Economics & Finance
Gresham’s Law
Gresham's law describes incentives to circulate money overvalued at an official or imposed rate while retaining or diverting money undervalued at that rate relative to its market value
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Economics & Finance
Gross Domestic Product (GDP)
GDP measures the value of final goods and services produced within an economy during a specified period
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Hedging
Hedging uses an offsetting position or arrangement to reduce exposure to a specified risk
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Importance of Margins
Profit margins express a defined profit amount relative to revenue
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Incentives
Incentives are anticipated consequences that can influence the attractiveness of actions
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Inflation
Inflation is an increase in a general price level over a specified period, measured using a defined index
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Information Asymmetry
Information asymmetry occurs when parties have different relevant information about a decision, transaction, or action
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Insider Trading
Insider trading includes lawful transactions by corporate insiders as well as conduct prohibited under applicable securities laws
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Investing vs Speculation
Graham distinguished investment operations supported by analysis of value, protection of principal, and adequate prospective return from operations that did not meet those conditions
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Jevons Paradox
Jevons paradox describes cases where efficiency stimulates enough additional activity to increase total resource use
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Kelly Criterion
The Kelly criterion chooses exposure to maximize expected logarithmic wealth under a specified probability and payoff model
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Keynesian Beauty Contest
Keynes used a newspaper guessing contest to illustrate decisions rewarded for anticipating average opinion
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Loss Leader
A loss leader is an offer sold below a specified cost measure to attract purchases that may offset the initial loss
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Market Power
Market power is the ability to sustain prices or other terms above a competitive benchmark because competitive constraints are limited
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Moat (Economic Moat)
An economic moat is a metaphor for a competitive advantage that is difficult to erode
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Monopoly and Competition
Competition and monopoly describe different degrees of constraint from rival sellers and substitutes
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Moral Hazard
Moral hazard is an incentive problem in which protection from consequences can change behavior, often when actions are difficult for another party to observe
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Natural Monopoly
A natural monopoly exists when one provider can supply the relevant market at lower total cost than multiple providers dividing production
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Opportunity Cost
The value of the best alternative you give up when making a choice
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Perverse Incentive
A perverse incentive rewards behavior that undermines the outcome the incentive was meant to support
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Poison Pill
A corporate poison pill commonly means a shareholder rights plan designed to deter an acquisition without board agreement
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Predatory Pricing
Predatory pricing describes a proposed strategy of sacrificing returns through low pricing to weaken competition and later recoup losses through market power
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Preferred Stock vs Common Stock
Common and preferred stock are equity classes whose rights depend on their terms
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Price Discrimination
Price discrimination involves price differences not fully explained by cost differences, often aimed at different willingness to pay
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Price Elasticity
Price elasticity measures the percentage quantity response to a percentage price change under specified conditions
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Principal-Agent Problem
A principal-agent problem can arise when one party delegates decisions to another whose information, incentives, or objectives differ
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Purchasing Power Parity
Purchasing power parities are statistical conversion factors used to compare quantities of goods and services across economies after adjusting for price-level differences
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Reflexivity
In Soros's account, participants' beliefs can influence actions that change the conditions those beliefs describe, creating feedback between perception and the situation
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Regulatory Capture
Regulatory capture occurs when regulated interests redirect a public institution's decisions toward their own interests at the expense of its public mandate
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Risk-Reward Analysis
Risk-reward analysis compares potential benefits with losses, their uncertainty, timing, and consequences
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Scarcity
Scarcity means that available resources do not satisfy all desired uses within relevant constraints
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Social vs Market Norms
Social and market norms describe different ways people interpret exchanges, including reciprocity and care on one hand and explicit price or contract terms on the other
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Specialization
Specialization concentrates work or learning on particular tasks or capabilities
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Supply and Demand
Supply and demand describe quantities sellers and buyers would choose at different prices under specified conditions
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Third Rail
A third rail is a metaphor for a topic perceived to carry unusually severe political or interpersonal penalties when raised
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Time Value of Money
Time value of money compares cash flows at different dates using an explicit rate and assumptions
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Trademarks, Patents, and Copyrights
Trademarks identify the source of goods or services; patents can protect qualifying inventions through defined exclusion rights; copyrights protect qualifying original expression
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Tragedy of the Commons
A tragedy of the commons can occur when individual users receive benefits from a subtractable shared resource while depletion costs are spread among others
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Two-sided Market
A platform setting where participation and interactions across distinct groups affect demand, so the allocation of prices and incentives between groups can matter alongside their total level
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Utility (Marginal, Diminishing, Increasing)
Utility represents preferences or satisfaction in an economic model
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Winner Take All Market
A market or contest pattern in which a small number of participants receive a disproportionately large share of rewards
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Winner's Curse
The risk that an auction winner overpays by failing to account for what winning reveals about an optimistic estimate of uncertain common value
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Mr. Market
Benjamin Graham's allegory of a business partner who repeatedly offers to buy or sell at changing prices
Investing ModelsEconomics & Finance
Reversion to the Mean (Business Performance)
Extreme business results may become less extreme when temporary conditions or noise fade, and profitability may also change through competition and adjustment
Investing ModelsEmotional Regulation & Somatics
Affect Labeling (Name It to Tame It)
The practice of putting an emotion or emotional stimulus into words
Emotional IntelligenceEmotional Regulation & Somatics
Co-Regulation (Nervous System Attunement Between People)
Interpersonal processes through which people influence emotional experience, behavior, and sometimes physiological patterns
Emotional IntelligenceEmotional Regulation & Somatics
Emotional Granularity (Barrett): Precision in Emotional Vocabulary
The differentiation of emotional experiences into relatively specific categories
Emotional IntelligenceEmotional Regulation & Somatics
Neuroception (Unconscious Threat Detection)
Porges's proposed term for nonconscious evaluation of safety and threat cues within polyvagal theory
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