Marketing and Product

1. On the Basics: a. We have asserted that marketing is really the strategic idea of ‘connectedness’ with customers. From the perspective of your final project company, identify and discuss how your company connects with its customers – select from either the marketing concept or the selling concept. Be sure to define each concept and be detailed in your response. A: Marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. customer focus and value are the path to sales and profits) The marketing concept is a customer-centered sense and responds philosophy. (The job is to find the right products for your customers. ) My project company Samsung took the marketing concept and connect with its customers. Samsung chooses to concern more about customers’ need and invent products that solve customers’ problems rather than make it and sell it. Before inventing cellphone products it will do a lot of surveys and experiment to find out what problems exist and concerned seriously in modern world.Activities like free gift and sample-with-purchase, free experiencing and considerate after-selling service are good ways of finding what customer want and asking for feedbacks. Not only can these marketing strategies collect data and examples for its study, but also can build a strong relationship with current and potential customers. Besides that Samsung also develop a system of contacting with customers, which uses cell phones and email. By emailing and texting customer what new products are and asking their ideas about them helps improve products and make products more customer-orientated. . Referring to your project company provide a well-developed characterization of your market segment and your target market. i. Identify the most urgent issue necessary for you to penetrate or protect your desired market space. Mark et Segmentation: Target Customers: Urgent issue: The most urgent issue is to differentiate this smartphone from other smartphone of other brands by marketing. There are many smartphones in the market and the most competitive one is the iphone5 from Apple.These two smartphone have similar function and both have good reputation in repairing skins. To market the serum from Lauder we have to stress its function of giving you the most attractive function such as Pop up play and Face Zoom which Apple doesn’t have. c. Lastly, concisely address each of the following central positioning questions pertaining to your project company/brand: i. What position, if any, do you already have in the prospect’s mind? Here I list some of the competitive offerings Full range of service after selling Apple 9. 0 Nokia 7. Motorola7. 5 HTC 7. 0 Sharp6. 5 ZTE6. 0 Quality of product The branches of product ii. What position do you want to own? With a strong brand advantage and the luxuriant Apple store, Apple now is still the brightness star in people’s mind. But what I am going to do is to give customers more space to experience our product when they come to Samsung store . I aim to own the first place. iii. What companies must be outgunned if you are to establish or maintain that position? From my point of view, Motorola would be the first one to be outgunned.The reason is that: 2. On the Marketing Mix: Discuss the strengths and weaknesses of your company’s marketing mix and offer strategic recommendations on how the company should handle the most burning marketing problem/opportunity impacting the strategic performance of the ‘mix’. Consider shaping your answer with the 5Cs in mind Strengths: Lauder has diversified marketing strategies from retailing stores to TV commercials to spas. It present the product in many dimensions and gives consumer a full and impressive understand of the product.Weakness: Most of Estee Lauder’s retail stores are owned by the company. Lauder doesn’t want to cooperate with other retailers in order to keep their image of high-end. However, marketing the serum means you have to highly exposed your product to the public and remind them there’s always this choice for them and they have easy access to the product. Solutions: The burning marketing problem is galaxy does not have a strong differentiated position from other brands and not impressive to cosumers. Firstly, we should think of customer solution.By launching ad campaign in which stress the function of the product and list features that other cellphones don’t have, we are actually telling consumers that the extra benefits they can get from choosing this cellphone. Besides that we can set up experience lounge in some shopping malls for people to try the product out as well as teaching them how to use it to achieve the best effect. Secondly, we focus on customer cost. To some people who have never used it before they might not want to spend that much money in trying a new product.So when we are launching this product we can offer discount or selling as a package to lower the price so that more potential customer will be willing to have a try. Fourthly, we can promote the communication. By establishing two-way communication can really strengthen the tight with consumers. Why many brands are forgettable is because they don’t have a strong connection with consumers. By contacting consumers with email and message we can always expose them in the information of the products which increase the chance of them choosing the product. 3. On Consumer Buying Behavior: a.Referring to your company, describe a scenario of your typical customer using the buyer decision process when considering purchasing your company’s product/service. Use the language from our readings. i. Consider pulling from your database research offered in our library workshop to authenticate how your customers behave in you r market environment. b. Additionally, from the criteria that influence the rate of adoption, in what area does your company/product excel and what area does your company/product require attention to strengthen the adoption process? Be detailed in your response. . First we have Need Recognition. The buyer recognizes a problem or need of the cellphone by talking to a friend of watching an ad. Second, he will do Information Search. Ads are from commercial sources-controlled by marketers. He may also find information from personal sources, public sources and experiential sources. By watching ads or listening to the advice of a close friend or trying the samples she will get the information about the cellphones. Third, we have Evaluation of Alternatives. He will evaluate alternatives with calculations and logical thinking.By taking each attribute into consideration and compare different cellphones he finds out that cellphones from Samsung will satisfied his need with the functions galax y has. Fourth, he will make the Purchase Decision. After ranking brands and forming purchase intention, he is about to buy the cellphone. Now if attitudes of others also points to buying it and there’s no unexpected situational factors like worsening economy or dropping price of competitors, he will by the rather expensive cellphone form Samsung. Last but not least there’s Postpurchase Behavior.He will feel either satisfied or unsatisfied with the galaxy,which is the gap between the expectations and the product’s perceived performance. b. EXCEL Relative advantage: 4. 8† Super Amoled HD display Pebble blue or marble white Battery: 2,100mAh (wireless charging optional extra) Camera: 8MP rear; 1. 9 MP front S-Beam High speed file transfer via NFC and WiFi Direct, between two phones touched together, operating at up to 300Mbps. Smart Stay The phone tracks your eyes, so as long as you’re looking at it, the display won’t dim or turn off.What Needs to be STRENGTHEN? the purpose of the current market situation, the major brands of mobile phone chain (such as Suning, Gome, etc. ) occupies a large market, so we are faced with considerable pressure. According to the market potential, the Guangdong market level of consumption analysis, consumer groups, after all, is limited, so we have a unique service to impress potential customers. d out the differences. 4. On Branding and the Product Lifecycle: a. Referring to your company, identify the one major strength and weakness of the brand. i.What are your recommendations to strengthen the competitiveness and equity of the brand? ii. Identify at what stage your brand falls within the product lifecycle model. What is required for you to ensure that the customer remains eternally ‘connected’ to your brand? a. Strength: Samsung has sufficient fund for inventing so it’s able to apply high-tech into their products, which makes it a sell point to the customers because nowad ays everyone likes new technology. What’s more, when inventing the product Samsung will have so many test before they finally launch the product so the product is definitely safe.Weakness:The four-nuclei graphics card needs large amount of electricity The outer skin is easily getting old because of its material i. To increase competitiveness and equity of the brand first we need to think about the brand positioning Marketers need to position the brand clearly in the target customers’ mind. I will position the brand at the highest level which is on strong beliefs and values. By launching ad campaigns we deliver the concept that the serum form Estee Lauder is more than a serum, it’s a lifestyle you choose. â€Å"To be fabulous and healthy everyday gives you the confident to face every challenge. I would also establish a mission for the brand and a vision of what the brand must be and do. Through the promise the serum deliver to buyers we can strongly impress the buyers with the features, benefits and experience. Second, I will introduce line extensions. Redesigning the form, color and size of the screen we can easily change the image of this old product in consumers mind. The Samsung cellphone old outfit is no longer suitable for modern consumers because it was designed long time ago and the main concept is to express its luxurious.Nowadays people want products which can present youth and energy. So changing the outer packing is necessary in delivering new message to the consumers. ii. The product falls on the maturity stage in which product’s sales growth slows and profits stabilized. In order to ensure the customers remain eternally ‘connected’ to the brand marketers should evolve to meet changing consumer needs. Modifying the Market- The company should try to increase consumption by finding new users and new market segment for its brands.The Vita-mineral Radiance Serum from Lauder is often adopted by women over 30 yea rs old for the special benefit in fighting wrinkles. But actually it is suitable for women over 20 years old because it can give them the healthy grow of skin and prevent early wrinkles. Modifying the product- Changing the characteristics such as features, style or funtion to attract new users and inspire more usage. The old funtions of the Samsung were designed in the 2000s’ and it’s too garish for young people. Some details are unnecessary and will mislead consumers that this is a product for mid-age people.By changing the cellphone to a more simple and portable style can really modify the image in people’s mind and attract younger consumers to buy it. Modifying the marketing mix- Improving sales by changing one or more marketing mix elements. The company can offer new or improved services to buyers. Distributing free, new samples and offering free tour to â€Å"Korea Tour† after purchasing the serum can really attract consumers to buy this old product. The company can offer a lower price after discount the product to increase the scale of sale.The company can also launch a better advertising campaign or use aggressive sales promotions. By redefining the product’s use and target customer, the company can launch ad campaign that highly stress the benefits this cellphone offer and help consumers notice their potential need. Company The analysis of the company allows for the evaluation of the company's objectives, strategy and capabilities. These areas indicate to an organization about the strength of the business model or whether there are areas for improvement, as well as how well an organization will fit with the external environment. 6] †¢ Goals & Objectives: An analysis on the mission of the business, the industry of the business and the stated goals required to achieve the mission. †¢ Position: An analysis on the Marketing strategy and the Marketing mix. †¢ Performance: An analysis on how effectively the b usiness is achieving their stated mission and goals. †¢ Product line: An analysis on the products manufactured by the business and how successful it will be in the market. [5] [edit] Competitors The competitor analysis takes into consideration the competitors position within the industry and the potential threat it may pose to other businesses.The main purpose of the competitor analysis is for businesses to analyze both the current and potential nature and capabilities of a competitor in order to be prepared against competition. The competitor analysis looks at the following criteria's: †¢ Identity competitors: Businesses must be able to identify competitors within their industry. Identification of whether competitors provide the same service/products to the same customer base will be useful is gaining knowledge on direct competitors.Both direct and indirect competitors must be identified, as well as potential competitors that may enter the market. †¢ Assessment of co mpetitors: The competitor analysis looks at competitor goals, mission, strategies and resources. This will allow for a thorough comparison on the goals and strategies of both competitors and organization. †¢ Predict future initiatives of competitors: An early insight into the potential activity of a competitor will help a company be prepared against competition. [6] [edit] Customers Customer analysis can be vast and complicated.Some of the important areas that a company analyzes includes:[5] †¢ Demographics †¢ Advertising most suitable for the demographic †¢ Market size and potential growth †¢ Customer wants and needs †¢ Motivation to buy the product †¢ Distribution channels (online, retail, wholesale, etc. ) †¢ Quantity and frequency of purchase †¢ Income level of customer [edit] Collaborators Collaborators are useful for businesses as they allow for an increase in the creation of ideas, as well as an increase in the likelihood of gainin g more business opportunities. 7] The following type of collaborators are: †¢ Agencies: Agencies are the middlemen of the business world. When businesses need a specific worker who specializes in the trade, they go to a recruitment agency. [8] †¢ Suppliers: Suppliers provide raw materials that are required to build products. There are 7 different types of Suppliers: Manufacturers, wholesalers, merchants, franchisors, importers and exporters, independent crafts people and drop shippers. Each category of suppliers can bring a different skill and experience to the company. 9] †¢ Distributors: Distributors are important as they are the ‘holding areas for inventory'. Distributors can help manage manufacturer relationships as well as handle vendor relationships. [10] †¢ Partnerships: Business partners would share assets and liabilities, allowing for a new source of capital and skills. [11] Businesses must be able to identify whether the collaborator has the capab ilities needed to help run the business as well as an analysis on the level of commitment needed for a collaborator-business relationship. [6] [edit] ClimateIn order to fully understand the business climate/environment there are usually many different factors that can affect a business, and if researched well it will contribute to a company that can respond well to change. An analysis on the climate is also known as the PEST analysis. The types of climate/environment firms have to analyse are: †¢ Political and regulatory environment: An Analysis of how active the government regulates the market with their policies and how it would affect the production, distribution and sale of the goods and services. Economic Environment: An Analysis of trends regarding macroeconomics, such as exchange rates and inflation rate, can prove to influence businesses. [5] †¢ Social/cultural environment: Interpreting the trends of society;[5] which includes the study of demographics, education, culture etc. †¢ Technological analysis: An analysis of technology will help improve on old routines and suggest for new methods in being more cost efficient. In order to stay competitive and gain an advantage over others, businesses must have sufficient knowledge on the technological advances

