Teachers Cheating and Incentives
"they began to do anything that would improve their performance on that measure even by a tiny bitâ€”even if they messed up other employees in the process. Ultimately they were consumed with maximizing what they knew they would be measured on, regardless of the fact that this was only part of their overall responsibility."
Profit = Market Price - Actual Cost or Price = Cost + Desired Profit
"Apple would probably sell very few iPhones for $2,000 more than they cost today. How many they would sell at $100 more or $100 less may change significantly but they would still be huge sellers at either of those prices. So that "market sets the price" idea is not 100% accurate (I don't think anyway).
Pricing decisions also have big long term versus short term considerations. Apple has started pricing many things in a way which makes it hard for competitors to undercut them. Apple, almost for sure could charge more for the laptops they sell and the iPad and iPhone. But if they did they make it easier for a competitor to compete on price. This pricing decision is an Apple decision not a market decision."
Charlie Munger on the Psychology of Human Misjudgement
"Early in the history of Xerox, Joe Wilson, who was then in the government, had to go back to Xerox because he couldn’t understand how their better, new machine was selling so poorly in relation to their older and inferior machine. Of course when he got there he found out that the commission arrangement with the salesmen gave a tremendous incentive to the inferior machine.
you really get extreme dysfunction as a corrective decision-making body in the typical American board of directors. They only act, again the power of incentives, they only act when it gets so bad it starts making them look foolish, or threatening legal liability to them. That’s Munger’s rule. I mean there are occasional things that don’t follow Munger’s rule, but by and large the board of directors is a very ineffective corrector if the top guy is a little nuts, which, of course, frequently happens. "
Improve the Affordable Care Act, Don’t Repeal It
"when patients do need care, the processes of care delivery must be redesigned to radically improve the patient experience and reduce errors; 250,000 people dying every year from medical error is unacceptable. Finally, individual hospital and provider outcomes must be made public to the consumer so patient choice can play a role in reform.
Parts of the ACA are clearly on the right track to address health care reform. Other parts need to be significantly improved. The focus should be on improving the affordability of health care for every American. This should be the number one priority of the new government."
Management Web Sites and Resources
French Deming Association
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