Do you have a Lame Duck Boss?

In game theory a lame duck is a player who remains in the game but has no chance of winning.

This usually happens when CXOs ,Presidents, Managers etc. are getting towards the end of their term and everyone knows it. This is called as lame duck effect.

The lame duck effect at the end of somebody’s term undermines their ability to cooperate, their ability to provide incentives for people to cooperate with them, and causes a problem. Lame duck effect affects top management of companies.

'We usually give you a watch to remind you of your time with us, but decided this would be more appropriate.'

Even ex-prime minister Manmohan Singh suffered from lame duck effect when his tenure ended in 2104.

Manmohan Singh Sonia Gandhi

But it’s not just leaders who run into this problem. It can affect employees too when they approach retirement. As they near retirement, the future does not provide them with any incentives. So retirement can cause lame duck effect.

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Watch out for such lame ducks in organisation, esp. be careful if your boss happens to be a lame duck. He will have no incentive to coach, mentor or sponsor you. You may suffer from career stagnation. Try to find new boss ASAP.

 

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Martha Michelle, Whistle-blower and Cassandra

“Watergate is an immensely complicated scandal with a cast of characters as varied as a Tolstoy novel.”

-Bob Woodward, Journalist, Washington Post

Just like we have Vyapam, Coalgate and Bofors scam,US too had a big political scandal called Watergate. Then US president Richard Nixon was accused of bugging offices of political opponents (esp. Democrats) and those people whom he was suspicious of. It started when five people tried to break in Democratic National Committee headquarters at Watergate office complex. On investigation it was found that it was linked to Nixon’s office.

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Two reports from Washington Post Bob Woodward and Carl Bernstein started writing articles on this scam. It was found that Nixon and his close aides ordered harassment of activist groups and political figures, using the Federal Bureau of Investigation (FBI), the Central Intelligence Agency (CIA), and the Internal Revenue Service (IRS). The scandal led to the discovery of multiple abuses of power by the Nixon administration. Ofcourse, Nixon denied his involvement.

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“You must pursue this investigation of Watergate even if it leads to the president. I’m innocent. You’ve got to believe I’m innocent. If you don’t, take my job.”

-Richard Nixon, 37th President of US

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One of the officials involved in scam was John N. Mitchell, United States Attorney General under President Richard Nixon. His wife Martha Mitchell played role of whistle blower, she got in touch with reporters, but was prevented from making calls to media. Because of her allegations, she was discredited and even abandoned by most of her family, except her son Jay. Martha Mitchel was then accused of being a crazy alcoholic. In psychiatry it came to be known as “Martha Mitchell effect”, i.e. a psychiatrist mistakenly or purposely identifies a patient’s extraordinary claims as delusions, despite their veracity.

“If it hadn’t been for Martha Mitchell, there’d have been no Watergate.”

-Richard Nixon

In mythology there was lady called Cassandra, she was granted gift of prophecy by God Apollo, but along with it she also had curse that no one would believe her word or her predictions, even though they were true. Apollo gave her a gift that would frustrate her.

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Cassandra foresaw the destruction of Troy by the Greeks; when the Trojans found the big wooden horse outside the gates of their city. Cassandra told them that Greeks will destroy them if they bring the horse in the city. She was right, but Trojans refused to believe her and took horse inside their city and committed a fatal mistake.

Jeff Koterba cartoon for June 18, 2013 "Whistle Blower"

Game Theory, Dynamic Inconsistency and Decision Making

“Stay committed to your decisions, but stay flexible in your approach.”

-Tony Robbins

Game theory has interesting concept called as dynamic inconsistency. It refers to a disagreement between your earlier self and your later self about what your later self should do. Informally, it is a failure to act (or prefer) according to plan.

More precisely, if you think “If things turn out like X, I should do Y”, and then things turn out like X, and you don’t do Y, then this contradiction is called a dynamic inconsistency.

'We've got to get our clients to think of long term investments. By long term, I man until we retire.'

In economics, dynamic inconsistency describes a situation in which a decision-maker’s preferences change over time in such a way that a preference can become inconsistent at another point in time. This can be thought of as there being many different “selves” within decision makers, with each “self” representing the decision-maker at a different point in time; the inconsistency occurs when all preferences are not aligned.

