The relativity of values causes us to use money irrationally. I go to the supermarket to buy a $15 pen, and the clerk smiles and says, “You can buy this pen for $7 if you walk 5 minutes from here.” Then, most people walk five minutes and buy a $15 pen for $7. But if you want to buy a $1,000 jacket and the clerk smiles and says, “You can get a $992 jacket in five minutes from here,” most people simply buy the $1,000 jacket. Reasonably, walking for 5 minutes equals the effort, and the profit of $8 is the same. However, people might go to a store that sells pens cheaper, but not for the jacket, because the discount rate is too low. In other words, the relativity of comparing values makes us act irrationally. The pen’s discount rate is 55%, and the jacket’s is only 0.8%. Yet, the total amount is the same for all $8, and the effort to gain that profit is identical. Attitudes and misconceptions about consumption influence how we build wealth. - Joseph’s “just my thoughts”
The biggest crisis for CEOs is the financial crisis . However, symptoms precede this financial crisis; staff around the CEOs stop offering advice. If the staff believes that giving advice is futile and will only worsen the relationship, they will refrain from providing further advice. Nevertheless, most CEOs perceive their aides differently when they remain silent. The CEOs interpret the staff’s silence as a resolution to the conflict of interest . Ultimately, the staff’s silence inevitably precedes a financial crisis. - Joseph’s “just my thoughts”