Economics Flashcards
80/20
80% of outcome from 20% of effort
Marginal utility
Decreasing with increasing consumption, diminishing returns
Agency costs
Misaligned incentives bias (risk/reward)
Sunk cost
Move on, business that sunk is at advantage to compete if breaks even
Expected value
Size of the prize
Complements and substitutes
Which is what for us?
Absolute and relative advantages
Benefits of specialisation
Tragedy of commons
Individuals acting for their own beliefs and counter to the common good of all users
Prisoners dilemma
Prisoners self interest goes against value maximisation for a group of them
Red queen effect
Constant evolution needed to survive, otherwise you just ran on the same spot (FCA confessions of a capital junkie)
Constraints
Bottlenecks
Theory of chaos
Tipping point, non-linearity, exponentiality
Alternative costs
Best alternative and costs of alternatives
Equilibrium
Static vs dynamic
Invisible hand and foot
Market forces and silent voting
Game theory
What maximises common outcome and how will players act?
Cumulative advantage effect (akin to compounding)
- rich get richer
- one small advantage of identified and used leads to massive outperformance
Power law / concentration rule
- top 1% of live artists generate 60% of total revenue
- you don’t need to cover everything but key points