Development Of The Shoulder Arthroplasty Health And Social Care Essay

Like the hip, the shoulder includes a ball and socket articulation. The replacing of the shoulder articulation is the operation which occupies the 3rd topographic point among common joint replacing, merely after replacing of the hip and articulatio genus articulations. Historically, shoulder replacing has a clear and defined objective which to reconstruct or retroflex the bone of the glenohumeral and the rotator turnup. The nature of shoulder arthroplasty is the most complex articulation Reconstruction in the human organic structure. It need see the factors of figure and fluctuation. With the development of surgical techniques and clinical doctors recognize, shoulder joint anatomy engineering has made important advancement. With the development of surgical techniques and clinical doctors recognize, shoulder joint anatomy engineering has made appreciable advancement. The modem epoch of shoulder replacing is no more than thirty old ages old range to present society. The conventional en tire shoulder arthroplasty ( TSA ) achieves this end that it brings significantly improves map for many patients and reduces pain they suffer. The cost of wellness attention is increasing every twelvemonth. There is a turning demand that the costs of intervention be justified by proved measuring of quality of life betterment. In finding the appropriate use for joint replacing surgery, and therefore specifying its function in the intervention of degenerative upsets, effectiveness rating is critical. Regional fluctuations in the frequence of joint replacing processs and the deficiency of consensus sing many facets of related patient attention, which have spurred involvement in the methodological analysis of surgical results research. The purpose is to better specify the function of specific interventions through valid, evidence-based clinical result and epidemiological surveies.1 The development of the shoulder arthroplastyThe history of shoulder replacing can be dated from late nineteenth century France. A Parisian tooth doctor, J. Michael Porter, who designed pean unreal shoulder which successful dainty a patient whose shou lder was already tubercular infection. This operate can be classified as an original implant in the country of glenoid part. ( Lugli, 1978 ) In 1953, the Neer produced vanadium unreal humeral caput prosthetic device to handle humerus near terminal comminuted break and the consequence achieved satisfactory healing consequence. From now shoulder arthroplasty began to be widely used in clinical intervention. The technique advanced highly rapidly in following few old ages. Since half shoulder arthroplasty ( besides called unreal humeral caput prosthetic device replacing, hemi-arthroplasty, HA ) successful treated humeral breaks near terminal, this technique applied the range of the shoulder joint replacing bit by bit spread to osteoarthritis, rheumatoid arthritis. This operation does non handle the shoulder articulation disease that the both sides of the articulate surface caput of the humerus and glenoid pit have been broken. In 1970s, Neer added polythene glenoid pit prosthetic device on the unreal humeral caput prosthetic device, in order to develop the first coevals which is Neera†¦ entire shoulder prosthetic device system. Because the glenoid pit prosthetic device can easy be abraded, loosed and shoulder joint replacing inspection and repair engineering non mature, clinical applications tend to utilize HA, but there are besides glenoid pit abrasion job. Biological surface angioplasty began to clinical applications in 1988, ( Krishnan SG, 2007 ) in order to supply a method to work out glenoid pit bring by the wear job of the humeral HA prosthetic device. At the same clip, other types of the shoulder joint replacing engineering besides begins to look and use, such as unreal humeral caput prosthetic device surface replacing, shoulder arthroplasty somersault angioplasty, and so on. At present shoulder arthroplasty has become a preferable method to handle most patients suffer from diseases of end-stage shoulder arthritis and humerus near terminal comminuted b reak. The current research chiefly focused on the humeral caput prosthetic device and glenoid pit prosthetic design, in order to cut down glenoid pit wear.2 the caput of the humerus prosthetic device replacing positionShoulder joint prosthetic device design for the chief portion of the caput of the humerus. The survey found that the curvature radius of the caput of the humerus was inconsistent, in each subdivision on the consecutive size is non the same. Now the caput of the humerus prosthetic device design is the caput of the humerus diameter and thickness correlativity coefficient as 0.75 ( Gregory T, 2007 ) The size of the caput of false organic structure and the shoulder articulation stabilisation straight relate to the strength of environing musculus in shoulder arthroplasty. Not suited prosthetic device caput will impact the caput of the humerus normal centre of rotary motion, change the shoulder articulation lever arm about, so that the musculus map alteration, causes a shoul der to shoulder, environing soft tissue hurt replacing failure. So first of all should take appropriate false figure figure to reconstruct the humerus near terminal anatomy, so as Reconstruction of soft tissue around the balance ( Yuan benxiang, 2005 ) . Normal shoulder the caput of the humerus and glenoid pit are non fiting, glenoid pit surface curvature radius is bigger than the curvature radius of caput of the humerus 2 ~ 3 millimeter, and the being of articular gristle and dishes lip in do them both basic matching. Shoulder arthroplasty â€Å" mismatch † refers to curvature radius of the caput of the humerus prosthetic device and glenoid pit prosthetic device are different, the ratio between them called consistent index, research shows that when the index is 0.80 ~ 0.88, joint stableness is best ( Anglin C, 2001 ) . It is considered that it will be better if the glenoid pit and the caput of the humerus prosthetic device in shoulder arthroplasty are wholly fiting from some theories, but in pattern most bookmans believe that do non fit more contributing to the stableness of the shoulder. The ground include two chief point: one is that does non fit the design can be in prosthetic device disruption happened when half the extra burden transportation to the environing soft tissue, cut down direct action in the articulations of dishes from head burden from head burden is the consequence of joint prosthetic device relaxation after one of the chief grounds. The 2nd point is that the comparatively little caput of the humerus false physical lessening abrasion atom coevals. The design and choice of caput of the humerus prosthetic device depends on the length and the mush pit breadth. Medullary pit breadth and humeral diameter relate to the thickness of the cerebral mantle, seemingly show approximately broad at the top and narrow in the underside. When intraoperative to the full enlarge mush aid prosthetic device grip with the environing bone, and to recognize the full contact force per unit area distribution better, better prosthetic device handle stableness. At present, although the 3rd coevals of anatomical type prosthetic device system already can good better the forecast of patients. Through the betterment of the caput of the humerus prosthetic device, prosthetic device single adaptability increased, shoulder map and the quality of life improved.2.2 the caput of the humerus prosthetic device fixed engineeringThe caput of the humerus prosthetic device grip fixed means has bone cement and the bone cement two. Bone cement into the bone cement and close terminal bone cement fixed engineering, non-bone cement is divided into force per unit area with fixed and compression bone grafting.3 glenoid pit prosthetic device replacing positionGlenoid pit prosthetic device has been use as clinical applications for 30 old ages, but it is still controversial. In the shoulder arthroplasty after usage joint prosthetic device will non merely increase the operation clip, intraoperative sum of hemorrhage and operation trouble, and a series of postoperative complications may happen, particularly glenoid pit prosthetic device relaxation. Glenoid pit prosthetic device relaxation is the consequence of operation failure, demand to make shoulder joint replacing surgery is one of the chief grounds for the alteration.3.1 glenoid pit the applied anatomy and prosthetic device designGlenoid pit prosthetic device ideal design is to recognize anatomical Reconstruction, glenoid pit the applied anatomy and biomechanics belongings of the prosthetic device design has an of import function. At present there are chiefly the undermentioned difference: ( 1 ) the glenoid pit prosthetic stuff: all sorts of polyethylene prosthetic device and metal pat of polyethylene prosthetic device. ( 2 ) The form of the glenoid pit, Due to the glenoid pit bone mass less, addition with age will do bone loss, and patterned advance of disease cause bone defect, and glenoid pit signifier will be altered evidently, increase the trouble of the anatomical Reconstruction. In or der to recognize the anatomical Reconstruction, bookmans design the ultra-high molecular weight polythene cuneus gasket to counterbalance for defect, preoperative adopts modern imaging engineering after bone and joint harm, right rating, in order to run into the single intervention. Glenoid pit prosthetic device nidation manner: joint prosthetic device after implant place to action in bone cement bed emphasis and glenoid pit prosthetic device have obvious influence on the burden, prosthetic Angle can besides impact the caput of the humerus in glenoid pit prosthetic device place [ 16 ] . The survey found that the glenoid pit and shoulder blade organic structure between axis Angle, Angle in the forward 2 A ° and pour 7 A ° between, after an norm of 1.23 A ° pour, glenoid pit prosthetic device downward inclining a hitter to cut down the caput of the humerus prosthetic displacement, so glenoid pit prosthetic device nidation in moderate backward, downward inclining can break cut do wn partial head burden, and false organic structure wear and loose ( Yuan benxiang, 2005 )3.2 glenoid pit prosthetic device fixed engineeringGlenoid pit prosthetic fixed engineering harmonizing to the fixed manner into bone cement and the bone cement, harmonizing to the prosthetic device design patterns into bolt fixed and stagger fixed. At present most bookmans think bone cement is non bone cement fixed more stable house. Neer design application foremost glenoid pit prosthetic device is made from polyethylene stuffs, ellipse, curved back, the bone cement and stagger fixed, after 30 old ages of survey the proficient betterment is really little. Pure polythene, bone cement fixed, arc line drive prosthetic device design still is the best pick, the difference is bolt fixed than stagger fixed more stable.4 other technological advancement4.1 glenoid pit biological surface angioplastyIn the presence of glenoid pit prosthetic device relaxation and pure HA the glenoid pit wear, glenoid pit biological surface angioplasty began to clinical applications. It is in the footing of HA will joint capsule, wide facia, Achilles tendon or semilunar cartilage and organ transplant fixed on glenoid pit, and â€Å" file dishes and activities to reshape † engineering. The angioplasty is chiefly used in immature and middle-aged patients, but compared with the TSA its healing consequence is unsure. Krishnan reported the shoulder arthritis utilizing glenoid pit biological surface angioplasty intervention after five old ages, it was found that glenoid pit of wear and tear visible radiation, the caput of the humerus prosthetic device stableness, did non happen secondary to false organic structure wear and the dishes brachial arthritis, shoulder articulation map is good. They think the glenoid pit biological surface angioplasty can obtain and TSA similar clinical results. The operation that immature patients and to shoulder joint map demanding patients has a opportunity to go through a comparatively long recuperation achieve good shoulder articulation map recovery, and to avoid a joint prosthetic device nidation after the hazards of, but still necessitate farther measure its effectivity and persistent. By utilizing this engineering is still need to be s olved such as transplant stuff beginning, its lastingness, surgical hurt jobs such as large. The development of tissue technology make it go the solution of this job is one of the most effectual ways.4.2 shoulder joint replacing alteration processsShoulder arthroplasty can look for shoulder hurting worse and functional restrictions, need to shoulder joint replacing alteration processs. Neer will be its ground loosely grouped into the undermentioned three facets: [ 2 ] : ( 1 ) the hapless preoperative status, such as rotator turnup hurt, infection, etc. ; ( 2 ) the operation and the false organic structure of complications, such as during the operation, the structural harm, anatomical Reconstruction failure ; ( 3 ) the jobs, such as rehabilitation exercising, hapless dishes brachial joint continued instability. HA postoperative lead to pass the most common ground is glenoid pit wear, TSA for dishes brachial joint continued instability and glenoid pit prosthetic device relaxation5 the market of shoulder articulation replacingThe cost of wellness attention is increasing every twelvemonth. There is a turning demand that the costs of intervention be justified by proved measuring of quality of life betterment. In finding the appropriate use for joint replacing surgery, and therefore specifying its function in the intervention of degenerative upsets, effectiveness rating is critical. Entire joint replacing has become a feasible option for immature, middle-aged, and aged patients who want to prolong athletically active life styles. Although shoulder arthroplasty can break easiness serious shoulder joint disease patients clinical symptoms and better with shoulder map, but at present the application more focal point on low to the map demand of the aged patients. And in the clinical pattern of many immature and middle-aged patients because of the serious harm to the same shoulder surgery. The traditional surgery, ankle arthrodesis and joint operation from off the serious influence shoulder articulation map and patient quality of life, immature and middle-aged patients to joint functional demand is high, the more hope the shoulder arthroplasty. To handle immature and middle-aged patients with shoulder joint replacing, clinicians ever hold more conservative. on the one manus, because of the shoulder articulation is the whole organic structure of big articulations activity scope biggest articulations, its activity strength, more easy to do prosthetic device relaxation and wear, particularly glenoid pit false organic structure parts, shorten the prosthetic device life ; On the other manus because of shoulder articulation inspection and repair engineering non mature. But there are besides clinicians claims for immature and middle-aged patients with shoulder arthroplasty, because: ( 1 ) Tell from the map upper limbs than lower limbs are more likely to avoid weight factors, can cut down false organic structure wear ; ( 2 ) from the surgery manner, ankle a rthrodesis and joint from off the shoulder articulation map BASIC is lost, the serious influence patients quality of life, and shoulder arthroplasty can maintain a certain extent with shoulder map, better the quality of life. Burroughs [ 31 ] on 19 instances of average age, 38.6 old ages of the immature and middle-aged patients with shoulder joint replacing therapy, after a average followup of 5.6 old ages, and from diseases and surgical types of categorization treatment. The consequences showed that patients postoperative shoulder articulation map and quality of life improved, no postoperative shoulder articulation map impairment, and TSA is HA has good healing consequence. Sperling [ 32 ] reported so far the longest followup were the consequences of the survey, this survey included 78 patients with HA and 36 instances of patients with TSA, age are & lt ; fifty old ages old, and a average followup of 16.8 old ages. The consequences showed that HA and TSA on hurting alleviation and functional betterment of all can obtain long-run, steady consequence, HA a TSA in quality of life better healing consequence, but the outlook of life is comparatively short and overhaul rate is higher. He thought that should be based on the single state of affairs of patients with disease patterned advance and take the right manner of replacing. At present shoulder arthroplasty can do immature and middle-aged patients get better and stable forecast, But for the immature and middle-aged patients with TSA or HA, is still controversial. At present, the shoulder arthroplasty is still has many jobs, the chosen replacing engineering, fixed method and stuffs to acquire the best healing consequence, still necessitate big multicenter randomized controlled tests and long-run follow-up observation. A hot topographic point in the survey of many focal point on glenoid pit portion ; Shoulder joint prosthetic device system are largely based on western people study design, with the popularisation and application of engineering in our state, how to plan a more suited for China ‘s patients with shoulder articulation prosthetic device system ; Whether can utilize tissue technology theory and material better work out the glenoid pit surface angioplasty are faced with the job ; For joint map of the high demand on the immature and middle-aged patients, how can break better the long-run forecast. All these need farther research to better and corroborate. LUGLI, TOMASO M.D, Artificial Shoulder Joint by Pean ( 1893 ) : The Facts of an Exceptional Intervention and the Prosthetic Method, Clinical Orthopaedics & A ; Related Research: June 1978 – Volume 133 – Issue – ppg 215-218 Krishnan SG, Nowinski RJ, Harrison D, et Al. Humeral hemiarthro plasty with biologic resurfacing of the glenoid for glenohumeral arthritis-Two to fi fteen-year results. J Bone Joint Surg ( Am ) , 2007, 89 ( 4 ) : 727-734. Gregory T, Hansen U, Emery RJ, et Al. Developments in shoulder arthroplasty. Proc Inst Mech Eng H, 2007, 221 ( 1 ) : 87-96. e ¬c , e‘?e†¹Ã‚ ±? µÃ‚ · . e‚ ©a†¦?eS‚a?†c†?e §?a†°-a?Za?†¡a?â€Å"e ®?e ®? . aa?Sec §Ã¢â‚¬ËœÃ¢â‚¬Å¡a?- , 2005, 8 ( 6 ) : 571-573. Anglin C, Wyss UP, Nyffeler RW, et Al. Loosening public presentation of cemented glenoid prosthetic device design brace. Clin Biomech ( Bristol, Avon ) , 2001, 16 ( 2 ) : 144-150. Boileau P, Avidor C, Krishnan SG, et Al. Cemented polyethylene versus uncemented metal-backed glenoid constituents in entire shoulder arthroplasty: A prospective double-blind, randomized survey. J Shoulder Elbow Surg, 2002, 11 ( 4 ) : 351-359.

