Category: arbit

P Polie Exclusion Principle

The basic concept is that for any given person, no two romantic partners fulfil the same kind of needs.

Let us take all the possible ways in which a romantic partner (since we are talking about multiple partners for the same person, usuallly happening at different points of time in the person’s life, I don’t want to use the term “long-term gene propagating partner”) can help you out. The kind of needs that she can fulfil. Make a list of them, and represent them as a vector.

And to this, add a vector of binaries. Let us call it the “need vector”. You might have guessed that an element of this vector is 1 if the partner fulfils this particular need and 0 otherwise. So for each of your romantic partners (spanning across space and time), construct such a vector. Yeah of course some of these needs are more important than others so you might think you might want to give weights, but that is not the purpose of this exercise.

The Pauli Exclusion Principle in quantum mechanics states that no two electrons can have the same four quantum numbers. Similarly the P Polie Exclusion Principle in romantic relationships states that no two of your romantic partners have the same need vector. That the needs vector of any two of your romantic partners have a hamming distance of at least 1.

This principle has certain important consequences. Given that any two of your romantic partners are separated by a Hamming distance of at least 1 and using the Neha Natalya-xkcd argument, the number of romantic partners you can possibly have in your lifetime is bounded from above by 2^n, where n is the length of your need vector. So contrary to intuition, this shows that promiscuous people actually have a larger set of needs from romantic partners than committed people.

Why Kannadigas are Inherently Lazy

There is something about the weather in Bangalore. There is something about the weather in Bangalore that perks you up. There is something about the weather in Bangalore that most of the time you really want to do something, to be active, to go out, walk around, lead an active life and all such. The first few days I spent in Bangalore after my return from Gurgaon in June I spent literally jumping around. The weather was so uplifting. It filled me with so much enthu for everything in life!

So I was wondering why people usually classify Kannadigas as being inherently lazy. As one of the professors in my JEE coaching factory used to say “naavu Kannadigarige aambode mosaranna koTTbiTTre khushhyaagiddbiDtivi” (if someone gives us Kannadigas dal vada and curd rice, we’ll live happily forever, and we will forget about working hard). Basically implying that we are inherently not too ambitious, and that we are generally laidback about stuff.

Thinking about it, I was wondering if the wonderful climate of South Interior Karnataka has to do with this (people from North Karnataka and the coast are supposed to be fairly hardworking, and are not known for their laidbackness unlike us Old Mysore people). I wonder if this laidbackness is because our wonderful weather has spoilt us. Spoilt us to an extent that we don’t really need to normally fight against the odds.

So I was thinking about Gurgaon, the other place where I’ve recently lived in. Gurgaon has horrible climate. Maybe a total of one month in the year can be desccribed as “pleasant”. Most of the time it’s either too hot or too cold. Temperatures are extreme. When it rains the whole place floods up. If people in Gurgaon are happy it is in spite of the weather and because of it. And therein lies the reason why people from there are traditionally more hardworking than us people from Old Mysore.

Blessed with such wonderful climate, we don’t really need to fight the odds. If today is too hot, we can put off the job for another day when we’re sure it’ll be cooler. If it rains too much today, we know that it’s likely to be dry tomorrow and can thus postpone it. Essentially we don’t need to put too much fight. When the weather is good, we are all jumpy and enthu and do our work. Which allows us to wait and sit when the weather is bad.

The man in Gurgaon, or in Chennai, or even in Raichur, however, can’t afford that. The likelihood of him having a good day weatherwise sometime in the near future is so thin that there exists just no point for him to postpone his work thinking he’ll do it when he feels better. This means that he is culturally (rather, climatically) conditioned to work against the odds. To do stuff even when he doesn’t want to do it. To essentially put more fight. And so he avoids that “inherently lazy” tag which people like us have unfortunately got.

I’m reminded of the second case that we did in our Corporate Strategy course at IIMB, from which the main learning was that sometimes your biggest strengths can turn out to be your biggest weaknesses.

nODi swami, naaviruvudu heege.

Gyaan From a Former All India Topper

CAT is less than a month away. Or more, depending on when you’re writing it. If any aspirants are reading this, I have just one piece of advice for you – which no one in any CAT Factory will give you. It’s about going for it. About batting like Sehwag. About reaching out far outside the off stump and playing every ball. I just want to assure you that percentages are in favour of this kind of a game.

