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Elizabeth V.

@elizabethvv67

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Bureaucracy

A bureaucracy is an organization that has a complex structure of multilayered systems and processes in order to maintain uniformity and control within the organization.

Conversely, how the bureaucracy runs, inevitably causes the decision-making process to be slow. The bureaucracy stems from the effort to govern and watch over these organizations through systems that are formal and rigid. They place high regard on procedural correctness and hierarchical procedures.

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Bureaucracy Definition

investopedia.com

Bureaucracy is not the same as governance or administration. Although they may seem synonymous, bureaucracy and administrations have different objectives.

  • Administration - they usually direct organizational resources towards a specific and objective goal like generating profits or handing out services;
  • Bureaucracy - they ensure procedural correctness at all times irrespective of the circumstances and goals.
  • Bureaucratic methods are outdated and have a backward-looking perspective, which is causing conflict with entrepreneurs and innovators who prefer forward-looking methods
  • Having a hierarchical decision-making process slows down efficiency
  • They have a rigid system that encloses the practice of protectionism such as being unable to fire someone with low performances due to the arduous termination process
The psychology behind money

Money is not a fixed entity. It is a complex of data points, challenges, and opportunities you encounter and have feelings about. Your decisions about money affect your emotions and behavior.

There are three factors you need to know about the psychology behind your relationship with money:

  • Emotion have a big role in your relationship with money.
  • Anxiety and avoidance create a vicious cycle in relation to money.
  • Psychologically, family and childhood will continue to influence you when you make money decisions.

The Psychology of Money: What You Need To Know To Have A (Relatively) Fearless Financial Life

forbes.com

The most important emotions about money to become aware of are fear, guilt, and shame. Without awareness, these emotions will interfere with your rational thinking.

  • Common fears include fear of having too little money, fear of looking foolish, fear of causing envy.
  • Guilt is about feeling bad about a negative impact you've had on others. You may feel guilty because you have more than your friends, or are not charitable.
  • Shame is feeling troubled when you don't live up to your own values. Shame related to money involves feelings of not having enough money, avoiding thinking about finances, avoiding doing what you're supposed to do with your finances, feeling ignorant, and overspending.

Other emotions that influence your handling of money include envy, greed, and over-excitement.

Mental health problems can have a significant effect on your finances.

  • Excessive use of alcohol leads to poor judgment and inattentiveness to finances.
  • Depression can cause a loss of employment. People with depression also lack energy and a sense of purpose.
  • People with a mild expression of bipolar disorder can experience states with increased energy, decreased inhibitions, exciting plans, and are overstimulated to spend.
  • Adults with ADHD/ADD have the ability to pay intense attention to tasks that really interest them while screening out the tedious or mundane.

All families have their own psychology of money: what they can talk about, who should be in control, how important money is.

You may have experienced subtle pressures to correct the injustices perpetrated or suffered by previous generations. You may feel internal pressure to go against the family money mentality, or you may the first in your family to succeed and may want to give back to the family while neglecting your own financial needs.

Emotions can be useful. They tell you what matters to you.

Mild anxiety is motivating for example. Harness your emotions to attend to what you need to face.

The Apparent Wealth Of Other People

Money cannot buy happiness, but there is a new kind of association found between money and our perception towards it: comparison with other people's wealth.

Money by itself is a tool that can provide us with food, shelter, comfort and clothing. The connection between our happiness and our own wealth is overshadowed by the connection between our happiness and other people's subjective socioeconomic status.

A Key Factor in Well-Being: Others’ Apparent Wealth

insights.som.yale.edu

Conventional wisdom states that relationships and experiences produce happiness, not just money. This thought process, prevalent for decades, is busted by new research, which says that happiness is dependent upon what we think we have as compared to others, and not how much they have.

Happiness, success and wealth are not individualistic or personal, but is a broader, collective pursuit based on our own perception for other people.

Myth: Shop Early for the Best Deals

While early holiday shopping can snag you discounts and the best selection, you are most likely to get the best deal just before holiday shopping.

Retailers need to move holiday-specific merchandise because they are seasonal items. You can probably score deals 20% and 30% deeper in December, while the same article will be slashed by 50% or 60% in January. Not every item should be left for the last-minute sale, but fun and unnecessary items can be bought as the holidays get closer or even post-holiday to stock up for other events.

9 Money Myths & Mistakes That Could Cost You

moneycrashers.com

Coupons are sold in lots to allow couponers to stock up on the best deals.

While coupons are great to save money, it does not make sense to spend on coupons in order to save. Coupons vary greatly by geographic location and store, and may not apply to your geographic area. Instead of buying coupons, get the Sunday paper for better ads, download an app or keep a coupon binder to stash extras.

It makes sense to stock up on non-perishable items such as soap and canned goods.

However, buying wholesale perishable items like fruit and milk might mean it goes to waste if you can't consume it before the expiration date.