Planning and Controlling Direct Labor Costs Essay

Planning and Controlling Direct Labor Costs - Essay Example In the current competitive business environment, companies that cannot afford to charge low prices on their products are likely to be excluded from markets. In this regard, cost cutting allows firms to employ low pricing strategy and still make profits (Burns, Quinn, Warren & Oliveira, 2013). Business costs come in many forms. As noted by Burn et al. (2013), manufacturing companies incur expenses in acquisition of raw material and labour among other things. Sometimes it is not easy to assess the value contributed to the company’s product or service by the expenses incurred. According to Burn et al. (2013), many firms find it hard to assess actual contribution of their employees to their products. In this regard, planning and control of direct labour costs is one of the most challenging tasks for businesses. This paper discusses direct labour costs in relation to a soda ash mining company called Tata Chemicals Magadi. Importance of the study Tata Chemicals Magadi has been exper iencing financial difficulties in the recent years. As a result, the company hired an expatriate in May this year to help streamline its operations. After analysing the company’s operations, Paul Patterson (the expatriate) asserted that the Magadi’s financial problems were mainly caused by poor planning and control of labour costs. He therefore proposed a plan to improve labour efficiency. He took office in July 2013 but his progress has never been assessed until today. This study aims at determining the extent to which Patterson has been successful in streamlining the company’s direct labour costs. The specific objectives include: (1) determining actual contribution of individual employees to product output in the months of September, October and November. (2) Reconciling variances and providing information that will help the company to properly plan and control its direct labour costs. (3) Enhancing maximum output from employees. Analysis Direct labour cost co mprises of human resource expenses that goes directly to processing of products or provision of services (Horngren, Datar & Foster, 2003). In a manufacturing set up, direct labour cost would be the expenses incurred in form payment of wages and other benefits to employees who are directly involved in product manufacturing (Horngren, Datar & Foster, 2003). In this regard, as pointed out by Horngren et al. (2003), benefits may range from house allowance, transport allowance, medical cover, social security contribution and workmen’s compensation insurance among other things. This excludes labour expenses related to administrative functions such as accounting, human resources and purchases departments. Some functions in manufacturing department such as supervision and other overhead costs are not part of direct labour costs (Horngren et al., 2003). Tata Chemicals Magadi mines and dries soda ash from Lake Magadi before packaging and transporting to the market. In this case, direct labour costs comprise of wages and other benefits enjoyed by employees who are directly involved in mining and drying of soda ash. There are seven plant operators in charge of mining machines and 22 in charge of driers. In addition, there are 6 drivers who operate tracks that transport wet ash from the lake to the drying plants 4 in charge of front-end loaders at mining

Ethical Considerations in Leadership Article Example | Topics and Well Written Essays - 1000 words

Ethical Considerations in Leadership - Article Example His message was that, I should keep down my head and avoid drawing any attention concerning the problems that the company was facing in performance. The fact that the control purpose of the meeting was to be affected by the manager’s demand made me very uncomfortable. Covering up the problems that led to poor company performance worried me because this was very unethical. I was also concerned of being accused of things that the manager could not have told me, which could also be affecting the company. Despite these misgivings, I went ahead to attend the meeting, just to avoid being at loggerheads with the manager. On attending the meeting, I had to address issues concerning the company that I had no slight idea about. When I informed the manager about eh meeting and the questions asked, he was very angry at me, accusing me of betraying him. After a month, I was given notice concerning my job contract termination. A month later, I was fired with claims that I was a poor perform er and could not meet the company’s expectations. This really discouraged me and to me, the manager was unethical in carrying out his duties. Problem Identification Real leaders consider doing the right thing irrespective of its consequences when faced by difficult ethical dilemmas (Kidder, 1995). Managers experience such dilemmas when caring out their daily chores as Greenfield (1991) says. Developing moral obligations to the companies and their employees leaves them in a situation where they have to determine what is morally right. Unfortunately, very few leaders are usually able to deal with such conflicts. Until recently, ethical issues were accorded little attention in dealing with organizational conflicts (Kidder, 1995). The problem in this case is that, the manager was not ready to attend the meeting because he well understood the problems. He therefore feared any confrontations from his superiors and thus opted to send me to represent him. Though he could have been co nfronted for the poor performance of the company, he could have handled the situation better than me, because he was more experienced. As for me, I was very new in such issues, despite not being responsible for the problems. The manager could have also sent his assistant who could have also argued out the issues better than me, just a junior staff. It was unfortunate that the questions asked were very unfamiliar to me. On the other hand, the manager knew very well where he was failing but kept on assuming his responsibilities. For example, poor trained staff and late delivery of supply goods were the main problems. These are issues he could have addressed early enough by seeking help from his seniors. On the other hand, these were issues he could have presented before the board during the meeting. However, he was reluctant because he well knew that he was to blame for such mistakes. Another solution was for the manager to attend the meeting and air his views concerning the problems in a way that worked out better for him, since he was in a better position to defend him. As Kidder (1995) says, management crisis are better handled by the affected party than a second or third party. However, the best solution to the manager, which is also ethical, was for him to attend the meetings personally, explain everything, and ask for assistance in proving the company’s performance. For example, since the main problems were delayed delivery of goods and untrained staff, the manager could h

Mary Morrison's Ethical Issue Case Study Example | Topics and Well Written Essays - 750 words

Mary Morrison's Ethical Issue - Case Study Example This case study highlights the key issues concerning software piracy, the ethical dilemmas faced by the users, and the implications of indulging in software piracy. In the process, it also provides a comprehensive review of the rapidly deteriorating ethical beliefs and the negative impact of such acts on the society as a whole. Mary Morrison, a business student at Big State University was gifted a new PC by her parents. The computer had the basic Windows Operating system installed and no other software was provided with it. Mary being a student required Microsoft Office Suite software to assist her in her studies such as making spreadsheets and presentations. Since the computer had no such software installed, she was compelled to buy it instead. On inquiry it was found that the software she needed would cost her $199. Although Mary belonged to a financially well-off family, she faced financial difficulties due to the rising costs of education. She had a definite source of income from her job at a bookstore but she was saving money for her college trip and spending it on the software would hamper her plans to do so. Her friend Frank, offered to provide her with a pirated copy of the software she needed. Hence Mary was faced with a critical ethical dilemma - that of choosing to forego her moral values and us e the pirated software for free or use up her savings for the college trip and buy the legal copy of the software, and uphold her moral values instead. Software piracy is one of the most pressing issues in present times, and has of late become a global phenomenon costing the industry billions of dollars every year. Ever since the growth and expansion of the market for software there has been a simultaneous rise in the illegal sale and download of the same (Grabosky and Smith, 1998; Drahos and Braithwaite, 2002). The illegal sale and download of software tends to dissuade firms from

A critical perspective on branding, concerned with issues in practical Essay

A critical perspective on branding, concerned with issues in practical application of branding practices - Essay Example Lury (2004) also adds that employees form a core part of brand promotion in any company; large businesses use employees as mediums to promote their brands not only to external potential customers but also to the existing and potential internal customers. A reflective analysis on the impact of branding on employees and organizations has been undertaken in the present context. Working with a large and influential brand is usually regarded as an example of prestige and privilege. One such brand is the HSBC bank that will be studied for its efforts to enhance brand image in this analysis. Drawing points from Dr. Brannan’s teachings from the theme titled, ‘Branding: Being 'you' inside and outside the organisation,’ likeliness of impact of branding on employees will be assessed against literature propositions. This analysis will specifically focus on Warhurst and Nickson’s (2009) perspective of employees’ position in branding efforts, which is a mere objec t of brand personification in order to please customers and stakeholders. In this process, an attempt will be made to understand how branding impacts employees’ place and meaning in organizations by relating to personal experiences. Important findings from literature will be evaluated along with identification of some critical reviews of management specialists. These evaluations will be helpful in explaining practical positions held by individuals in organizations with respect to brand promotions based on personal experiences. Important conclusions will be subsequently highlighted. 2. Working at HSBC: About HSBC: HSBC Bank is multinational bank setup in more than 80 countries and has over 7200 offices with more than 287,000 employees. HSBC bank provides the widest range of financial services to over 89 million customers across the globe. Its services are in retail banking, personal financial services, commercial banking and markets, and global private banking (HSBC history, n .d). Working as a back-office executive at HSBC bank is perceived as a prestigious position owing to its brand value besides its size and strength. This brand is considered as one of the greatest success stories in modern marketing, according to the bank’s website. HSBC was ranked number one financial services in 2011 in one of the surveys and its brand value is estimated to be worth $ 27.1 (Advertising, 2012). The HSBC brand: Globally, all HSBC offices and businesses follow certain common practices, which, they believe, reinforce their brand. One such practice that reinforces brand image and corporate reputation through certain regulations is its ‘core standards of behaviour,’ based on integrity, trust and excellent customer service; these standards facilitate building HSBC’s reputation, keeping different units united, in making them unique and earning them the competitive edge in the market. These core standards define certain behavioural components for all employees towards active listening, understanding, freedom to deliver, integrity, straightforwardness, forward thinking, and teamwork (Employee Handbook, 2008). Like many other far-fledged businesses and corporate sector firms, HSBC’s brand image is emphasized in almost every aspect that is visible to its internal and external customers. Its brand image also reflects in its choice of aesthetics in terms of interiors, logo design and color as well as in its rules for employee etiquettes. For instance, its slogan, ‘The World’s Local Bank,’ actually depicts HSBC’s mission of making its presence felt in every country and region by offering diverse and customized

Contract and procurement management Case Study Example | Topics and Well Written Essays - 2000 words

Contract and procurement management - Case Study Example The budget of Ruralshire County is short and it is expecting high quality of services. Traditionally, only a small number of local contractors have the high capacity (100 seater) vehicles for these routes and because the routes are long they are challenging in terms of the ability of vehicles to keep to time, especially in adverse traffic and weather conditions. In keeping with wider practice, bus and coach operators deploy older vehicles to school transport and pupils can expect to travel in vehicles more than 10 years old.  The client is unhappy at the high cost and unreliability of a cluster (8) of long-distance routes transporting around 700 secondary age pupils from the city of Maynard Kaines (located outside the county) to Amplewealth (the county town) some 22 miles away where these children attend four local grammar schools. The combined cost of these contracts is 1.1M per annum. This report intends at identifying the important of this project. This report also intends at identifying the important of reverse e-auctions for the upcoming project. Moreover, this report ends at presenting a business case that identifies the benefits, costs, risks and gaps of the upcoming project (Worksafe.vic.gov.au, 2015). Effective procurement is a key to provide best services to businesses and customers. Selection process of suppliers is a way to identify a best person or company for a service. There are a lot if procurement approaches to select vendors to get service and goods. There are a lot of possible re-procurement approaches to achieve the business objectives mentioned in our case study of home-school transportation. In our case it is important to reduce the costs associated with the transportation of children from homes to schools. The award of new contract is strongly associated with the cost effectiveness of the transportation coupled with less travel time (Imagination.lancs.ac.uk, 2015).

