholder pressure had been able to stop. And indeed, it needed to stop: in 1976 the average CEO was paid 36 times as much as the average worker. By 1993, the average CEO was paid 131 times as much.
But guess what happened. Once salaries became public information, the media regularly ran special stories ranking CEOs by pay. Rather than suppressing the executive perks, the publicity had CEOs in America comparing their pay with that of everyone else. In response, executives' salaries skyrocketed. The trend was further "helped" by compensation consulting firms (scathingly dubbed "Ratchet, Ratchet, and Bingo" by the investor Warren Buffett) that advised their CEO clients to demand outrageous raises. The result? Now the average CEO makes about 369 times as much as the average worker—about three times the salary before executive compensation went public.
"Mr. Somsel, in an interview Thursday, said he had done further research and was concerned that the radio signal — or the Internet instructions that would be sent, in an emergency, from utilities' central control stations to the broadcasters sending the FM signal — could be hacked into.
That is not possible, said Nicole Tam, a spokeswoman for P.G.& E. who works with the pilot program in Stockton. Radio pages "are encrypted and encoded," Ms. Tam said."
not possible = will be done in days.