NIMBY (an acronym for the phrase “Not In My Back Yard“), or Nimby, is a pejorative characterization of opposition by residents to a proposal for a new development because it is close to them, often with the connotation that such residents believe that the developments are needed in society but should be further away. Opposing […]
Monthly Archives: March 2014
Other people’s money
A phrase of Adam Smith in The Wealth of Nations (1776) Book V, ch 1, §107, referring to how corporate directors will always be inefficient, because they preside over other people’s money. Attributed to Milton Friedman as a way of expressing the opinion that the government does not carefully spend taxpayers’ money.
Tragedy of the commons
The tragedy of the commons is an economics theory by Garrett Hardin, according to which individuals, acting independently and rationally according to each one’s self-interest, behave contrary to the whole group’s long-term best interests by depleting some common resource. The concept is often cited in connection with sustainable development, meshing economic growth and environmental protection, […]
Bystander effect
The bystander effect, or bystander apathy, is a social psychological phenomenon that refers to cases in which individuals do not offer any means of help to a victim when other people are present. The probability of help is inversely related to the number of bystanders. In other words, the greater the number of bystanders, the […]
Somebody Else’s Problem
Somebody Else’s Problem (also known as Someone Else’s Problem or SEP) is a psychological effect where individuals/populations of individuals choose to dissociate themselves from an issue that may be in critical need of recognition. Such issues may be of large concern to the population as a whole but can easily be a choice of ignorance […]
Normalcy bias
The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of […]
Black swan theory
The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The theory was developed by Nassim Nicholas Taleb to explain: The disproportionate role of high-profile, hard-to-predict, […]
Prospect theory
Prospect theory is a behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known. The theory states that people make decisions based on the potential value of losses and gains rather than the final outcome, and that people evaluate these losses and gains […]
Risk aversion
Risk aversion is a concept in economics and finance, based on the behavior of humans (especially consumers and investors) while exposed to uncertainty to attempt to reduce that uncertainty. Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly […]
Ambiguity effect
The ambiguity effect is a cognitive bias where decision making is affected by a lack of information, or “ambiguity”. The effect implies that people tend to select options for which the probability of a favorable outcome is known, over an option for which the probability of a favorable outcome is unknown. The effect was first described […]