Site plan Case Study Example | Topics and Well Written Essays - 1000 words

Site plan - Case Study Example Such information can be acquired by conducting a SWOT analysis of the business in attempts to determine the strengths, weaknesses, opportunities and threats affecting the business. This work evaluates the provided plan of a proposed cupcake shop along the beach by using the SWOT Analysis. In any business, it is vital to assess the industry in order to be fully informed of the requirements. It is essential to have credible information regarding the targeted customers and their needs. The intended business has to meet and satisfy the needs of the targeted customers. If the business achieves this objective efficiently, chances of success are high. Therefore, as far as this proposed business is concerned, SWOT analysis will provide the necessary information to make the business a success. Strengths The site location’s strength is based on the demographics of the area. The demographics, according to Russ (2009) give a person the idea of the population surrounding the area. Since th e site is supposed to host a cup cake studio, the area demographics, which includes the beach, is suited for the site location. People of different age groups love the beach, and this is an opportunity to serve these people with cupcakes. The beachgoers love to relax as they enjoy themselves with their favorite snacks and beverages. Therefore, the fact that there is a cup cake shop near the beach is an advantage to the business since it is near the targeted customers. Also, because the business is located on the first building accessible from the beach is an advantage. Had the business been located in other buildings far away from the beach, proximity could have been affected. It is imperative to have a business located in a place easily accessible to customers. Easier proximity to a business plays a significant role in the growth and development of the business. When customers can easily access the business, the business is guaranteed to succeed. Furthermore, the immediate surround ing area has numerous apartments that will provide the proposed business with the required customer base for the business to

African American Essay Essay Example for Free

African American Essay Essay My name is Michelle Williams-Agwagu and my ethnicity group is African American. African Americans came here by forced immigration. They were not invited here to America, and they certainly did not come here by choice. They were forced and taken on ships that brought them to America just to become slaves to the white people. Upon arrival to America, African Americans were treated poorly. Many of them were torn apart from their family members and some were infants that had no knowledge of whom they were as they became older. The group faced many challenges such as prejudice, segregation, and racism. A set of codes were implemented that all African Americans had to adhere to, or they would be punished by either getting beat by their master or possibly killed. African Americans were not allowed to have any education; therefore, no one was allowed to learn to read or write. The slave owners made sure of that and if any slave did learn to read or write, he or she would be punished by their owner. They were separated from the other people because of the color of their skin and was not allowed to eat, play, drink or have any interaction with the masters or the master’s family members unless it was to do household chores as their servant. They did not have many opinions when it came to making decisions. Unfortunately, African Americans were affected by dual labor market and red lining. In the early stages of African American emancipation, not many of them had education or access to quality higher education. Even if they had this education, they were forced into the lower labor market and regardless of the quality of their education they would start in much lower positions than that of their white counterparts. African Americans were affected by this because they were not given any meaningful jobs with any type of significant pay structure and benefits. The jobs were more short-term than long-term. Red lining is a reality in African American communities across the United States. Red lining is a practice which discriminates against Blacks of all economic sectors when they apply for home and business loans and consumer credit. Blacks, more than any other racial or ethnic group (with the possible exception of Native Americans), receive less credit. Through all the bad treatment that African Americans received from â€Å"white† Americans, they (AA) still participated in reverse discrimination. Reverse discrimination is still a problem here in the United States because it is racism; and racism is racism, no matter how we try to spin it. â€Å"Society classes an African American discriminating against a Caucasian as reverse discrimination because for most of American history, it was the African Americans who were persecuted for something that they could not control their ethnicity. † (Libra, n. d. ) African Americans have also been affected by the glass ceilings form of discrimination, and that is still an ongoing problem also. â€Å"The glass ceiling refers to the barriers that often confront Ethnic Americans and women in trying to reach the upper ladders of corporate America. African Americans do not earn the same pay for comparable positions† (The Glass Ceiling for African, Hispanic (Latino), and Asian Americans, 2008. ) as that of their white counterparts in the same job. Environmental justice issues have plagued African Americans in the past and continue to do so today. In the past century, factories emitting toxic fumes and hazardous waste were positioned near large African American sections of major cities as well as small towns inhabited by mostly African Americans. Today, in areas of Louisiana along the Mississippi River known as â€Å"Cancer Alley†, petroleum and chemical manufacturing plans spew fumes and release carcinogenic chemicals near the water supplies of African Americans. There has long been controversy over this modern issue however no other ethnic or racial group has the desire to have these companies relocate factories near their living areas. African Americans have participated in affirmative action since the very beginning, in fact, affirmative action was implemented in the United States largely for the benefit of this group. Affirmative action makes a valiant attempt to make up for past and current discrimination against a certain group and makes jobs and opportunities that members of this group would not have access to ordinarily. Some African Americans agree with Affirmative Action, while some others disagree with it because they perceive it to be a handout and not being able to get jobs or opportunities on one’s own merit. We, as African Americans have and still face many forms of discrimination. Will it ever end, I do not think so. There have been attempts to close the gap and bring us into that circle of equality but I do not see that ever happening in its entirety, all though we know that all men are â€Å"supposedly† created equal. I culturally identify more with African Americans because it is who I am. However, it is evident that racism with any prefix is a problem in America it is a problem in the entire world, and I hope people will start accepting people as people rather than accepting that they must hate people because of the color of their skin. Reference Page Libra, Themis. (n. d. ). Is reverse discrimination a problem in the United States?. Helium The Glass Ceiling for African, Hispanic (Latino), and Asian Americans (2008). Ethnic Majority.

Reaction Paper on Vampires Essay Example for Free

Reaction Paper on Vampires Essay Vampire movies always have lots of fans, and of course, I’m a vampire film fan, too. In the past, vampires looked so scary: they were old, extremely ugly, knows nothing but killing†¦ Nowadays, however, people start to make vampires more â€Å"human†(and sometimes they are made even better than human beings): They are so good-looking they have breath-taking faces, they have sexy figures; they are immortal  they won’t die because they are too â€Å"old†, in other words, they are undead. They still looked young even thought they are hundreds years old; they have so many superpowers they read minds, they move as fast as wind, they are unbelievably strong. Now people even made vampires know more than just hunting like animals they know romance as well, they will fall in love with like human do†¦ I think this might be one of the reasons why people love vampire movies that much: because we find that our dreams (which can never come true in real life) come true in these movies. Reverse Psychology† is often used on children, through which parents let their children to do something by telling them †don’t do this. † This is because children are more likely to respond orders with reactance. In the movie â€Å"let the right one in†, when Eli and Oskar first met, Eli told Oskar â€Å"I can’t be your friend†. But obviously, Oskar didn’t have a clear desire to make friends with Eli. Eli started stating a negative in order to achieve her positive goal. And this is the use of reverse psychology. Based on the film notes, Eli’s intentions regard the function of Oskar is a replacement of Hakan. But even after reading the film notes, I still feel that Eli’s ultimate goal with Oskar is not just for finding someone to kill people and get blood for her. For me, Eli is just trying to have a friend who can keep her company. It’s easy to tell that Eli’s attitude towards Oskar is totally different from that to Hakan, she cares about Oskar (at least for me it is). At the beginning I thought Hakan is the father of Eli, but later on I found he’s more likely to be someone who helps Eli finding â€Å"food†. He might used to be Eli’s lover, but that’s just a guess, because there might be other reasons why he chose to take care of Eli. For example, he might be the one who cause Eli’s changing into a vampire, he feel guilty so that he chose to stay with her. According to the notes, at first Eli tried to sense Oskar as a potential serial killer, then she took control of Oskar’s self-image†¦Assume that Eli is a pedophile, she might keep Oskar, a young boy with her and replace Hakan, who’s no longer useful to her. In this film, the uncanny ability is shown to audiences over and over again, and it presents that love is just an excuse, which is used to disguise the subliminal reality of objectification and exploitation. By looking at the way Oskar dresses and behavior, we can tell that Oskar is an effeminate personality in this movie. I think that’s why the boys enjoy making fun of him. I thought that the reason why Oskar didn’t ever fight back is because he is so cowardice that he’s afraid that they might hit him harder if he fights back. But the note assumes that Oskar is actually sublimating his unconscious sexual attraction by allowing himself to be victimized. I think that because the group of bad boys always attacked Oskar and he couldn’t get any help from someone else, so he was mentally ill already. He had a strong desire of revenging but he didn’t have the â€Å"courage† to do so. He wants to kill people if it is allowed. Just because he knows that he cannot do it, he transferred his inner desire of killing to collecting the newspaper clippings on murder. I think his too cowardice. When I first watched this movie and saw Eli asked Oskar to teach her how to play the Rubrik’s cube, I didn’t think too much about this. But after reading the notes, it shows me that Rubrik’s cube might be one of the tools Eli use to achieve her subterfuge (which is to get close to Oskar). I think because Eli is a vampire who cannot live without drinking human’s blood, so it’s better for her to live in a lower class apartment so that she won’t catch people’s attention, otherwise she will get into trouble so easily. In a telling scene, we saw Eli’s naked groin with a horizontal suture, which means Eli was a boy but castrated by someone.