An interesting experiment was carried out to understand this concept.

In the experiment, subjects of the study were offered free rentals of movies which were classified into two categories of movies – “lowbrow” (ex. The Breakfast Club) and “highbrow” (ex. Schindler’s List) – and researchers analysed patterns of choices made.

In the absence of dynamic inconsistency, the choice would be expected to be the same regardless of the delay between the decision date and the consumption date ex. if I want to watch Schindler’s list, I will watch it anyway, whether it is today or 2 weeks later.

In practice, however, the outcome was different. When subjects had to choose a movie to watch immediately, the choice was consistently lowbrow for the majority of the subjects. But when they were asked to pick a movie to be watched at later date, highbrow movies were chosen far more often. Among movies picked four or more days in advance, over 70% were highbrow.

 

Thus time horizon can lead to inconsistencies in decision making.

 

“I bought a company in the mid-’90s called Dexter Shoe and paid $400 million for it. And it went to zero. And I gave about $400 million worth of Berkshire stock, which is probably now worth $400 billion. But I’ve made lots of dumb decisions. That’s part of the game.”

-Warren Buffett

Another example is that of campus placements. In beginning of course everyone wants to join only Fortune 500 Company, but if at the end of course there is recession in job market, candidates will grab any job offer rather keep trying for Fortune 500 companies.

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Mathematically if you are given an option of Vice (grab any job that is offered to you) or Virtue ( opt for only Fortune 500 company), look for payout in each case.

Vice gives yield of 100 now and 100 later, while Virtue gives yield of 25 now and 200 in future. Assume immediacy effect of 0.5 i.e. present gets discounted by .05

If you want to start immediately then present value is

Virtue= 25+ (0.5 x 200) = 125

Vice= 100+ (.5 x 100) = 150

So Vice is preferred, thus in short term Vice is always preferred because of discounting of future value.

But if you are looking for long term horizon, then entire thing is discounted

Virtue = 0.5 x (25 + 200) = 112.5

Vice = .05 x (100+100) = 100

Hence in long term Virtue gets preferred.

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Voronoi Diagram, Cholera Outbreak and Beer

“After careful inquiry, we see no reason to adopt this belief. We do not feel it established that the water was contaminated in the manner alleged; nor is there before us any sufficient evidence to show whether inhabitants of that district, drinking from that well, suffered in proportion more than other inhabitants of the district who drank from other sources.”

-William Farr, British Epidemiologist

Georgy Voronoy was Ukrainian mathematician, who came up with a spatial analysis technique which is named after him- Voronoi diagram.

It’s a diagram created by taking pairs of points that are close together and drawing a line that is equidistant between them and perpendicular to the line connecting them. That is, all points on the lines in the diagram are equidistant to the nearest two (or more) source points.

The figure shown below tells how a Voronoi diagram is made. It has number of applications in field of science and technology ex. in cell biology, astrophysics, geometry, ecology etc.

It is also used in field of epidemiology, where Voronoi diagrams can be used to correlate sources of infections in epidemics.

Infact a similar technique was used by British Physician Dr. John Snow even before George Voronoy was born.

In 1854, there was outbreak of Cholera in Soho district of London esp. in areas close to Broad Street. Soho district then was facing problem of large influx of migrants. There were no proper housing and sanitation facilities, resulting in dirt and filth. Lack of sewer lines resulted in all waste (human and animal) getting dumped in Thames River.

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This filth and stench resulting from it gave rise to Miasma Theory. Miasma was considered to be a poisonous vapour or mist filled with particles from decomposed matter (miasmata) that caused illnesses. The miasmatic position was that diseases were the product of environmental factors such as contaminated water, foul air, and poor hygienic conditions. Such infection was not passed between individuals but would affect individuals within the locale that gave rise to such vapours. It was identifiable by its foul smell. This theory had its supporters including epidemiologist Willaim Farr.

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It was easy to correlate filth in Soho district with outbreak of Cholera.