Leaving money in your checking account might make you spend more than you planned, simply because the money is available. The money in your checking is also not earning any return.

Instead, lessen the temptation. Try budgeting carefully enough and transfer the extra money into savings and retirement accounts. By only keeping what is needed in your checking account, you won't feel tempted to spend more.

Instantly stopping your bad spending and saving habits may set you up for failure and leave you feeling discouraged and less motivated to improve your finances.

Changing your spending habits should be taken on in smaller steps. For example, if you like to eat out, save it for Saturday night.

Purchasing less expensive items could also mean buying lesser quality, meaning you will have to buy the same article more often.

Knowing how long something should last versus how much you'd like to pay, can balance quality and price.

Credit can come in handy on some big purchases. Rather than using your debit card, it may make better sense to pay with your credit card, then settle the amount immediately.

This is because credit cards often offer more protection for larger items, such as extra insurance against damage or theft, or reward points.

Consumers need to protect themselves when dealing with banks. Don't let the bank make financial decisions for you.

Signing up for a new credit card because you were pre-qualified will not always end in well. Despite good credit scores and money in the bank, only you know your real financial situation.

Your parents were in their prime in a very different social and economic climate. What was good for them may no longer be true.

By managing your money differently to your parents does not make you ungrateful. It acknowledges that your parents managed money in a way that was best for them, while you should do what makes the most sense for you. Thank your parents for giving you solid advice when it comes to financial responsibility, even if you have to handle your finances differently.

A History Of Popcorn

Popped from a strain of corn which is starchy and a hard surface, popcorn was the first variant of maize that came from Central America thousands of years ago.

The sound of popping corn was entertaining, and by the 1950s, popped corn exploded, and was available in circuses and fairs.

Why Do We Eat Popcorn at the Movies?

smithsonianmag.com

Surprisingly, popcorn was not initially available at movie theatres, which were catering to a ‘highbrow clientele’ and didn’t want to spoil their expensive carpets and rugs.

They also thought that the crunchy sound of snacking on popcorn would distract the audience from the movies, which were mostly silent at that time.

  • When movie theatres started showing movies with sound, the audience increased, as now people didn’t have to read the titles from the movies.
  • Popcorn by then was a cheap snack outside of theatres, with a bag costing only about 5 to 10 cents.
  • Moviegoers started buying them before entering the theatres, forcing the owners to halt this practice and restrict the entry of the snack in the theatre.
  • Eventually, the theatre owners realized they could sell popcorn inside the theatres and earn huge profits.
  • Many theatres were saved from going bankrupt solely on the ability to sell the crunchy snacks along with movie tickets.
  • By 1945, 50% of all popcorn that was consumed in the United States was eaten at the movie halls. The owners even used jingles and commercials to entice audiences to ‘go to the lobby’ during the movie interval.

Popcorn is admittedly sold at a huge markup in movies, as they make about 85 percent profits through its sales.

They are cheap to make at scale and are sold at prices that make them a primary profit machine for movie theatres.

Movie halls did amazingly well in the ’50s and the early 60s only to see a decline in ticket (and popcorn) sales due to something new in the market: The Television.

Popcorn machines started to make their way into households and while the sales were down, popcorn was now associated with movies, especially the yellow popcorn which expanded more and had the buttery-yellow tint.

TV and other media eventually lived alongside the movie-going experience.

Popcorn is tied to movies as a ritualistic experience, and many luxury theatre owners provide gourmet-style popcorn to its patrons, along with other high-end snacks(with huge markups, of course) to make the movie-watching experience a complete one.

Management of Common Pool Resources

Political science professor Elinor Ostrom showed that common-pool resources, such as water supplies or fish, can be effectively managed collectively without government or private control.

But this is only possible if those using the resource are physically close to it and have a relationship with each other. They will self-police to ensure community rules are followed.

5 Nobel Prize-Winning Economic Theories You Should Know About

investopedia.com

Behavioural Economics

The economic theory of expected utility maximization says that people will act out of rational self-interest. But psychologist Daniel Kahneman showed that it is incorrect.

