Influence PEOPLE. Trust and Revenge Are Irrational—But Vital to Our Society | Dan Ariely. Big Think: What would the world be like if everyone always acted rationally? Dan Ariely: I think the world would actually be quite terrible if everybody would be perfectly rational. And, you know, when you a ask people this question initially, you say, “Oh, yes, I want everybody to be rational.” But the fact is, that I picked the title, "The Upside of Irrationality," because I think there’s a lot of wonderful things about irrationality. I’ll give you two examples. The first one is, imagine that you left your wallet on your desk and you went out for lunch. Here’s another example: Imagine a game we call the "trust game" and then I’ll tell you about the trust game with revenge. Turns out people are much nicer than economic theory predicts. So people... this is the case when people are nice in economic theory. Now, again, it’s irrational—why would it be rewarding and pleasurable?
So the way to understand it is that trusting is irrational but we do it. Dan Ariely asks, Are we in control of our own decisions? How Much Money Do You Really Need To Be Happy? 8 High-Profile Financial Scandals in 5 Months. Here's an alarming statistic: In the past five months, the financial sector has had eight high-profile scandals.
The most recent: Standard Chartered Bank which settled with New York regulators on Wednesday for $340 million. The charge: allegedly engaging in illegal transactions with Iranian clients. From worldwide manipulation of interest rates to an admission of fraud written in a suicide note, many of the alleged actions took place years ago but are only now coming to light.
The problems should have gone away when Congress passed financial reforms in 2010. Take a look at eight financial scandals that came to light in the past five months. Date: May 10. Story: J.P. Fallout: There was a Congressional hearing, but no new policy changes. Date: June 27. Story: Libor interest rates are the standard used to determine interbank lending. Date: Aug. 15: New York regulators reach settlement. Story: U.S. sanctions on Iran prevent most banks from doing business there. Date: Aug. 1. Date: July 17. Why I Am Leaving Goldman Sachs. Why I Am Leaving Goldman Sachs. Banking scandal: 'the rot was widespread, the corruption endemic' | Vince Cable | Comment is free | The Observer. Last week's banking scandals demolished a convenient myth: that the banking crash was all the fault of a few colourful rogues like Fred the Shred of RBS and Adam Applegarth of Northern Rock.
We have been reminded, instead, that the rot was far more widespread. Incompetence, corruption and greed have been endemic in British banking. The RBS/NatWest computer failure illustrated the incompetence. Millions of households and firms now have to clean up the mess caused by accidental missed payments, bounced cheques and cash shortages.
Computers do crash, but RBS is far too big and it has eloquently shown the folly of over-centralised, mechanised banking systems which have sucked the life out of local, branch-based, relationship banking. The Libor scandal demonstrated deeply corrupt practices at the heart of Barclays Capital, our leading investment bank, and at others too. Faced with a moral quagmire of almost biblical proportions, what should be done? Third, there has to be accountability. Businesses could leave UK after banking scandals, warns HSBC. Banking scandal: Greedy, shoddy, deceitful. A modern cesspit - Business News - Business. If that reads like a caricature, it is more authentic than the portrait the banks paint of themselves in their multinational, happy-clappy TV advertising – actorly voiceovers oozing sincerity and shots of nicey-nicey advisers handing out financial sweeties.
The reality for us ordinary customers is pin numbers, over-charging and calls to Delhi to speak to a man who says his name is Eric. The real money is made elsewhere. While some bank staff (the disposable foot soldiers – Royal Bank of Scotland has made 36,000 of them redundant in the past five years) cash our cheques, the organisations themselves and their risk-takers operate on different streets, in different ways, and make telephone-numbers money. We know that because we read of the banks' profits, their staff bonuses and the fancy cars and homes they buy with them.
What most of us didn't know before 2007 was exactly how they made it. And neither did the Government. But the banks over-reached themselves. But how smart were they? Global banking scandals: Who is under scrutiny? Chrystia Freeland | Analysis & Opinion. Dan Ariely, author of “The Upside of Irrationality,” has some (unsurprisingly) unconventional recommendations for restoring the health of the financial system and fixing Wall Street pay.
He told Chrystia that the government’s effort to recapitalize the banks and restore liquidity to the financial system are half-hearted since it has done little to restore trust in the industry: I think what is really dangerous is the feeling of mistrust and revenge towards bankers. People at AIG have told me that they’ve been punched — physically, people punched them in restaurants. There’s a deep mistrust. Ariely mentions an experiment he calls the “trust game” that illustrates how vindictive people become once they feel betrayed. It turns out that, contrary to economic orthodoxy, Player A often sent the $100 to Player B and Player B often reciprocated and split the $400 with Player A. [S]ure, people work for money.