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Dr. Snow has different theory. He did not believe in Miasma theory. He believed that Cholera was spread by contaminated water rather than foul air. To prove his theory, he studied map of Soho district and cases of Cholera in different areas of district.

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“That is possible; but I believe that the poison of the cholera is either swallowed in water, or got directly from some other person in the family, or in the room; I believe it is quite an exception for it to be conveyed in the air; though if the matter gets dry it may be wafted a short distance.”

-John Snow, British Physician.

He found that maximum number of cases were in and around a water pump in Broad Street. Dr. Snow concluded that water from this pump was responsible for spreading Cholera in region. He told authorities to break handle of pump so that people could not draw water from this pump. This resulted in sudden drop in Cholera cases, supporting this theory that it was water from pump that was spreading Cholera.

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Dr. Snow’s research is pioneering work in areas of spatial analysis and research methodology. Till then causative agent for Cholera was not identified. It was much later i.e. 1884, that German physician and microbiologist Robert Koch during his research in India was able to determine the causative agent of cholera, Vibrio cholera.

It was found that human and animal waste from Soho district was discharged in Thames River. This water got into wells, and pumps were installed to draw water from these wells. The pump at Broad Street was drawing water from well whose water was contaminated and whoever drank water from pump suffered from Cholera.

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But task of doing extensive research in correlating contaminated water of pump with cases of Cholera was done by Reverend Henry Whitehead. Whitehead believed in the miasma theory of disease, he also felt that this disease was punishment from God. Initially Whitehead worked to disprove Snow, but after interviewing lot of people, he eventually started believing John Snow’s idea that cholera spreads through water contaminated by human waste. Snow’s work, particularly his maps of the Soho area cholera victims, convinced Whitehead that the Broad Street pump was the source of the local infections.

“You and I may not live to see the day, and my name may be forgotten when it comes, but the time will arrive when great outbreaks of cholera will be things of the past; and it is the knowledge of the way in which the disease is propagated which will cause them to disappear.”

-Reverend Henry Whitehead

There was one exception to this theory, there was a brewery situated near Broad Street pump- Lion Brewery, yet workers from this brewery did not suffer from Cholera.

On investigation it was found that workers in brewery were allowed to drink beer free of cost, so they never drank water. So though the brewery was situated just one block east of the Broad Street pump, workers drank beer instead of water; the fermentation killed the cholera bacteria, and none of the brewery workers contracted cholera.

Drinking beer proved to be life saver.

Elinor Ostorom, Wintering Laws and Tragedy of Commons

“Unfortunately, many analysts – in academia, special-interest groups, governments, and the press – still presume that common-pool problems are all dilemmas in which the participants themselves cannot avoid producing suboptimal results, and in some cases disastrous results.”

― Elinor Ostrom, Governing the Commons

In Game Theory there is an interesting concept of ‘Tragedy of the Commons’. It refers to a situation where a shared resource is overused by the people using it, even though they know that if they all overuse it then it will run out. Examples are overgrazing on common grasslands, overfishing in rivers or oceans, polluting rivers by releasing effluents in them.

tragedy of commons

For example every Koli (fisherman) in Mumbai knows that if there is too much fishing then eventually fish stocks will run out. If all the fishermen could agree to fish at sustainable levels then the fish stocks could last forever. However, if one fisherman starts to overfish, then others might as well overfish as well to get as much as possible before the stocks run out. It only takes someone to start overfishing to mean that it is then logical for everyone else to overfish.

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Citizens of Varanasi should know this concept, here everybody is competing to pollute river Ganga. Crores of rupees have been spent on cleaning Ganga, but tragedy of commons ensures that money goes waste and Ganga gets more polluted every year.

Elinor Ostrom was a economist who studied this phenomenon and came up with solution to resolve tragedy of commons. She won Noble Prize for her research.

elinor ostrom

Based on her extensive work, Ostrom offered eight principles for how commons can be governed sustainably and equitably in a community. These are…

  • Define clear group boundaries,
  • Match rules governing use of common goods to local needs and conditions.
  • Ensure that those affected by the rules can participate in modifying the rules.
  • Make sure the rule-making rights of community members are respected by outside authorities.
  • Develop a system, carried out by community members, for monitoring members’ behaviour.
  • Use graduated sanctions for rule violators.
  • Provide accessible, low-cost means for dispute resolution.
  • Build responsibility for governing the common resource in nested tiers from the lowest level up to the entire interconnected system.