  • Common cognitive biases cause people to use faulty reasoning to make irrational decisions, such as the anchoring effect, the planning fallacy, and the illusion of control.
  • People make decisions by using irrational guidelines such as perceived fairness and loss aversion, which are based on feelings, attitudes, and memories.
  • People tend to use general rules, such as representativeness, to make judgments in contradiction to the laws of probability.
Asymmetric Information
  • In 2001, George A. Akerlof, A. Michael Spence, and Joseph E. Stiglitz won the prize "for their analyses of markets with asymmetric information."
  • Economic models predicated on perfect information are often misguided. In reality, one party usually has superior knowledge, such as in the car market, where sellers know more than buyers about the quality of their vehicles and can lead to a market of lemons (adverse selection.)
  • Better-informed market participants can transmit information to lesser-informed participants. Job applicants can use educational attainment as a signal to prospective employers about their likely productivity; corporations can signal their profitability to investors by issuing dividends.
Game Theory
  • In 1994 Nash, Selten and Harsanyi became Economics Nobel Laureates for their contributions to economic game theory.
  • Non-cooperative games are those where participants make non-binding agreements. They base their decisions on how they think the other participants will behave, without knowing how they really will behave.
  • The Nash Equilibrium is a method for predicting the outcome of non-cooperative games based on equilibrium. These findings have been applied to dynamic strategic interactions, and to scenarios with incomplete information to help develop the field of information economics.
The Public Choice Theory
  • James M. Buchanan's work within Public Choice earned him the Nobel Prize in Economic Science in 1986.
  • This theory shows that contrary to the conventional wisdom that public-sector actors act in the public's best interests, politicians and bureaucrats tend to act in self-interest, just like private-sector actors.
  • Using these insights, we can better understand the incentives that motivate political actors and better predict the results of political decision-making, then design fixed rules that will lead to better outcomes.
The Black-Scholes Theorem

This is a key concept in modern financial theory used for valuing European options and employee stock options.

Investors can use an online options calculator to get results by adding an option's strike price, the underlying stock's price, the option's time to expiration, its volatility, and the market's risk-free interest rate.
Robert Merton and Myron Scholes won the 1997 Nobel Prize in economics for the Black-Scholes theorem.

These two fast food companies have fought indirectly for decades. They used product development, such as the same breakfast sandwich, to fight the war.

In 2009, Burger King confronted McDonald's with more comparative marketing. Burger King put the Whopper and the Big Mac to a taste test. But it turned out to be a failure because the public saw the ads as exploitative and racist.

The 12 Most Intense Marketing Wars Ever

businessinsider.com

Warren Buffett's 5 Rules For Investing
  • You don't need to be an expert to achieve investment returns. 
  • Focus on the future productivity of the asset you are considering.
  • If you focus on the prospective price change of a contemplated purchase, you are speculating.
  • Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard.
  • Listening to the macro or market predictions of others is a waste of time - it may blur your vision of the facts that are truly important.

Warren Buffett's 5 Rules For Investing

businessinsider.com

The five-day working week

In the Western world, a five-day working week has been the norm for less than a century.

  • The Reformation carved out Sunday as a holy day in Europe.
  • 19th-century bosses started granting a half-day holiday on Saturdays.
  • Industrialists such as Henry Ford pioneered the 40-hour working week in the early 20th century.
  • In France, the Matignon Agreements of 1936 put the 40-hour week into law.
  • In 1940, America mandated two full days of freedom.
  • China's Communist Party only allowed workers to shift to five working days in 1995.
  • In 2000, the French government reduced the full-time worker's week to 35 hours.

Why the weekend isn’t longer

economist.com

Shorter working weeks have been tried in New Zealand and Sweden, where they resulted in happier, healthier and more motivated employees. Those who work shorter weeks reported that they were more productive.

But for many workers, the feasibility of a three-day weekend depends on whether they can afford to skip a shift. Businesses may also find a four-day work burdensome because the overall output is reduced.

Fear Of Trading

Trading of stocks and bonds has many variables and the uncertainty can lead to fear and anxiety. Fear is the biggest hurdle to overcome in this otherwise lucrative way to earn money.

Knowing about fear and how to overcome it can be beneficial for the newbie.

How to Overcome Your Fears in Trading?

tradingwithrayner.com

The most common fear is the fear of the unknown, where uncertainty and lack of knowledge of the forces at play can lead to a feeling of gambling away one’s money.

This fear can be overcome by expanding one’s knowledge about trading by taking a course or reading relevant books.

We are hardwired to be right and are awarded throughout our life pursuing what is right while being punished if we are wrong. From an early age, we learn to avoid the embarrassment of being wrong.

Trading success does not rely on one being right all the time or even on the IQ of the person. The outcome is equality reliant on the emotional makeup of the person.

The trading graph provides us with enticing opportunities which can make us act impulsively or over-optimistically, leading to huge losses at the end.

If you miss a golden chance to mint instant money, the wise thing is to let it go. Ups and downs happen all the time in the chart.

  • Loss aversion is second nature to most of us, as people prefer to avoid losses as opposed to acquiring a profit.
  • Traders fearing loss hesitate to cut their trades and also to execute it when the time comes. This hesitation makes one miss profitable opportunities.
  • The way to handle this is to trade with money that is disposable for you, and risking small amounts, while coming in terms with the fact that uncertainty is a certainty in trading.

Trading works with profit and loss both, and when we intervene in the natural law of probabilities, we end up losing by trying to minimize giving back the profit attained.

Having a clear trading plan makes us refrain from taking rash on-the-spot decisions based out of fear.

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