Compare and Contrast Thomas Kuhn and Karl Popper

Compare and Contrast Thomas Kuhn and Karl Popper Positivists regarded empirical observation freed of preconceptions as the means by which facts were obtained and explained. This view, however, has been greatly contested since the Vienna Circles avid pursuance of it. The main problems include its inability to be checked and criticised by the scientific community members. In other words, they are subjective, fallible and thus unreliable.  [1]  It is this initial discontent with positivism, especially with logical positivism which prompted Karl Popper to develop his Theory of Falsifiability, a theory which no longer relies on induction but on deduction, which accepts that truth is not attainable and which casts theories aside which have been refuted by only a single piece of empirical evidence. Falsification is also a demarcation between science and non-science, something which has proved to be very controversial. Thomas Kuhn, perhaps the most well known critic of Poppers work, does not believe in induction or deduction as methods through which science progresses. Instead, he introduces the concept of normal science, revolutionary science and paradigms. The differences between these two mens work will be analysed, the implications of each for the conduct of social sciences commented upon and the work of Imre Lakatos, a twentieth century philosopher of mathematics and science, highlighted in order to illustrate just how much both philosophers resonate in the social sciences as a whole. Karl Popper, Positivism and his Theory of Falsifiability Karl Popper was first and foremost a philosopher of the natural sciences,  [2]  his knowledge of the social sciences being limited basically to economics.  [3]  With that in mind, one understands why he agreed with Rudolph Carnap in advocating that philosophy should learn from how the natural sciences operate. He believed scientists should adopt a critical attitude, willing to incessantly test their views with empirical evidence and rational discussion which the Vienna Circle had so avidly promoted. However, Popper was soon to highlight flaws with positivism, especially with logical positivism. These were, in particular, its dedication to the principles of inductivism and verificationism. Inductivists claim that via induction, one is able to obtain secure scientific knowledge and that the inference is legitimate if a significant number of singular or observational statements are gathered under a wide variety of circumstances.  [4]  In order to maintain the empirical certainty of inferences obtained through the deductive method, the universal law premise must be empirically certain.  [5]  However, as Popper pointed out, one has no assurance that any universal empirical proposition is certain. For Popper, the problem of induction was insurmountable, contesting that if science is empirical its [] laws must be treated as tentative hypotheses.  [6]   Popper accepted the Humean critique of induction, claiming not only that it is never used by scientists but that observation, believed to be an initial step in the formulation of theories, is misguided  [7]  . Hume also pointed out that observation is selective and theory-laden and thus one can never make pure or free observations.  [8]  Popper, however, disagreed with Hume over whether knowledge could be rationally justified. Hume saw inductively inferred laws as merely an account of habit or custom, (suggesting that) even scientific knowledge is irrational.  [9]  Popper, on the other hand, in order to avoid statements allowing empirical evidence to confirm false theories, believed that induction could be replaced by deduction. Deduction draws inferences about the premises from the observed falsity of the conclusion.  [10]  To justify this, he argued that though even with a body of empirical evidence, one can never be absolutely certain about the validity of a theory , it takes only one empirical rebuttal to determine the falsity of a theory. Popper denominated this the asymmetry between verifiability and falsifiability  [11]  , a difference which became the centrepiece of his philosophy of science. Scientists begin with universal statements and initial conditions from which they deduce hypotheses which will then be subsequently tested. If they withstand the test, the theory will survive; if falsified, the theory is abandoned. Falsifiability, according to Popper, is the criterion of demarcation between science, or the empirical sciences and the non-science. There are, however, degrees of falsifiability. The more information a statement contains, the larger its body of observational statements and therefore, the higher its degree of falsification. According to Popper, scientists should aim at highly refutable theories instead of modestly falsifiable ones. It is preferable for the theory to be bold, precise and simple  [12]  as their empirical content will be greater and therefore there will be a larger body of potential falsifiers. Poppers definite break with logical positivism appears in their search of certainty: the positivists aimed to specify methods that would generate certain knowledge  [13]  whilst in Poppers view, one can only hope to improve what must always remain imperfect  [14]  as future tests could cast doubt over what was previously thought of as true. If we take Poppers approach to the search for truth, it would initially appear that there are an endless number of possible true theories.  [15]  However, Popper addresses that by explaining his notion of verisimilitude. The scientific process of trial and error which Popper advocates creates a greater approximation of the truth, or increases the verisimilitude of the theory. Popper, Marxism and Pseudo-Science The young Popper had been attracted to the apparent strength of theories such as Freuds psychoanalysis and Adlers individual psychology. These theories were regarded as capable of explaining virtually everything related to human behaviour as verifications were found to justify every advancement. Popper, however, was soon to discover a major flaw in them: they could not be refuted. Freud was therefore severely criticised by Popper for producing immunised theories against falsification. A theory unable to be falsified belongs, in Poppers view, to a non-science. His drastic approach towards pseudo-science was also extended to Marxism, especially the Marxism that Neurath had brought to the Vienna Circle. Neurath interpreted Marxian materialism as epsitemically equivalent to his own physicalism  [16]  and hailed Engels and Marx as having produced the foundations of a truly scientific study of society. In Poppers opinion, this could not have been further from the truth. The problem with Marx was not only that he was considered a historicist, but that he was a utopian too. Marxism, initially considered as a science because of its predictive nature, was soon re-classified as fundamentally non-scientific. The predictions Marx had made had not been borne out and in order to save it from falsification and refutation, ad hoc hypotheses were added, making the theory compatible with facts. These factors prompted Popper to adopt falsifiability as his criterion for demarcation between science and non-science. If a theory, according to Popper, is capable of being falsified or, in other words, is incompatible with empirical evidence, it is considered as scientific. If, on the other hand, a theory is compatible with all observations and is capable of explaining virtually everything be it because, as with the case of Marxism, it has been modified to accommodate newly made observations or, because, as in the case of psychoanalysis, it is indeed consistent with all observations made and to be made in the future, it is categorised as unscientific.  [17]  It is thi s criterion which characterises Poppers theory of falsifiability and which was soon criticised. Implications for the Social Sciences Popper helps demolish one of the notions positivism embraces, namely that science progresses from the observation of data by means of experiments. These experiments are verified when repeated allowing general laws about the nature of reality to be inferred. Popper, therefore, shows that progress is made not by verifying facts, but by attempts of falsifying the results of other theories.  [18]  The theories of science, he argues, are conjectures to solve problems and cannot be verified by empirical evidence.  [19]  The switch from induction to deduction also means that rather than proceeding from the particular to the universal, science originates from the universal (i.e. scientific hypotheses) to the particular.  [20]   Sander Thomas Kuhns Theory of Paradigms Thomas Kuhn began his career as a physicist and then turned his attention towards the history of science where his preconceptions about natural history were shattered  [21]  . His Structure of Scientific Revolutions (1962) was developed as an attempt to give a theory more in keeping with the historical situation as (Kuhn) saw it  [22]  . Unlike Popper, his main aim was not to provide guidelines to scientists about how to proceed or to develop a normative philosophy of science. The central concern of his thesis was to characterise the way in which science historically develops and to explain why scientists have operated in such a way. Kuhns Structure of Scientific Revolutions has been one of the most provocative (pieces of work) to appear in the last fifteen years  [23]  , offering the most sophisticated alternative to Popper.  [24]  Science, in his opinion, does not progress inductively as positivists would maintain nor by falsification as Popper would argue. Alternatively, Kuhn places focus on the revolutionary character of scientific process, where a revolution involves the abandonment of one theoretical structure and its replacement by another, incompatible one. Kuhns approach to the way science progresses can be summarised by the following open-ended scheme: pre-science normal science crisis revolution new normal science new crisis  [25]   According to Kuhn, the pre-science stage is a disorganised and diverse activity preceding the formation of science. It eventually becomes structured, directed and channelled when a single paradigm emerges and is adhered to by the scientific community. As will be discussed below, the concept of paradigms itself has been subjected to heavy criticism, not least because of its ambiguous nature. However, vaguely, one can postulate that paradigms contain some very general methodological prescriptions  [26]  to guide scientific work. Paradigms also serve a regulative function in directing future research.  [27]  Workers within a specific paradigm whether it be Newtonian mechanics or wave optics practise what Kuhn denominates normal science. As professed in Structure of Scientific Revolutions, normal science is: research firmly based upon one or more past scientific achievements that some particular scientific community acknowledges for a time as supplying the foundation for its further practice.  [28]   Normal science is inextricably characterised by a dominant paradigm, something that Popper quickly picked up upon as irrational and superficial.  [29]  In normal science the scientists work is devoted to the articulation and wider application of the accepted paradigm.  [30]  In other words, their main aim is to fill out what is suggested by the accepted paradigm.  [31]  It is therefore clear that little emphasis is placed upon normal science and research to produce major novelties as a primary aim. Kuhn, in effect, reduces Poppers falsification theory to problem solving within the confines of normal science. According to Kuhn, science is merely a set of puzzles whose solutions are to be found within the operating paradigm  [32]  . Normal scientists do not actively look for anomalies which the content of their paradigm will be hard-pressed to solve. However, when a recurrent anomaly does arise which the paradigm is unable to resolve, crisis will break out. During such a crisis, extraordinary science occurs characterised by a plurality of views and a challenge to the fundamentals of the paradigm. The crisis will then be resolved when a completely new paradigm emerges which has the capacity to resolve the previous, problematic anomalies and, in doing so, attract the allegiance of a growing scientific community until eventually the paradigm posing the problem is abandoned. Therefore, the new paradigm not only has to be able to resolve the anomaly, it also has to be subsequently accepted as normal science, thus establishing a new consensus. A scientific revolution according to Kuhn is constituted by discontinuous change  [33]  as the newly adopted paradigm will be confronted with problems it is unable to resolve and thus the never-ending cycle continues. Kuhn and Popper The Structure of Scientific Revolutions soon became problematic to reconcile with Poppers theory of falsification as Kuhns historical account about how scientists operate came into conflict with Poppers work. The emphasis Kuhn placed on scientific communities, their rules and expectations, was used to explain why scientists were not always willing to refute and actively search for falsifications of their theories. Unlike what Popper claimed, the scientific communities would not question the paradigm they work within until a particular anomaly was repeated. Instead, they might question their own calculations or instruments implemented, but never the broader framework they operate within.  [34]   Poppers reaction to Kuhns severe criticism was veritably weak. He simple asserted that Kuhns accurate historical account of science clashes with the facts as I see them.  [35]  According to Kuhn, falsification has not been in use in the past for the reasons highlighted above. Poppers rebuttal to this was that he, unlike Kuhn, had not focused on providing a historical account but on providing guidelines for future scientists. He also criticises Kuhn for producing a highly selected theory, one which disregarded large chunks of normal science.   [36]   Popper also criticised Kuhn for paving the way for irrationalism and relativism,  [37]  the reason for this lying in two of Kuhns statements. Firstly, the fact that Kuhn equated the switch in paradigms to a gestalt switch or a religious conversion because he believed in a holistic theory of meaning  [38]  means that it is very difficult to compare scientific theories. Secondly, because of Kuhns cynical approach to verisimilitude and his belief that we never get closer to the truth, his explanation on how science progresses seems ill-founded. In these contexts, Popper criticises Kuhn of adhering to the myth of framework which presupposes that rational and critical discussions can only take place if fundamentals are agreed upon. Popper strongly disagrees with this concept, as with the belief that science will not progress across paradigms and argues that different frameworks always have enough in common to allow the scientific community to compare and judge them, triggering pro gress. Other Criticisms of Kuhns Work Popper has not been alone in criticising aspects of Kuhns Structure of Scientific Revolutions. Bernstein succinctly puts the majority of the criticisms in his The Restructuring of Social and Political Theories  [39]  . The ambiguous nature of paradigms and the irrationality of the paradigm shift have been discussed above. Critics have also pinpointed Kuhns misrepresentation of the history of science  [40]  , the inaccurate description of normal science  [41]  and the exaggerated distinction between normal and revolutionary science  [42]  . In order to further show the relevance of Kuhns work to the social sciences, the vagueness of paradigms will be discussed, as the irrationality of paradigms has been explained above. When first introduced, Kuhn claimed paradigms were universally recognised scientific achievements that for a time provide model problems and solutions to a community of practitioners.  [43]  However, the elusive and slippery concept  [44]  of paradigm was shown when Kuhn acknowledges that he had been using the term paradigm in many ways  [45]  , citing Masterman who listed at least twenty two senses in which the term was used in the book.  [46]  To tackle the confusion created by his multiple use of paradigms, Kuhn proposes to replace it with a disciplinary matrix.  [47]  A disciplinary matrix includes the shared commitments of the community of scholars, the shared symbolic generalizations and [] the shared problems and solutions in the discipline.  [48]   Mark? Other Implications for Social Scientists. Even though Thomas Kuhn has been almost exclusively concerned with the natural sciences, social scientists have repeatedly claimed his work offers fresh illumination for understanding social sciences and theory.  [49]  Part of the reason for this is, as Kuhn himself pointed out, the fact that his work is regretfully [] too nearly all things to all people.  [50]   The revolutionary transformation in the use of observation as a means leading to theory has also had an impact on social scientists. Kuhns starting point for the formulation of theories is not reality but construction.  [51]  Kuhn contributed to demolishing [] positivism  [52]  not only by admitting revolutions in science involve the intrusion of non-scientific elements such as habits, customs or cultural values, but also in casting doubt over the possibility of attaining perfect knowledge and over the established idea that progress in science is cumulative. One of the most important consequences Kuhns work had for the social sciences was the significance he attributed to the role played by the sociological characteristics of scientific communities. Kuhn turned away from the search for an ideal methodology to the study of science by scientific means and, in doing so, invigorated the empirical study of science.  [53]  Finally, Kuhn may have hastened the demise of positivism by prompting and then influencing the naturalisation of epistemology, a movement which has become prominent through, for example, a conventionalistic and naturalistic study of science. Imre Lakatos: A Middle Man? By the late 1960s a great deal of the debate on the philosophy of science had come to focus on the difference between Kuhns paradigms and Poppers revision of positivism. Numerous epistemic doctrines entered this debate and different interpretations of Popper and Kuhns works emerged, reflecting the impact they had on their contemporary critics and their effect on the conduct of social science as a whole. Lakatos is one of the most prominent critics of their works, his critique generally considered as the most important attempt to place the post-empiricist theory of science somewhere between Popper and Kuhn.  [54]   Imre Lakatos at the outset appears to be a supporter of Poppers falsification theory. He strongly criticised Kuhn for his irrationalist and too general  [55]  concept of a revolution and his notion of a single, dominating paradigm. Lakatos defends Popper against the charge of naive falsificationism, the immediate discarding of a theory as soon as contradictory evidence is exposed. However, he goes beyond Popper in claiming that science progresses by sophisticated falsification which focuses on the comparative evaluation of whole research programs.  [56]   Sophisticated falsificationists realise that the conditions that a hypothesis should satisfy in order to be worthy of a scientists consideration [] alone are insufficient  [57]  and that the need for a hypothesis to be more falsifiable than the other it will replace is necessary for scientific progress. Thus, it is not single theories which are falsified but entire programs, embodying the notion of refutation [] not automatically lead(ing) to rejection.  [58]  Such an epistemic theory strikingly resembles Kuhns theory of paradigms. The difference between them only appears when closely examining Lakatos notion of research programs. According to Lakatos, every scientific research program has a hard core, a set of propositions that are immune from empirical tests  [59]  because they are surrounded by a protective belt of assumptions or conditions.  [60]  Though research programs and paradigms have been equated, Lakatos proposes that normal science be considered more as a research program for reasons of its general acceptability  [61]  and does not attribute the general status to it that Kuhnian paradigms have. Furthermore, the transition from one research program to another is the product of rational exploration of rival methodologies  [62]  and not, as Kuhn implied, a mystical conversion  [63]  to a new ontology. Cultural values, historical events and other external factors are far less important in Lakatos eyes and play little part in particular scientific theories or the choice of general research programs, levelling Kuhns theory down to critical rationalism.  [64]   Lakatos MSRP has not emerged without enticing criticisms. Firstly, he seems to have physics exclusively in mind when he developed his theory and when referring to science. Other natural sciences cannot as easily be accommodated to the Procrustean bed of the MSRP  [65]  and it is only economics which seems to offer the possibility of an easy fit.  [66]  As a model for the history of science, MSRP fails to meet the empirical test of general acceptability  [67]  . It is also limited in explaining how science works, failing to formulate the criteria needed to be employed for it to work. However, as Gordon highlights, the fact that Lakatos was flexible in not regarding former scientists as misguided in adopting theories that now would be considered irrational is a significant point of merit in Lakatos epistemic stance.  [68]  The MSRP model allows the possibility of gaining knowledge by using theories that are subsequently regarded as, in the absolute sense, false.  [69]    Conclusion As Lakatos claimed, The clash between Popper and Kuhn is not about a mere technical point in epistemology. It concerns our central intellectual values, and has implications not only for theoretical physics but also for the underdeveloped social sciences and even moral and political philosophy.  [70]   As seen with Sanders account, Popper has greatly influenced the political sciences, contributing to xxxx. Kuhns work, on the other hand, as Mark Smith rightly points out, has had a deep impact on the conduct of social sciences because of the vagueness and therefore adaptability of the term paradigms.  [71]  Despite their distinct approaches, however, both men have met with severe criticism, not only from each other, but from scientific colleagues and both have apparently failed to address these adequately.  [72]  It is therefore not surprising that xxxxxx

