The world's funniest economics stories

Chapter 30 Why Female Models Earn More Than Male Models (3)
The wooden barrel theory means that if a wooden barrel is to be filled with water, every plank must be flat and undamaged.If one of the planks of the barrel is not aligned or there is a hole under a certain plank, the barrel cannot be filled with water.Therefore, we say that how much water a wooden barrel can hold does not depend on the longest piece of wood, but on the shortest piece of wood.Therefore, the barrel theory is also called the short board theory.

According to this core content, the barrel theory has three inferences:
First, only if all the boards on the wall of the barrel are high enough, can the barrel be filled with water; if one of the boards in the barrel is not high enough, the water in the barrel cannot be full.

Second, the higher part of all planks higher than the lowest plank is meaningless, the higher the height, the greater the waste.

Third, in order to increase the capacity of the barrel, one should try to increase the height of the lowest plank, which is the most effective and only way.

The size of a person's achievements, like the amount of water in a wooden barrel, often depends not on how long his strengths are, but on how short his weaknesses are.His strengths show that he has strengths in this area, nothing more, does not mean that he can make a difference in this area, and his weaknesses often determine the size of his achievements in this area.

There is such a story: when Jon Hamm first came to Ed's martial arts training, he was often beaten due to lack of skills and experience.He tried to deceive, but always to no avail.

One day, Parker invited him to the office, took a piece of chalk, drew a line on the ground, and asked, "If it were you, how could you shorten this line?" Several answers came out, including cutting the line into several segments.Unexpectedly, Parker shook his head, drew a line longer than this line, and then asked: "Now what do you think of the first line?" Ham replied suddenly: "Oh, it's shorter."

An excellent manager must be good at discovering the "short boards" in the system he is responsible for managing, dare to expose the shortcomings, and be good at making up for the shortcomings, in order to greatly improve work efficiency and economic benefits.

Austin, a famous management consultant, pointed out that if a company focuses too much on outstanding employees while ignoring other ordinary employees, it will damage the morale of the team, and it will lose its foundation if outstanding employees lead ordinary employees to play a team spirit.Enterprises must know how to make good use of the strengths of excellent employees without stifling the contributions of other employees.

Of course, our emphasis on paying attention to ordinary employees does not mean that outstanding employees do not need to pay attention, but that everything should not be made absolute, or one should lose sight of another.

Li Ka-shing once said: "Most people have some strengths and some weaknesses. It's like an elephant's food is measured in buckets, but a small spoonful of ants is enough. Each should do what he can, and each will get what he needs. The principle is to use what is available; It is also like a machine, if the main parts require [-] horsepower to start, although half a horsepower is much smaller than [-] horsepower, it can still play a part of its role.”

The law of multi-legged stools, also known as the long board theory, means that if a bench with multiple legs of different lengths wants to be as stable as possible, the longest leg should be reduced instead of raising the shortest leg.Increasing the distance between the legs of the stool within the range of the stool surface can also increase the stability.

6. Why did the emperor kill the heroes -- agency theory
We have all heard the story of "a cup of wine releases the power of soldiers", and this happens in every dynasty.In the Ming Dynasty, Zhu Yuanzhang also gave a banquet to the founding heroes. Sadly, most of the heroes who went to the banquet this time were buried in a sea of ​​​​flames under Zhu Yuanzhang's design.

It is said that after Zhu Yuanzhang conquered the country, in order to express his gratitude to the founding heroes who followed him in the Southern and Northern Wars, he personally ordered the construction of a celebration building to entertain all the heroes.At that time, many people were deeply moved and praised Zhu Yuanzhang for being wise.Only Liu Bowen, the military adviser, begged the emperor to let him disarm and return to the field.Zhu Yuanzhang couldn't keep him, so he had to give him silver taels and sent him outside the palace himself.

After the completion of the Qinggong Building, Zhu Yuanzhang selected a date and invited all the meritorious officials to come to the banquet.Because Liu Bowen personally went to Xu Da's mansion to say goodbye before returning home, and kept telling him that on the day of the banquet, he must follow the emperor closely and never leave.Therefore, Xu Da has been following Zhu Yuanzhang all day.

The misfortune happened at the moment when Xu Da followed Zhu Yuanzhang and left Qinggong Tower.Poor Manlou's heroes struggled continuously in the sudden fire, and finally died in Huangquan.Xu Da, who survived the disaster, was also bestowed to death by Zhu Yuanzhang.

In the thousands of years of ancient Chinese history, there are countless farces of chasing and killing heroes.If we put aside politics and look at similar events from the perspective of economics, the relationship between heroes and emperors involves a theory in information economics: principal-agent theory.

In the principal-agent theory of information economics, due to information asymmetry, there are many types of agents. The agent knows which type he belongs to, but the principal does not.In order to show its own type, the agent chooses a certain signal, and the principal judges the agent's type according to the observed signal, and signs a contract with the agent.This is the so-called signaling model.

This is like the relationship between the company and employees. When a new employee goes to work in the company, the employee knows his own ability, but the company does not know the employee's ability. Therefore, the employee can only choose the level of education first, and the company pays according to this. employees' salaries.

In addition, there is also a signal discrimination model, which is consistent with the signal transmission model, except that the principal goes first and proposes a series of contracts for the agent to choose from, and the agent chooses the most suitable contract according to its type.Either way, it's about giving the agent an incentive to expose his own type.

