News and Opinions

Ten years since the collapse of Lehman Brothers

The financial crisis of 2008 is a reminder of the problems embedded in the financial system. It has been 10 years since the collapse of Lehman Brothers and the system is still flawed, the world prone to another crisis – expected to be worse than the previous one – by as soon as 2020, as per JPMorgan.


Even though everyone talks about the financial crisis, the average person doesn’t exactly know what it is and how it came to be. Well, the simple solution to that is – watch The Big Short, Academy Award winner for all the right reasons. It’s a clever piece of work that will actually teach you things without being a douche about it (ps: It’s also got Christian Bale, Ryan Gosling, Brad Pitt and Steve Carrell).

Check out on IMDB.


Also check out this Bloomberg article that encouraged this blog post: We Never learned from Lehman

Quick Bites

Convince people that they have options when they have none

“Any customer can have a car painted any color that he wants so long as it is black.”

Often paraphrased as “You can have any color as long as it’s black.”

-Henry Ford in his book My Life and Work (1922)

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Note: The fact that there are no options for colors at the time was to scale production and create economical cars. This quote is often taken out of context but its clever wording is probably one of the reasons.

Quick Bites

On Using Empathy

“You know what makes humans different from other animals?

We’re the only species on Earth that observes Shark Week. Sharks don’t even observe Shark Week, but we do, for the same reason I can pick up this pencil, tell you its name is Steve, and go like this!


And part of you dies, just a little bit, on the inside. Because people can connect with anything. We can sympathize with a pencil, we can forgive a shark, and we can give Ben Affleck an Academy Award for screenwriting.

-Jeff Winger in the TV series Community (Pilot)

Quick Bites

Ask first.

“If you’re frustrated because you’re not getting what you want, stop for a second: Have you actually flat-out asked for it? If you haven’t, stop complaining. You can’t expect the world to read your mind. You have to put it out there, and sometimes putting it out there is as simple as just saying, ‘Hey, can I have that?'”

-Sophia Amoruso in her book #Girlboss

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Consumer Behaviour

Parody Display

Why are ripped jeans so popular? Why do you pay more to get a piece of clothing that has been artistically torn up to look as though you waged a war in them?

Social scientists (they are probably as creepy as they sound as their primary job is to dissect the society and observe their functioning) call this parody display. They define it as the mocking of status symbols by deliberately going against them.



Parody display is essentially an act of rebelling against conventional status symbols. Traditionally, a pair of jeans was given the mark of quality based on their ability to not easily be torn or faded. It was the members of the lower social classes who had to wear the same pair of jeans over and over again until they ripped and faded. In this way, ripped jeans were a signifier of low social class.

Now, a member in the elite social class may use such signifiers of low social class as an act of mocking convention and embracing a symbol of a lower social class. This eventually turns into a trend that ends up being blindly followed by all members of the society (Remember in Mean Girls when they cut off Regina’s shirt and it became an instant trend because the popular kid was wearing it?).

The once low class signifier becomes an elite social symbol that the previous users may be unable to afford now. Talk about irony.


Implications on marketing?

It is important to know the psyche of your average target consumer. People generally want to be different from the status quo but at the same time be a part of an exclusive group. The essence of parody display is that of a rebellious teen from a rich home seeking to embrace a social class that is looked down upon (Titanic, anyone?). Positioning a product in such a manner can help tap into a customer base that wants their fair share of defiance and compliance in a single product.

Investment Management

Behavioural Finance

Behavioural finance is a new way of looking at finance keeping in mind that humans are, in fact, emotional beings and prone to taking mental shortcuts that may cause errors in judgments (commonly known as heuristics). It attempts to use psychology in order to explain the seemingly irrational behaviour in the marketplace.


This seems fairly obvious…

It’s really not. There is an ongoing debate going on about the validity of behavioural finance, which took off from about 1980 and is now a massive interdisciplinary field including finance, psychology, experimental economics, behavioural economics and sociology.


What kind of a debate?

Essentially something that goes like this:

Old school finance people: Investors are completely rational and think with their head all the time and make wise decisions.

New age behavioural peeps: Actually, investors are human beings who sometimes make the wrong choices due to emotions and mental errors. This causes mispricing in the market (products such as stocks and bonds are overpriced or underpriced).

Old school finance people: If there is mispricing due to these “emotional investors”, won’t the rational ones in the mix of investors try and to earn riskless profit (otherwise known as arbitrage)?

New age behavioural peeps: Well, no, because:

  1. There are very few rational investors in the marketplace.
  2. Among these, even fewer have the resources to play the long con (rational investors tend to limit themselves to short term profits, as is wise due to the fickleness of the market).
  3. There are transaction costs that reduce the profits they would earn.
  4. Rational investors may not necessarily be skilled investors; their tools may produce bad models and they end up making the wrong choices.

Old school finance people: You’re basing this on studies that were made in the late 1990s. This isn’t universal. And if you’re so concerned, why aren’t you putting forward any solutions to these so-called “emotions”?

And so it goes.


I still don’t get it…

Here’s an example: Suppose you have two accounts, in which one is mentally kept as a retirement fund. From which of the accounts would it be easier to take money? Chances are you would pick the account that you haven’t kept aside as the retirement fund, although the end result is the same. This is a behavioural bias known as mental accounting, where you have multiple mental accounts that affect rational behaviour.

Take another example relating to mental accounting: If you had spent $100 for entertainment and $20 for clothes in a month, chances are that you would be more willing to spend on clothes in the same month than entertainment. Of course, there are other factors at play here; this is a scenario that has been largely simplified.



This is the gist of behavioural finance: Humans are emotional and sometimes make irrational decisions because of it.

Consumer Behaviour


Quite a mouthful, isn’t it? But not that hard a concept.

Anthropomorphism is essentially the humanization of non-human entities like objects and animals. When you say your cat has a certain personality, you are doing something that most people can’t pronounce – you’re anthropomorphising them.

Is this the same as personification?

Not really. Personification is when you attribute human characteristics to non-human items. It is also mostly used by writers to create imagery: Stars in the sky blinked and winked out (from the poem My Town by Sharon Hendricks). Anthropomorphism is to consider them as human beings with human emotions and rational thinking, and is the basis of characters like Winnie the Pooh and the Terminator.

This sounds like a literary thing. How is this related to business?

Well, children’s fairytales and cartoons is one major industry that thrives on anthropomorphism, as well as the movie industry, to a great extent (the successes of the Terminator series and Wall-E, anyone?).

However, anthropomorphism is applied extensively by successful businesspeople everywhere. It is what help marketers create brand personalities. Apple was successful initially due to it projecting itself as the underdog and the misfit (it is too big a company now to claim that status any longer). Apple is associated with simplicity and sophistication, which are attributes you normally give to people, which is what anthropomorphism really is all about.

Why does anthropomorphism work?

We as humans tend to gravitate towards things we consider similar to ourselves. The more it resonates with us, the better. Humanizing brands help in identifying with the brand and help you understand if it is the right one for you. If you wish to purchase a safe car, you would tend to look for brands such as Volvo or German origin cars because that is what these brands are known for.

Anthropomorphism is why a lot of companies have spokescharacters – the Michelin Man, for example, or the Chester Cheetah from Pringles. It is also why robots are being made to look and act more like humans.

And last but not the least, it’s why we spent most of our childhood watching animated cartoons of talking animals.

Quick sum up?

Anthropomorphism is the humanization of non-human entities. It is used by marketers to position their product in the market and create brand personalities and spokespersons that resonate with their target audience.