The Economics Of Life And Death :: Economic Theory

The Economics Of Life And Death This paper begins with an explanation of the "life sequence of value," which is defined by the formula Life->Means of Life->More Life (L->MofL->L1). The analysis then contrasts this general sequence of value to the "money sequence of value," which is shown to have three autonomous forms not before distinguished: (1) Money->Means of Life->More Money ($->MofL->$1); (2) Money->Means of Life Destruction->More Money ($->MofD->$1); (3) Money->More Money->More Money ($->$1->$2->$3->$n). I explain how the first money sequence of value, analyzed by Marx in his classical formula of industrial capital (M->C->M1), has mutated so that the standard sequence of (1) assumed by economists has, in fact, been increasingly displaced by sequences (2) and (3). The argument shows that these sequences of economic "growth" increasingly dismantle environmental and civil life-fabrics, but remain unproblematic to the dominant economic paradigm whose measures of value do not register life-losses in their value a ccounts. It is concluded that a regrounding of economic understanding in the life sequence of value is required to avoid a cumulative breakdown in the conditions of social and planetary existence. "The techniques which induce a paradigm change may well be described as therapeutic, if only because, when they succeed, one learns one had been sick before." - Thomas Kuhn (1) The life sequence of value can be formulated in simple axiom as the sequence: Life --> Means of Life --> More Life ( L--> MofL -->L1) In this formula, life refers specifically to sentient life. Sentient life, in turn, is life which can move, feel and - in the case of humans - think in concepts. These three planes of being - organic movement, sensation and thought - all admit of ranges of function. These ranges of function or capability can be reduced by their economic conditions (as with the vital capabilities of a malnourished child), or increased (as with the opening horizons of movement, felt being and cognition of the same child with access to nutritious food). (2) Means of life refer to whatever enables life to be preserved, or to extend its vital range on these planes of being alive. Clean air, food, water, shelter, affective interaction, environmental space and accessible learning conditions are such "means of life". To reproduce life is to maintain its achieved ranges of capability. To increase life is to widen or deepen them to more comprehensive range. To reduce life is to diminish or to extinguish any vector of their vital domains of being.

Evolution, God and Society :: essays research papers

The Island of Dr. Moreau Evolution, God and Society   Ã‚  Ã‚  Ã‚  Ã‚  In the book The Island of Dr. Moreau by H.G. Wells, we see a microcosm in which Evolution, God and the society are all represented by something strange. First, Dr. Moreau is playing the role of God. Dr. Moreau is an educated man trying to prove that he can turn an animal into a human form, so that the animal will forget all of its animal instincts and become more and more human. After Moreau created these beast men, he then controlled them through fear. The fear was of pain. The house of pain was were the creatures were created and they all remember the pain and therefore associate Dr. Moreau with pain so they do not have to go back.   Ã‚  Ã‚  Ã‚  Ã‚  Montgomery played the part of an ignorant assistant. Montgomery was not a stupid man, but he was torn between good and bad, right and wrong, and friendships. I think he tried to play the part of the massager or the son, but he did not agree with what Moreau was doing to the animals. The Creatures did not respect him the same as Moreau because he had not caused them any physical pain. Montgomery fit in and got along with the beast people more than Moreau did. If he would have stood up to Moreau and made the experiments stop, he then could have been an angle, or a godlier figure. The only thing that kept Montgomery from going crazy was all the alcohol that made his mental pain go num.   Ã‚  Ã‚  Ã‚  Ã‚  Then we have Prendick, the voice of reason. Poor Prendick came to the island after being stranded out at see on his little boat. He thought he was going to die, and his friends and family back at home probably thought he was also dead. But, he was saved by a large boat that Montgomery and normal animals were using to get back to the island. When Prendick steps off the boat onto the island, he can not even begin to understand what creatures are lurking around, some even helping to unload the boat and speaking like humans. Within the first week of being on the island, he knew something was wrong and needed to be done. Prendick thought that Dr. Moreau was turning humans into animals. This in his eyes was wrong and he was ready to do something about it.

Innocent Smoothies Essay

This report is aimed to examine and analyse the opportunities in the market for the ‘innocent’ brand. The research draws attention to †¦. the report evaluates and concludes†¦. it is recommended that †¦. ii. Introduction Innocent Ltd. is a fresh business that has been exceptionally successful in creating wholesome and natural smoothies. The company has appeared in the Sunday Times for four consecutive years in the ‘Fast Track 100’, a list of the fastest growing privates companies in the UK. The company has aimed to place itself on the side of the consumer as supporting green issues and responsible business practices and this has evidently proved to be in favour with the company’s brand image which has resulted to its success. On the other hand, it has faced criticism from cynics who argue that the company’s ethical position is a facade as they have sold a 20% stake to Coca-Cola which led to thousands of dissatisfied and betrayed customers who previously supported the company’s initial brand values. This has led to ‘White, Harte and Laine,’ a specialist in strategy and market development, who have conducted this report that will be researching and analysing the opportunities in the market for the ‘innocent brand’. This report will define what a ‘market driven organisation’ is and discuss how it compares to ‘innocent’ whilst addressing their customer relationships. It will also outline the trends in the macro environment by looking at the political, economical, social, technological, environmental and legal factors which created the opportunity for ‘innocent’ to initially build its firm position in the smoothie market. An analysis of the company’s main opportunities and threats over the next five years will be highlighted through a SWOT analysis. The report will additionally adapt Porters Five Forces analysis to the smoothie industry and finally, recommendations will be made about possible business strategies that ‘innocent’ could pursue in the next five years. iii. Main Body In an article by Bill Barrett, Uncles (2000) defines a market driven organisation as an organisation that has a thorough understanding of customers and potential customers, including their changing needs and wants. Uncles (2000) states that market-driven organisations continuously gather data in all environmental sectors – competitive, cultural, political, economic, technological, human resources, physical resources, and consumer. The market-driven concept is a managerial concept where close attention is given to business processes and activities. There must be an emphasis on an organisations ability to respond to environmental changes. All aspects of the organisation must be aware of and consider environmental changes and continuous process improvement is mandatory for a market-driven organization. Innocent’ has been described as a market driven organisation. Innocent’ is an ethical company whose initial idea was to produce its products from 100 per cent pure, fresh ingredients and no fruit concentrates. As defined by Uncles (2000), a market-driven organisation understands the customers, and potential customer wants and needs. In order for ‘Innocent’ to have c reated a market-driven organisation they had to put their customers first with the organisations objectives, goals and strategy. This is evident as their main aim is to take a social responsibility to the public and environment by producing 100 per cent natural products. It is established that ‘innocent’ promotes healthy eating and appeal to eco-friendly and health conscious consumers; therefore in order to put the wants and needs of these consumers into place, they had to come with strategies to uphold their brand name as well as delivering the desires if their consumers. Hodge, et al (1996) believes that by putting the customer first in an organization’s mission and goals, market driven organizations make providing value to the customer a top priority. Market-driven organisations also develop product strategies to deliver whole product solutions to customers and use strategic relationships to build synergy, create whole-product solutions, and gain support of stakeholders. ‘Innocent’ strategies put the interests of their health focused consumers at the heart of their organisation and gain support through various deeds such as: * Keeping all their ingredients natural. This strategy reinforces the initiative of the company only producing food that is healthy and good for their consumers. The fact that only natural products are used means that their product s has a positive health benefit minus the additives and therefore keeping the focus on the company’s brand name ‘innocent’ connatating purity. * The use of responsible ingredients. ‘Innocent’ tends to purchase their farms from ethical and environmentally friendly farms. Once more this is another way to strengthen their brand name ‘innocent’ to their consumers to portray their organisation as a green and a social responsible company. * Sustainable packaging. ‘Innocent’ uses 100 per cent recycled material as package for their products. This compliments their ‘green’ image and satisfies their eco-friendly and health-conscious consumers. * They are a resource efficient business meaning that they aim to produce as little carbon dioxide emissions as possible while manufacturing the products, growing the ingredients, transportation and packaging. This approach coincides with the interest of their consumers who are environmentally friendly. * Sharing their profits with charities. 10 per cent of the company’s profit at the end of the year is donated to charity which fund the rural developments projects in the countries in which their fruits come from. This highlight’s the caring nature of ‘innocent’ toward the environment as well as to their consumers. From the above points we can therefore establish that ‘innocent’ is a market-driven organisation. Their target markets are eco-friendly, health conscious consumers who value organic, natural and environmentally friendly products. Evidently, from their strategies it is indicated that ‘innocent’ puts the interests of their consumers at the heart of their strategies by taking into account the environmental factor of global warming. It must also be noted that back in 1998, the fate of ‘innocent’ was decided by people through a ballot by putting their empty bottle of ‘innocent’ drinks in a ‘YES’ or ‘NO’ bin depending on whether they should pursue the business. The outcome resulted in the majority of bottle being placed in the ‘YES’ bin. This demonstrates that ‘innocent’ has always valued the opinions of their consumers and act upon their wants which are the traits of a market organisation. The smoothie market