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Good example of this is a Swiss village where farmers tend private plots for crops but share a communal meadow to graze their cows. While this would appear a perfect model to prove the tragedy-of-the-commons theory, Ostrom discovered that in reality there were no problems with overgrazing. That is because of a common agreement among villagers on number of cows that will be allowed to graze. They have what are called as wintering laws, i.e. during winter number of cows who graze is strictly regulated, if any exceeds the number of cows allowed, then he is fined. This prevents overgrazing.

In India polluting of lakes, rivers etc. can be regulated if locals are made responsible for prevention of tragedy of commons.

Forensic Psychiatry, McDonald’s Triad and Serial Killer

“Together or alone, the triad behaviours can indicate a stressed child with poor coping mechanisms or a developmental disability; such a child needs guidance and attention. However, until we design and carry out better empirical studies than we’ve seen thus far, researchers and media agencies should refrain from stating that the triad identifies a future serial killer.”

Katherine Ramsland, Psychology Today

Forensic Psychiatry is a branch of psychiatry where the medical and the legal worlds overlap. It involves application of medical psychiatric expertise in legal contexts.

'On your personals AD, you say you're a butcher . . . that's fascinating. Tell me about that . . .'

John Macdonald was a forensic psychiatrist, who after some research came to conclusion that if set of three behaviours i.e. obsession with fire setting, cruelty to animals and persistent bedwetting were exhibited by child (all three or any combination of two) then it was predictive of or associated with later violent tendencies esp. those related to serial offences. These three set of behaviours were called Macdonald’s Triad.

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He first proposed this triad in published paper titled “The Threat to Kill”.

Macdonald came to this conclusion based on research done by comparing 48 psychotic patients with 52 non-psychotic patients who all had threatened to kill someone (they threaten to kill but did not actually commit crime)

Later some more research was carried on McDonald’s Triad. But since research group was small and unrepresentative, study lacks reliability and hence its predictive value is questionable.

“An extensive review of the literature reveals little empirical support for the validity of this triad. The fact that the Macdonald triad has been and continues to be presented as fact suggests a need to revisit the process by which theories of violent behaviour are derived and sustained.”

-Kori Ryan, author of The Macdonald Triad: Predictor of Violence Or Urban Myth?

But some criminologists have applied the triad to various offender populations, especially serial killers. They found that violent offenders do have excessive fire-setting, animal cruelty, or bedwetting past age five in their backgrounds, but rarely do all three behaviours show up.

Fire setting is result of extensive periods of humiliation suffered by several adult serial killers during childhood. These repetitive episodes of humiliation can lead to feelings of frustration and anger, and gets released in form of fire setting.

'I wanted to set the world on fire. I never dreamed I'd be charged with arson.'

Some offenders kill animals as a rehearsal for killing human victims. Cruelty to animals is mainly used to vent frustration and anger the same way fire setting is. During childhood, serial killers could not retaliate towards those who caused them humiliation, so they chose animals because animals were viewed as weak and vulnerable.

'How many times has Mum told you not to be cruel to dumb animals?'

Persistent bed-wetting beyond the age of five ( called as Enuresis) can be humiliating for a child, especially if he or she is belittled by a parental figure or other adult as a result, this could cause the child to use fire setting or cruelty to animals as an outlet for his or her frustration.

'Is there anything worse than waking and going to the bathroom?'

The triad behaviours are not causal when examining a relationship with later predatory behaviour, but rather, are predictive of an increased likelihood of the future behaviour patterns.

 

Game Theory, Nash Equilibrium, Pareto’s optimal, Kashmir problem

“I want to stress that it is only the people of Kashmir who can decide the future of Kashmir. It is not that we have merely said that to the United Nations and to the people of Kashmir; it is our conviction and one that is borne out by the policy that we have pursued, not only in Kashmir but every where.”

