The 007s — Week 9

This week went by reading ‘The Changing World Order’ by Ray Dalio, attempting at understanding the Russian attack on Ukraine and exploring the many nooks and crannies of Delhi.

• Ghost Loans: Ghost loans are the fictitious loans recorded in the books or loans taken by the borrower-on-record, at the behest of the real borrower. These exist only on paper and are used to inflate the loan book of lending institutions. In India, there has been a sharp hike in the number of consumer complaints against such ghost loans. In order to understand ghost loans, one also needs to understand credit reports — a collation of all the details of a borrower to ascertain one’s creditworthiness, which influences the rate of interest to be charged from the borrower. Ghost loans skew the credit scores of individuals and have now become a major issue given the fintech boom in India.
• Achilles’ heel: According to the Greek legend, when the hero Achilles was an infant, his sea-nymph mother dipped him into the river Styx to make him immortal. But since she held him by one heel, this spot did not touch the water and so remained mortal and vulnerable, and it was here that Achilles was eventually mortally wounded. Today, the tendon that stretches up the calf from the heel is called the Achilles tendon. But the term Achilles’ heel is now used with the general meaning “weak point” — for instance, to refer to a section of a country’s borders that aren’t militarily protected.

• Prisoners Dilemma: The prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome. A prisoner’s dilemma is a situation where individual decision-makers always have an incentive to choose in a way that creates a less than optimal outcome for the individuals as a group. The typical prisoner’s dilemma is set up in such a way that both parties choose to protect themselves at the expense of the other participant. As a result, both participants find themselves in a worse state than if they had cooperated with each other in the decision-making process. The prisoner’s dilemma is one of the most well-known concepts in modern game theory. The prisoner’s dilemma presents a situation where two parties, separated and unable to communicate, must each choose between co-operating with the other or not.

• Crime hotspots: A crime hot spot is generally defined as an area containing dense clusters of criminal incidents. Identifications of hotspots help public safety institutions allocate resources for crime prevention activities. This geographical analysis is usually made based on crime pin maps of reported crime events over a certain period. Developing maps that contain hotspots become a critical and influential tool for policing; they help develop knowledge and understanding of different areas in a city and possibly why crime occurs there. Another common method used to define crime hot spots is to draw circles from each event and then find the ellipse representing the highest density of crime, i.e., to measure events per square mile. This method usually uses a cut-off figure, for example, only the top 25 percent of circles containing the highest number of incidents are defined as a hot spot. The result is an ellipse with no direct comparison with the surrounding area.

Image Source: The New Indian Express

• Krebs Cycle: The Krebs cycle, also known as the citric acid cycle or the tricarboxylic acid cycle, is one of the most important reaction sequences in biochemistry. Not only is this series of reactions responsible for most of the energy needs in complex organisms, but the molecules that are produced in these reactions can also be used as building blocks for a large number of important processes, including the synthesis of fatty acids, steroids, cholesterol, amino acids for building proteins, and the chemicals used in the synthesis of DNA. Due to the many functions of the citric acid cycle is also considered to be the “central hub of metabolism”. This is because, as most of the absorbed nutrients, the fuel molecules are oxidized ultimately within the Krebs Cycle and its intermediates are used for various biosynthetic pathways.

• The Einstellung Effect: Einstellung is the development of a mechanized state of mind. The Einstellung effect is the negative effect of our previous experiences when solving new problems. It refers to our predisposition to solve a given problem in a specific manner even though better or more appropriate methods of solving the problem exist (Maslow’s Hammer). In 1942 renowned psychologist Abraham Luchins conducted an experiment to illustrate the Einstellung effect. The Einstellung effect occurs where preexisting knowledge impedes one’s ability to reach an optimal solution. One becomes unable to consider other solutions when clouded by a previous solution, even though it may not be accurate or optimal. This leaves us cognitively incapable of differentiating previous experience from the current problem. So we may solve a problem but we don’t actually innovate.
• LATTE Method: The LATTE method, originally implemented and popularized at Starbucks, is a tool used for handling customer complaints and works across many different types of customer service roles. The LATTE method stands for: listen, acknowledge, take action, thank the customer, and explain why the problem occurred. LATTE has become the automatic, habitual response to the cue of a shouting or complaining customer, which leads to the reward of a happy customer and a job well done. In the book titled ‘Power of Habit’, Duhigg says, “Starbucks taught their employees how to handle moments of adversity by giving them willpower habit loops”. The key was turning self-discipline into a habit by identifying a certain behaviour (routine) ahead of time and following an established routine (LATTE Method) when triggered by a particular cue.