Efficient Market Hypothesis and Behavioral Finance †Is a Compromise in Sight

Legend has it that once upon the time two economists were walking together when one of them saw something that struck his mind. â€Å"Look,† he exclaimed, â€Å"here’s a great research topic! † â€Å"Nonsense,† the other one said, â€Å"If it were, someone would have written a paper on it by now. † For a long time this attitude governed the view of economists toward the stock market. Economists simply believed that the stock market was not a proper subject for serious study.Indeed, most of the pre-1960 research on security prices was actually done by statisticians. The Pre-History: Statistical Research Most of the early statistical research of the stock market concentrated around the same question: are security prices serially correlated? Do security prices follow a random walk? Are prices on any given day as likely to go up as they are to go down? A number of studies concluded that successive daily changes in stock prices are mostly independent. Th ere seemed to be no pattern that could predict the future direction of price movements.One of the most interesting (and currently relevant) research projects of that earlier era was undertaken by Harry Roberts, a statistician at the University of Chicago. In his paper, â€Å"Stock Market ‘Patterns’ and Financial Analysis,† published in the Journal of Finance in 1959, Roberts wrote: If the stock market behaved like a mechanically imperfect roulette wheel, people would notice the imperfections and, by acting on them, remove them. This rationale is appealing, if for no other reason than its value as counterweight to the popular view of stock market â€Å"irrationality,† but it is obviously incomplete.Roberts generated a series of random numbers and plotted the results to see whether any patterns that were known to technical analysts would be visible. Figure 1 provides an example of Roberts’ plot: Efficient Market Hypothesis And Behavioral Financeâ€⠀Is A Compromise In Sight? Figure 1. Simulated stock price path Those somewhat acquainted with technical patterns might recognize a familiar head and shoulders formation, which technical analysts believe to be one of the surest indicators of a trend reversal. At this point, the reader may take pause. Are these stock price patterns of value or not?If they work even on decidedly random series, isn’t there a contradiction? Maybe not. Consider a hypothetical example of a stock price path in Figure 2. If tomorrow the price of this stock goes down, there will be a clearly visible head and shoulders pattern, which should signal a trend reversal. If, however, the price goes up, the resulting formation will look more like a pennant pattern, which, according to market technicians, signals the renewal of the trend. In other words, technical patterns are easy to see only when it is too late to act on them. P P t Figure 2. Hypothetical example of technical patterns formation tToday, anyo ne can replicate Roberts’ results using a common spreadsheet program. In his popular textbook, Financial Modeling, Simon Benninga of the Wharton Business School devotes an entire chapter to simulating stock price paths using Microsoft Excel. 2 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Returning to Harry Roberts, his paper turned out to be almost prophetic in one major respect. He wrote: Perhaps the traditional academic suspicion about the stock market as an object of scholarly research will be overcome. As we shall see during the rest of this presentation, Roberts was right.The Pre-History: CRSP Another enabling factor for the soon-to-follow boom in stock market research was provided by an initially small outfit based at the University of Chicago, the Center for Research in Securities Prices (CRSP). CRSP was established by James H. Lorie in 1960 and provided comprehensive data on all stocks traded on the New York Stock Exchange since 1926. From day one, CRSP data were available in machine-readable form, a rare and pleasant occurrence to anyone involved in economic research at the time. Also important is the fact that CRSP data contained a negligibly small number of errors.Overall, CRSP database was one of the richest data sets available. Everything was ready for a revolution. Indeed, the revolution was soon to begin. The Origin of the Efficient Market Hypothesis The introduction of the term â€Å"efficient market† is usually attributed to Eugene Fama. In his 1965 paper, â€Å"Random Walks in Stock Market Prices,† published in the Financial Analysts Journal, Fama cites, among other things, his earlier study of serial correlations in daily price changes of 30 stocks that comprise the Dow Jones Industrial Average index (â€Å"The Behavior of Stock Market Prices†).He concluded that daily changes had a very small positive correlation, approaching zero for practical purposes. The stock market seem ed to work in a way that allowed all information reflected in past prices to be incorporated into the current price. In other words, the market efficiently processed the information contained in past prices. Fama defined an efficient market as: a market where there are large numbers of rational profit maximizers actively competing, with each trying to predict future market values of individual securities, and where important current information is almost freely available to all participants. Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Note that this description is very similar to that of a perfectly competitive market out of a microeconomics textbook. And in a perfectly competitive market, every seller earns a normal profit, i. e. , the amount of profit sufficient to stay in business, but insufficient to attract a competitor. If we assume that this is true of the stock market, it follows that any new information that becomes available to the m arket will be very quickly reflected in the prices.Otherwise, there will be opportunities for abnormal returns. In Fama’s own words, In an efficient market, on the average, competition will cause the full effects of new information on intrinsic values to be reflected â€Å"instantaneously† in actual prices. The efficient market hypothesis has been formulated. The time has come to test it. Tests of Market Efficiency in the 1960s A number of different approaches were used to test the efficient market hypothesis. One of the most obvious ones was to do more studies on serial correlation of security prices.A variation of this approach would be to test various trading strategies recommended by technical analysts to see if they have any investment value. Both have been tried, and invariably came back with mostly negative results. An interesting area of research dealt with the nature of return distributions. There are some clearly visible asymmetries in stock returns. If we lo ok at the ten biggest one-day movements in S&P 500 index since 1947, nine of them would be declines. The market crash of October 1987 resulted in a negative return that was 20 standard deviations away from the mean.It turned out that stock returns are not normally distributed. They follow some sort of distribution, but, to our knowledge, no one has figured out what kind of distribution it is. On several occasions, stable Paretian distribution and Student t-distribution were found to be better approximations than the normal distribution. Needless to say, this poses a huge methodological problem for researchers who, for lack of a better assumption, are still assuming normal distributions for drawing statistical inferences. An important breakthrough in testing market efficiency came with the advent of the â€Å"event study† methodology.In an event study, researchers take a sample of similar events that occurred in different companies at different times and determine how, on aver age, this event impacted the stock price. And what would a researcher expect to see as the outcome of an event study? Assuming that we are studying favorable events, the outcome would depend on whether or not the event is anticipated by the market and, of course, on whether or not the market is efficient. In all cases, we would expect the stock price to go up. The question is, when? 4Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Consider an unanticipated event first. If the market were efficient, the stock price would adjust upward very quickly. If not efficient, it will drift upward for some time following the event (see Figure 3). P Efficient Market P Inefficient Market Event Time t Event Time t Figure 3. Market reaction to an unanticipated favorable event If the event were anticipated, the price would drift upward for some time before the event, and, in an efficient market, likely stabilize on the event date (see Figure 4). PEfficient Market P Inefficient Market Event Time t Event Time t Figure 4. Market reaction to an anticipated favorable event The first event study was designed and conducted by Eugene Fama, Lawrence Fisher, Michael Jensen, and Richard Roll. Their article, â€Å"The Adjustment of Stock Prices to New Information,† was published in the International Economic Review in 1969 and quickly earned itself a nickname, â€Å"the FFJR study. † FFJR studied the stock market reaction to announcements of stock splits. Typically, stock splits are believed to be seemingly inexplicable good news for investors.One possible reason was reported by FFJR themselves: they found that 72% of firms in their sample announced above-average dividend increases in the year after the split. Stock splits seemed to â€Å"signal† future dividend increases. (Actually, the term â€Å"signaling† was proposed in the early 1970s by Michael Spence, who won the 2001 Nobel prize for, among other things, his research on signaling in labor markets. ) 5 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? What FFJR found is that, on average, stock prices around the date of the split behaved as shown in Figure 5. Figure 5.Averaged stock price performance around the split date According to FFJR findings, the market begins to anticipate a stock split more than two years before it actually happens and figures out the consequences of the split the day it is announced. The event study techniques were further refined by other researchers. Some of the research designs are quite clever. A bizarre example appeared in a 1985 article in the Journal of Accounting and Economics by Johnson, Magee, Nagarajan, and Newman. The title of the article, â€Å"An Analysis of the Stock Price Reaction to Sudden Executive Deaths,† is self-explaining.The authors found that unexpected CEO deaths are associated with stock price decreases. However, in cases when the CEO was the company foun der, the stock market tends to react by a price increase, begging the inference that the ability to create a business is different from the ability to run one. The efficacy of professional investors is another enduring question. Can they, on average, provide better investment performance? The research here was focused primarily on mutual funds. Regrettably, most professional money managers are not able to provide superior returns.By 1975, the preponderance of evidence argued that markets were efficient. Statistical studies showed that technical analysis did not add value (consistent with the weak form of market efficiency). Event studies found that the market quickly reacts to new information (consistent with the semi-strong form of market efficiency). And studies of professional investors’ performance made a strong case for the strong form market efficiency. Tests of Market Efficiency after 1975 As more and more researchers tested the efficient market hypothesis, some rather controversial evidence began to appear. Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? In 1976, Rozeff and Kinney published their article on stock market seasonality. They found that January stock returns were higher than in any other month. In 1981, Gibbons and Hess reported â€Å"the Monday effect† – stock prices tended to go down on Mondays. Both of these findings were clearly inconsistent with the weak-form market efficiency. Interestingly enough, Gibbons and Hess noticed that the Monday effect seemed to decrease over time (see Figure 6).Figure 6. The Monday effect In the nine-year period of 1962-1970, the S&P 500 returned about -0. 16% on an average Monday. In the following nine-year period, 1970-1978, the S&P 500 would only drop by 0. 10% on average. It appears that the effect has been known to some market participants for a while, and they were taking advantage of this private information, which, in turn, caused their gains to decrease over time. A growing body of research indicated that profitable selection rules could be based on publicly available information.In particular, stocks with low price-earnings ratio and high dividend yield outperformed the market. And, while small capitalization stocks have a greater risk than large-cap stocks, the return premium seemed to be too large for the degree of additional risk taken. The discovery of these and other â€Å"market anomalies† prompted the editorial board of the Journal of Financial Economics to publish a special issue in June 1978 on a dozen of those market anomalies. An unexpected blow to the efficient market hypothesis came from academic economists.In 1980, Sanford Grossman and Joseph Stiglitz published their article â€Å"On the Impossibility of Informationally Efficient Markets† in the American Economic Review. They argued that if all relevant information were reflected in market prices, market agents would have no incentive to acq uire the information on which prices are based. This line of reasoning came to be known as Grossman-Stiglitz paradox and, along with his other contributions, earned Joseph Stiglitz his Nobel prize in 2001. The empirical research, of course, did not stop there. 7Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? In 1981, Henry Oppenheimer tested stock selection criteria developed by Benjamin Graham. Most of us probably know Ben Graham as the author of the classic, Security Analysis, but he also wrote another, somewhat less technical, book, called The Intelligent Investor. In each new edition of the book, Graham updated his investment advice to his readers, whom he called â€Å"defensive investors†. Oppenheimer back-tested this advice as if he purchased every edition of The Intelligent Investor and acted on it after reading it.It turned out that Graham’s advice did have significant value. Moreover, it actually had more value than Graham h imself claimed. In 1982, Rendelman, Jones, and Latane published their article, â€Å"Empirical Anomalies Based on Unexpected Earnings and the Importance of the Risk Adjustments,† in the Journal of Financial Economics. They studied earnings surprises and their effect on the stock price. They divided their sample into ten categories (deciles in statistical parlance) according to how positive or negative the earnings surprise was.Then they calculated averaged price paths for stocks in each decile. Figure 7 presents a summary of their findings. Figure 7. Stock price paths around earnings announcement by decile While the market did react to earnings surprises quickly, the prices also drifted in the direction of the earnings surprise following the announcement. In other words, the market commonly underreacts to the quarterly earnings announcements. This suggests the validity of an â€Å"earnings momentum† strategy (buying stocks that just had a positive earnings surprise).A number of later studies produced results consistent with this thinking. However, in a somewhat puzzling twist, there were studies which suggested that the stock market actually overreacts to certain announcements. In 1981, Robert Shiller published his article, â€Å"Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends? † in the American Economic Review and concluded that they do. This phenomenon came to be known as â€Å"excess volatility†. 8 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?In 1985, Werner De Bondt and Richard Thaler published their article, â€Å"Does the Stock Market Overreact? † in the Journal of Finance. Their conclusion was that the stock market tends to overreact to long series of bad news. So by 1985, there were enough anomalies discovered to seriously doubt the validity of the efficient market hypothesis. Reconciling the Theory and the Reality This is a good point at which to consider the efficient market hypothesis and identify those assumptions that may be inconsistent with reality as we know it.First of all, as ironic as it sounds, there is no way to test market efficiency per se. We can only test a joint hypothesis stating that, first, the market is efficient in equating asset prices with their intrinsic values, and, second, we know what the intrinsic values are; i. e. , we have a perfect asset pricing model. Whenever an anomaly is found, we don’t know (and have no way of knowing) which part of this joint hypothesis did not work. Returning to Fama’s definition of an efficient market, he assumes that important current information is almost freely available to all participants.This appears to be an accurate assumption; however, both the processing of this information and the subsequent action have associated costs. An institutional investor must hire security analysts and portfolio managers. Even an individual investor faces an opportunit y cost with every portfolio evaluation. Both face transactional costs; large portfolios, in addition, may be subject to additional costs caused by market impact. The transactional cost considerations prompted Michael Jensen to argue that an efficient market should adjust prices within limits imposed by the cost of trading.In his 1978 paper, â€Å"Some Anomalous Evidence Regarding Market Efficiency,† published in the Journal of Financial Economics, he insisted that if, for example, transactional costs are 1%, an abnormal return of 1% must be considered within the bounds of efficiency. Indeed, if inefficiency cannot be exploited for profit net of costs, is the market really inefficient? This, of course, begs a question: what is the level of transactional costs at which we can no longer call a market efficient in spite of its being within the bounds of efficiency?There may also be some effects caused by the way security prices are reported (market microstructure effects, in the financial economics lingo). A typical research assumption has been that trades can be executed at the closing price as recorded by a data provider such as CRSP. However, the average NYSE-AMEX stock has a quoted bid-ask spread of about 3%. For NYSE-AMEX stocks priced under $5, the average spread is about 6%. In addition, sometimes it is impossible to execute at quoted spreads because of illiquidity or market impact. 