The Twin Dimensions of Trust

To trust or not to trustYour ageing smartphone has just given up the ghost. Would you chance handing it over to a stranger for repairs?

First you would think about whether its memory holds any sensitive data, and wonder what the stranger might do with it. Once you’re satisfied there are no ill intentions, you would decide whether you believe the stranger has the ability to repair smartphones. Given the success of the entire transaction depends on the latter, it seems counter-intuitive that this judgment be made only as a second step, yet this precisely what we all do. Read more on TCAM’s website

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Reputations Lost

Hardly a week goes by without some sorry tale of a lost reputation. If it isn’t a politician accused of ruthless betrayal, or a bank’s name sullied by the fraudulent activities of its traders, it is the country itself that suffers the ignominy of being stripped of its triple-A sovereign debt rating. Reputations are clearly things that people, firms and nations can have, and lose. But what are they? Where do they come from? What are they worth? And what does one do to repair a tarnished one?…

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Straight Outta Courneuve

‘One has to have the passion to teach to join the French education system.’ She spoke from experience. ‘The selection examinations are gruelling, the salaries are very lean and novice teacher recruits have practically no say about where they teach.’ France’s teacher placements are decided by a points system; the more of them a teacher has accrued, the greater the choice in schools. Young, single, childless, able-bodied, entry-level teachers start with a minimum of 21 points, which ensures that they wind up at the most challenging establishments in the most notorious neighbourhoods. Continue reading

The Auto-Enrolment ‘Nudge’

A discussion about the desirability of nudging techniques became very heated at a recent investor seminar on behavioural finance. Policymakers ‘nudge’ when they encourage people to make particular choices by employing techniques drawn from behavioural psychology. For instance, changing the default status in the company pension scheme for new employees from out-unless-opted-in to in-unless-opted-out tends to increase the participation rate. Indeed, this was precisely the issue that stirred delegates’ emotions. Continue reading

‘Nudgers’ are Tarred With the Same Brush

C-minus. This was the grade awarded by journalist Martin Grieve for the accomplishments of the ‘nudging’ techniques implemented over the last few years by the US and UK governments. Nudging is the policy approach that seeks to encourage people to behave in ways that enhance their health, wealth and wellbeing by tinkering with the way choices are presented to them. The obvious appeal of nudging for politicians is that it avoids the need for compulsion, which often provokes electoral resistance, and it avoids the need to provide any kind of public guarantee for the wisdom of the choice finally made. Continue reading

Bailouts, Naturally

The Centre for Economics and Business Research (CEBR), a well-respected UK think-tank, has officially forecast a break-up of the eurozone in the next five years, probably by 2013.[1] The view is not particularly controversial – UK MPs were screaming it across the aisles yesterday.  What was remarkable in the CEBR news release was that it believes that Germany, the paymaster of the current bailout, will not be willing to keep paying for the successive rounds of bailouts in the future. Why not?

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