Borrowing economic theory, we can regard the relationship between the emperor and his heroes as a principal-agent relationship.The emperor is the occupant of a country. As the absolute controller of the country, he cannot manage the country himself, so he can only find one or more agents to perform management tasks on his behalf.In exchange, the emperor had to give these agents high officials and generous salaries, and had to let them work hard and work hard.The main requirement of the emperor is that these people do not rebel.

However, it was crucial for the emperor to secure his dominance.Therefore, preventing the ministers from rebelling has become the first condition.So will the ministers rebel or not?This has no identifying information, and it is not easy to identify.This is a pattern of information asymmetry. The ministers know whether they are rebelling, but the emperor does not know who is loyal and who is traitor.

Every emperor faced this problem.He can't tell the loyalty and treachery of the ministers, so he can only distinguish according to his own separation signal, and clear out some people who may rebel, so as to ensure that the country will last forever.When he himself is not sure, he will kill those who are capable of rebelling, because he has separated the signal and concluded that even if they rebel, only those who are capable of rebelling will rebel.Those who are incapable will not be threatened if they want to rebel.

A trust relationship is a legal relationship centered on trust property. If a trust is not established with specific property, a trust relationship cannot arise.The settlor is the person who establishes the trust with its legally owned property and is the provider of the trust property.Therefore, the settlor establishes its legal status in the trust relationship as the trust property provider.

A principal is a person who entrusts others to handle affairs for him.In the securities brokerage business, the client refers to the natural person or legal person who can conduct securities trading in accordance with the provisions of national laws and regulations.To distinguish it from the principal in the principal-agent relationship, the trust laws of some countries refer to the principal as the trustor.

7. The salaries of high earners rise faster than ordinary people - the Matthew effect
In a small mountain village, there was an old man and his son.One day, the old man had a friend John come to see him. Seeing that his friend's son had grown up, he said to the old man, "Dear friend, let me take your son to work in the city."

John thought his friend would happily agree, but he didn't want the old man to shake his head and say, "No, absolutely not!"

This time, John also smiled: "I'll find someone for your son in the city, is that okay?"

"No, I never interfere with my son's affairs." The old man said while shaking his head.

"But this girl is the Earl of Rothschild's daughter."

"Then...if that's the case..."

John found Earl Rothschild again: "Dear Mr. Earl, I have found a husband with very good conditions for your daughter."

"But my daughter is too young!" said the count.

"But this young man is the vice president of the World Bank." John said still smiling.

"if it is like this……"

A few days later, John found the president of the World Bank and said to him: "You should appoint a vice president immediately."

"There are too many presidents here, and it is impossible to appoint so many vice presidents!" said the president.

John said: "If the vice president to be appointed is Rockefeller's son-in-law, is that okay?"

"Uh... If that's the case, I readily agree." Mr. President said.

Thus, the poor farmer's son transformed himself into the son-in-law of a wealthy family, and at the same time became the vice president of the World Bank...

"I'd rather add icing on the cake than send charcoal in the snow."In the above story, John is using people's psychology to promote a story.And this phenomenon, explained by Western academic point of view, is the "Matthew Effect".

The Matthew effect refers to the phenomenon that the strong get stronger and the weak get weaker.Its name comes from a fable in the Bible "New Testament Matthew": "Whoever has, more will be given to make him redundant; whoever does not have, even what he has will be taken away."

Specifically, the Matthew effect refers to a phenomenon in which the good is better, the bad is worse, the more is more, and the less is less.Sociologists have derived the concept of the "Matthew Effect" from it to describe the widespread polarization in the field of social life.

In modern society, we often hear people say that "the rich are getting richer, and the poor are getting poorer." In a company, we often see that the salaries of high-income earners are always higher than the salaries of ordinary people. fast phenomenon.In fact, this is also verifying the Matthew effect.

So poverty is a consequence of inequity, not a product of the market.The control of the rich over the allocation of economic resources is the main source of wealth.The soul of economics is freedom and fairness, which is also the internal driving force for the vigorous development of the market economy. Therefore, only returning the poor to "fairness at the starting point" is the direction for economists to fulfill their social responsibilities.

The Matthew effect, the so-called strong gets stronger and the weak gets weaker.In real life, if a person is successful, all good things will come to him.A man who lives in the world should not blame others. The greatest enemy of man is himself.If you have a proactive and persistent attitude, you will win material or spiritual wealth. After you gain wealth, your attitude will further strengthen your proactiveness. Only in this cycle can you maximize the positive effect of the Matthew Effect.

In 1968, American history of science researcher Robert Morton proposed this term to summarize a social psychological phenomenon: "Compared with those unknown researchers, famous scientists usually get more prestige, even if their achievements are similar. Also, on the same project, reputation is usually given to researchers who are already famous. For example, an award is almost always given to the most senior researcher, even if all the work is done by a graduate student.”

Robert Morton summed up the "Matthew Effect" as: Once any individual, group or region achieves success and progress in a certain aspect [such as money, reputation, status, etc.], it will have a cumulative advantage, and there will be more More opportunities to achieve greater success and progress.This term was later borrowed by economics; it is also often used in social psychology.

(End of this chapter)