9 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?In fact, Donald Keim used precisely this argument to explain â€Å"the January effect. † In his 1989 paper, â€Å"Trading Patterns, Bid-Ask Spreads, and Estimated Security Returns,† published in the Journal of Financial Economics, he reported that stocks tend to close near the bid in late December, but close prices move toward the ask in early January (although we still have to come up with the explanation of why it happens). Also, there is a short-selling issue. In an effic ient market, short sales are unrestricted. In reality, 70% of mutual funds state in their prospectus that they will never engage in a short sale.Interestingly enough, recent empirical evidence seems to suggest that, while undervalued investments are hard to come by, overvalued ones are much more common. For example, a 1999 article by Mark Finn, Russell Fuller, and John Kling, â€Å"Equity Mispricing: It’s Mostly on the Short Side,† in the Financial Analysts Journal concludes that in 1983-1998 overvalued large-cap U. S. stocks tended to be overpriced by as much as four times the amount of underpricing observed in undervalued large-cap U. S. stocks. Finally, there is the unavoidable issue of investor heterogeneity. Investors are not identical.Even if they have precisely the same information available to them, they are likely to interpret it differently. More importantly, they tend to act on it differently. One obvious example is tax status. Tax-exempt, tax-deferred, and taxable investors acting rationally will often choose different courses of action when presented with the same problem. Liquidity needs can also play a role. Speaking more broadly, is Fama-style rational profit maximizing the only possible model of investor behavior? Are there other models? This, of course, leads us straight into the brave new world of behavioral finance.An Alternative Behavioral Model? Since the early 1980s, there has been a movement toward incorporating more behavioral science into finance. The proponents of behavioral finance cite several key areas where the reality seems to be most at odds with the efficient market hypothesis. One is the excess volatility problem that we discussed above. Price movements seem to be much greater than an efficient market would allow. A related puzzle is that of trading volume. If everyone knows that everyone (including themself) is rational, then every trader might wonder what information the seller has that the buyer doesn’ t, and vice versa.Figuring out exactly how little trading should be occurring under the efficient market hypothesis is difficult, because people have liquidity and rebalancing needs, but the proponents of behavioral finance believe it is safe to say that a billion or so shares a day on NYSE alone is a little more than one should expect in an efficient market. 10 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Next is the great dividend puzzle. In a perfect world according to Modigliani and Miller, investors should be indifferent between dividends and capital gains.In the real world, because of the structure of the U. S. tax system, investors should prefer capital gains to dividends, and companies should prefer share repurchases to dividends. At the same time, most large companies do pay dividends. In addition, stock prices tend to rise when dividends are increased or initiated. The current literature treats dividends as yet another instance of sig naling—companies that increase or initiate dividends send a signal of their financial health to the investors. Another puzzle is that of the equity premium.Historically, this benefit has been much greater than can be explained by risk alone. (To the defense of the efficient market hypothesis, the equity premium implied in dividend yields tends to be significantly lower. ) Finally, it seems that future returns can, at least partially, be predicted on the basis of various historic measures such as price-earnings and price-to-book ratios, earnings surprises, dividend changes, or share repurchases. However, in spite of all these irregularities, real-world portfolio managers are still having a hard time trying to beat the market.Most of the studies of mutual funds and pension fund performance still show that, on average, active managers do no better than the market. Moreover, good performance this year consistently fails to predict good performance next year. With this in mind, le t's examine the case for behavioral finance. First of all, what is behavioral finance? In short, it postulates that investors have cognitive biases. What is a cognitive bias? Simply put, it is an imperfection in human perception of reality. (Have you ever noticed how much bigger the moon looks when it is just above the horizon compared to when it is high? Here are a few of the most common cognitive biases in finance. Mental accounting. It seems that the majority of people perceive a dividend dollar differently from a capital gains dollar. Dividends are perceived as an addition to disposable income; capital gains usually are not. Biased expectations. People tend to be overconfident in their predictions of the future. If security analysts believe with an 80% confidence that a certain stock will go up, they are right about 40% of the time. Between 1973 and 1990, earnings forecast errors have been anywhere between 25% and 65% of actual earnings.Reference dependence. Investment decisions seem to be affected by an investor’s reference point. If a certain stock was once trading for $20, then dropped to $5 and finally recovered to $10, the investor’s propensity to increase holdings of this stock will depend on whether the previous purchase was made at $20 or $5. 11 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? Representativeness heuristic. In cognitive psychology this term means simply that people tend to judge â€Å"Event A† to be more probable than â€Å"Event B† when A appears more representative than B.In finance, the most common instance of representativeness heuristic is that investors mistake good companies for good stocks. Good companies are well-known and in most cases fairly valued. Their stocks, therefore, may not have a significant upside potential. One of the most peculiar manifestations of cognitive biases in finance is the reluctance to realize losses. Investors seem to have a problem adm itting to themselves that they have made a mistake and avoid selling securities at a loss, even though such sale has some tax incentives.Now, what are the implications of behavioral finance for the markets? In his 1999 article, â€Å"The End of Behavioral Finance,† published in the Financial Analysts Journal, Richard Thaler offers this simple model: Suppose a market has two kinds of investors: rational investors (rationals), who behave like agents in economics textbooks, and quasi-rational investors (quasi’s), people who are trying to make good investment decisions but make predictable mistakes. Suppose also that two assets in this market, X and Y, are objectively worth the same amount but cannot be transformed from one into the other.Finally, assume that the quasi’s think X is worth more than Y, an opinion that could change (quasi’s often change their minds) while rationals know that X and Y are worth the same. What conditions are necessary to assure tha t the prices of X and Y will be the same, as they would be in a world with only rational investors? This question is complex, but some of the essential conditions are the following. First, in dollar-weighted terms, such a market cannot have too many quasi’s (in order for the rational investor to be marginal).Second, the market must allow costless short selling (so that if prices get too high, the rationals can drive them down). Third, only rational investors can sell short; otherwise, the quasi’s will short Y when the two prices are the same because they believe X is worth more than Y. Fourth, at some date T, the true relationship between X and Y must become clear to all investors. Fifth, the rationals must have long horizons, long enough to include date T. These conditions are tough to meet.Thaler seems to suggest that the belief by quasi-rational investors that certain assets are undervalued may lead to an asset bubble, which will burst as soon as quasi-rational inve stors sentiment changes. (Did somebody say Internet? ) Why is behavioral finance important? 12 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? As most marketers know, any product has its unique set of utilitarian and valueexpressive characteristics. The value-expressive characteristics are the most visible in jewelry and almost absent in laundry detergents.An interesting question to ask, then, is, do investments have value-expressive characteristics? If they do, we should not be surprised that pricing differences exist between otherwise identical investments, based entirely on their value-expressive characteristics. A casual look at stock exchange advertisements suggests a positive answer to this question. The NYSE promotes itself as solid, while NASDAQ claims it is innovative. A review of mutual funds marketing can also give us a few insights. In 1983, Fidelity Investments put Charles Jarvie in charge of marketing its mutual funds.Prior to joinin g Fidelity, Jarvie marketed Tide and Pringles at Procter ; Gamble. Jarvie immediately noticed two deficiencies in Fidelity’s marketing. Fidelity’s flagship product, the Magellan fund, was not advertised as Fidelity Magellan; the company was underemphasizing its brand name. Also, almost no attention was paid to cross-selling. Under Jarvie’s leadership, Fidelity redefined itself as a â€Å"family of funds† and built itself one of the strongest brands in the financial services industry. Other mutual fund companies followed quickly.Even more interesting are the studies of investment clubs. Over 35,000 of these clubs exist in the United States. An investment club usually includes 10-15 members (friends, co-workers, or relatives) who, on average, contribute $25 a month to the club’s account. In 1998, Brad Barber and Terrance Odean of the University of California at Davis studied performance of 166 investment clubs that had accounts with a large brokerage firm and found that 60% of the clubs lagged the market. The average underperformance was 3. 8% a year. So it seems that investment clubs lack utilitarian characteristics.What about value-expressive ones? Also in 1998, Brooke Harrington of Harvard University studied the identity formation in investment clubs. Her sample included three clubs: an all-men’s club where all members were sports car hobbyists, an all-women’s club where all members belonged to the American Association of University Women, and a mixed-gender club where all members met each other through a church singles group. She concluded that investment clubs are also social clubs. In terms of our marketing approach, they do have strong value-expressive characteristics.The importance of behavioral finance and its role in the professional’s decision making process appears self-evident. While it may fail to enhance our capacity to beat the market, it can help us understand the beliefs and motivations of our clients and improve the service provided. Is a Compromise in Sight? Are the differences between traditional finance and behavioral finance irreconcilable? Recent literature suggest a negative answer to this question. 13 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? One the one hand, the sensible proponents of behavioral finance recognize the limitations of this approach.Meir Statman of Santa Clara University said it best: Market efficiency has two meanings. To some, market efficiency means that there is no systematic way to beat the market. To others, it means that security prices are rational – that is, reflect only â€Å"fundamental† or â€Å"utilitarian† characteristics, such as risk, but not â€Å"psychological† or â€Å"value-expressive† characteristics, such as sentiment†¦ I argue that finance scholars and professionals would do well to accept market efficiency in the beat-the-market sense, but reject it in the rational-pricing sense.On the other hand, the standard finance begins to produce some research that models effects of opinion differences. Earlier, we talked about the seemingly excessive trading volumes. It appears that trading volume varies directly with the difference in investors’ opinions. Figure 8 provides a simple Marshallian cross analysis of a widening difference in opinions. Both supply and demand for a particular security shift to the right as both number of buyers and number of sellers increase.While the effect on price cannot be determined without additional information such as relative magnitude of shifts in supply and demand, the volume is bound to increase. P (price) S S’ D D’ Q0 Q1 Q (volume) Figure 8. Opinion difference and trading volume An interesting thing to discuss here would be the work of Joseph Chen and Harrison Hong of Stanford University and Jeremy Stein of Harvard Business School. In their 1999 paper, â€Å"Differen ces of Opinion, Rational Arbitrage and Market Crashes,† Hong and Stein propose the following model. 14 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight?There are two investors, A and B, and a class of fully rational, risk-neutral arbitrageurs. A and B each receive a different private signal affecting their rational perception of the value of the same stock. Both signals are useful, but A only pays attention to his signal, even if that of B is revealed to him, and vice versa. Arbitrageurs, on the other hand, recognize that the best estimate of the stock’s value is to be found by averaging both signals. However, if A and B face short sale constraints and the signals they receive are negative, the arbitrageurs simply will not see those signals.In other words, the negative private information will not have any effect on market price. This is consistent with the empirical research findings of equity mispricing being mostly on the short side. So if the arbitrageurs only hear the good news, the stock price may well be trending up, until some of the arbitrageurs begin to suspect overvaluation and take short positions in the stock. As a result, the trading volume would increase, reflecting the increasing difference of opinion among the arbitrageurs. If the stream of good news consequently ceases or private signals of A and/or B become public information, the stock price would collapse.In a later paper, â€Å"Forecasting Crashes,† Chen, Hong and Stein found that the probability of a crash is positively correlated with an increase in trading volume relative to trend over prior six months and positive returns over the prior thirty-six months. Overall, it appears that many stock market anomalies can be explained through either behavioral biases or institutional imperfections. In fact, Richard Thaler suggests applying the behavioral model to institutional investing and corporate finance. What immediately comes to mind he re is a Nobel-winning economist Herbert Simon and his 1947 book, Administrative Behavior.Here is how the outcome of Simon’s research was summarized by the Nobel committee: He rejects the assumption made in the classic theory of the firm as an omniscient, rational, profit-maximizing entrepreneur. He replaces this entrepreneur by a number of cooperating decision makers, whose capacities for rational action are limited, both by a lack of knowledge about the total consequences of their decisions, and by personal and social ties. A classic example of this approach is a 1956 paper by John Lintner, â€Å"Distribution of Incomes of Corporations among Dividends, Retained Earnings, and Taxes,† published in the American Economic Review.Lintner started by interviewing the corporate executives about their dividend policy decisions. These interviews led him to a very simple model. Companies move the dividend toward a desired payout ratio, but try to avoid having to cut the dividend. This model remains an accurate description of dividend policy to this day. Conclusion We conclude this presentation by quoting Meir Statman: 15 Efficient Market Hypothesis And Behavioral Finance—Is A Compromise In Sight? People are â€Å"rational† in standard finance; they are â€Å"normal† in behavioral finance.Rational people care about utilitarian characteristics, but not valueexpressive ones, are never confused by cognitive errors, have perfect selfcontrol, are always averse to risk, and are never averse to regret. Normal people do not obediently follow that pattern. Standard finance asks for too much when it asks for market efficiency in the rational sense, and investment professionals ask for too much when they insist that the primary contribution of behavioral finance is its potential help in beating the market.