-Nehru, Prime minister of India

India before independence consisted of parts ruled by British government, and princely states. Post-independence India was partitioned into two nations- Muslim dominated Pakistan and Hindu dominated India. Princely states were given option to join either of these nations or if they wanted, to remain independent. Jammu and Kashmir was one such princely state, which wanted to remain independent, it was Muslim dominated state ruled by Hindu ruler Hari Singh. Founder of Pakistan Jinnah claimed that Kashmir should go to Pakistan being a Muslim majority state, Indian Prime minister did not oppose it, so Kashmir could have gone to Pakistan but some political developments prevented that.

Muslims of Kashmir were not happy with Hari Singh; they found a leader in Sheikh Abdullah. Indian Prime minister Nehru too was not happy with Hari Singh and was friendly with Sheikh Abdullah. Both Sheikh Abdullah and Nehru did not like founder of Pakistan M A Jinnah. This set ground for what is called in Game theory as Peace War Game.

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Without going into details of history of Kashmir, suffice to say Kashmir got divided between India and Pakistan. Some parts went to Pakistan like Gilgit, Baltistan and Azad Kashmir; remaining parts like Kashmir Valley, Jammu and Ladakh remained with India. Today both claim whole of Kashmir belongs to them and this according to them is solution to Kashmir problem.

In game theory there are two important concepts- Nash Equilibrium and Pareto’s optimal.

Pareto’s optimal is an economic state where resources are allocated in the most efficient manner i.e. where one party’s situation cannot be improved without making another party’s situation worse. Pareto efficiency does not imply equality or fairness. The final allocation decision cannot be improved upon, given a limited amount of resources, without causing harm to one of the participants.

Nash Equilibrium is a concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his or her chosen strategy after considering an opponent’s choice. Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies.

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Coming back to Kashmir, Pareto’s optimal can be reached if both India and Pakistan sit together and resolve Kashmir issue. Both countries made efforts to resolve it on negotiation table.

First effort was made when UN intervened and asked both India and Pakistan to hold plebiscite and let Kashmiris decide their future. But for that to happen both countries had to withdraw their armies, but that did not happen and plebiscite never took place.

Second effort was made when Indian Prime Minister Lal Bahadur Shastri and Pakistani President Ayub Khan signed agreement at Tashkent. Again issue could not be resolved.

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Third attempt was made when prime ministers of both countries – Indira Gandhi and Bhutto signed Shimla agreement and decided to solve problem mutually. Shimla agreement was soon forgotten.

Shimla-agreement

“If we want to normalize relations between Pakistan and India and bring harmony to the region, the Kashmir dispute will have to be resolved peacefully through a dialogue, on the basis of the aspirations of the Kashmiri people.”

-Pervez Musharraf, ex- Army head and President of Pakistan.

Fourth attempt was made when President of Pakistan Musharraf met Indian Prime Minister Vajpayee. Again talks failed.

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Pareto’s optimal cannot be reached because neither politicians nor army is interested in resolution of Kashmir issue; also both players don’t know what optimal solution can be.

Nash equilibrium on the other hand is tit for tat game, and better alternative to Pareto’s optimal, since jingoism keeps both army and public busy. Since optimal solution cannot be found, Nash equilibrium is the only alternative. Also if one player goes for war, the other player has no option but to go for war.

So far I have talked about only two players; actually this game has other players also like citizens of Kashmir, political parties etc.

Earlier there was one more player- China. China believed that some part of Kashmir belonged to them, which they call as Aksai Chin. Instead for going for Nash Equilibrium or Pareto’s optimal, China decided to play game differently.

Mao

Nehru was friendly with China and signed treaty called Panchasheel (non-aggression treaty) treaty with China. Nehru also gave lectures on universal peace at various forums. China under Mao and Zhou Enlai did not believe in ideas of Nehru. They tolerated Nehru for some time and then decided to teach him a lesson. They suddenly attacked India and defeated Indian army. They occupied parts of India. Their intention was to take back Aksai Chin and humiliate Nehru. They were successful in both.

They also grabbed few more parts of Kashmir from Pakistan called Trans Karakoram tract. With this they declared that they had resolved their part of Kashmir problem, now dispute was only between India and Pakistan.