This is a really brilliant reception. Money, money.. they are not the things people do!
Who among us has not dreamed at least once, as in a fairy tale: you Wake up and you have a million dollars. Day after day people try to become lucky in the lottery, win big, win a considerable amount at the casino. Here only it is necessary to always remember that there is no easy money. And if you’re lucky and you’ve won large sums in a Swiss Bank, you need to clearly understand what responsibilities it will entail. Big money is big concern. You’ll be surprised, but we can say even more: a large amount of large losses, according to Rus.Media.
We all know that graduates of Harvard (the most popular higher education institutions of the USA) make the best financiers, bankers and CEOs of major corporations and companies. I wonder what methods they use in teaching students?
Will tell you about one of the professors at Harvard Bazerman max. Each year, teacher are able by simple fraud to exchange the banknote denominations of $ 20 for a large. His record is 20 $ 204$! How does he do it? The first lesson he shows the note you want to exchange, the audience and reports that the twenty will get people who will give her the most money. However, there is one condition: the student who will be the winner and icy which will be the second in the race to win, will have to give the Professor the amount that was offered for the lot.
Look at an example to make it clearer. For example, the top two lots 15 $16 $. The winner receives $ 20 in exchange for 16 $, and the person who offered 15 $, would give the Professor the amount. Rules are rules.
Usually the bidding starts the bidding at one dollar and quickly reach 12-16 $. At this point, as a rule, most students leave the auction, and only two people with the highest offers. Next auction is slowly coming to 20 $. And to fail at this stage do not want, because the loser not only receives nothing, but also will be forced to pay the Professor the value of its last item.
Once the auction passes the threshold of 21 $, the real fun begins. In the face of many perplexing: Harvard students supposedly so smart, willing to pay more than the cost of the lot. As practice shows, the auction continues and quickly comes to $ 50, then to one hundred, up to 204 $ (record Bazerman in your entire teaching career).
The question arises: why do people from year to year are willing to pay twenty dollars more money and that it tries to show the Professor? In humans, especially in business, has a weak spot — the so-called fear of losses. Numerous experiments show that any person is behaving extremely irrationally and even inadequate, when it begins to lose money.
Initially, all students believe that they have the opportunity to receive free money. They are not fools and will not pay more than twenty bucks for a twenty dollar bill. But as soon as trades reach 12-16 $ each one left in the game, realizes that he faces a serious loss. Therefore, students begin to raise rates, although not going to do that. So the auction goes to 21 $. At this stage, all parties lose money.
For example, in the end there were only two players. Of these, some will lose only a dollar, and someone twenty. To minimize losses, everyone tries to become a winner. Unfortunately, this race leads only to the fact that both students lose more and more money until the loss reaches such amounts that further nowhere.
The moral of the story is. Any desire to “left” money entails losses. Most interesting is that there are many examples (especially in the stock market), which show the phenomenon Bazerman in action. When a person begins to lose money, he panicked, behaves illogically. Instead of having to record the loss, he hopes to be able to win back the loss. But in the end loses more and more money.