In my zamaana, every correct answer in CAT gave you one mark, and every incorrect answer took away a third of a mark. Every question had four possible answers of which exactly one was correct. This negative marking had a completely psyching out effect on most takers, and people are afraid to go for it. And six years back, I liked it. For it made my own risk-taking strategy much easier – since I could now afford a larger number of errors.

The arithmetic is simple. Even if you have no clue about the question, and just put inky-pinky-ponky (or even better mark ‘C’, since years of research has proven that it’s the statistically most probable answer in CAT) you have one-fourth chance of getting it right – which gives a three-fourth probability of getting it wrong. And given the payoffs for correct and incorrect answers (1; -1/3) you can clearly see that the expected payoff of taking a completely random guess is ZERO!

So while this obviously rules out insane inky-pinky-ponkying, what it does tell you is that if you can eliminate at least one of the four choices, you are in the money! If you have to pick one of three possible answers, the expected payoff is 1/9 which is greater than zero. Yeah it doesn’t look very high but then the expected payoff is positive! So you need to go for it.

Back when I was in my 3rd year, there was some free mock CAT at IITM. And some of us 3rd years went just for the heck of it. I attemped 130 out of 150 questions, getting 90 right and 40 wrong. It still gave me a significantly higher score than any of my seniors (who were writing CAT that year) – most of whom attemped not more than seventy. Later that day a senior called me aside and told me that the art of CAT was about leaving questions. And that it was all about the questions that you left.

Leaving the ball makes sense in cricket where one mistake ends your innings. What if instead of ending your innings you were just deducted 2 runs everytime you got out? Would you still leave the balls outside off and play the waiting game? How on earth would you score runs if you were to leave every ball? It’s all about scoring, and you can score only if you attempt a shot.

I understand that CAT format has changed now and you have 5 possible correct answers for every question while the negatives are still at 1/3. Even then, if you can eliminate two out of the five answers (shouldn’t be too gouth), you have a positive payoff. And you must go for it. Keep in mind that you can’t score if you don’t play the ball.

I leave you with a video. The message is in the name of the song. Idu One Day Matchu Kano. This is a one day match dude. So you must go for every ball. And look to score.

A Balance Sheet View of Life

The basic idea of this post is that interpersonal relationships (not necessarily romantic) need to be treated as balance sheets and not as P&L statements, i.e. one should always judge based on the overall all-time aggregate rather than the last incremental change in situation.

Just to give you a quick overview of accounting, the annual statement typically has two major components – the P&L statement which reflects what happened between the last release of the statement and the currrent point, and the balance sheet which reflects the position of the company at the point of time of release of the statement.

I think Bryan Caplan had made this point in one of his posts, but I’m not able to find it and hence not able to link it. The point is that you should look at relationships on a wholesome basis, and not just judge it based on the last action. The whole point is that there is volatility (what we refer to in my office as “the dW term”) and so there are obviously going to be time periods during which you record a loss. And if on each of these occasions you were to take your next course of action based on this loss alone, you are likely to be the loser.

I’m not saying that you should ignore the loss-making periods and just move on. You do need to introspect and figure out what you need to do in the next accounting period in order to prevent this kind of a loss from repeating. You will need to “work the loss”, not make a judgment to break the relationship based on it. I think a large part of the problems in this world (yeah, here goes another grand plan) stems from people using one-period losses in order to take judgments on relationships.

Another thing is not to generate the accounting statements on a shorter time period. This is similar to one funda I’d put long ago about how you shouldn’t review your investments at extremely short intervals since that will lead to a domination of the volatility term (dW) and thus cause unnecessary headache. You might notice that corporates rarely release their accounts statements more frequently than once a quarter – this has more to do with volatility than with the difficulty in generating these statements.It is similar in the case of interpersonal relationships. Don’t judge too often – the noise term will end up dominating.

One caveat though – very occasionally the last loss may be so bad that it more than wipes out the balance sheet and takes to zero (or even less) the value of the firm. In that kind of a situation, there is no option but to shut down the firm (or break the relationship) and move on. Once again, however, the clincher in the decision to break up has to be the balance sheet which has gone to zero (or negative) and not just simply the magnitude of the last loss.

Life based on a balance sheet view is a balanced life.

Relationships and IIT

So the basic premise of this post is that being in a romantic relationship is like studying at IIT.

Everyone wants to get into IIT. They do thipparlaaga to try and get in. They join expensive coaching classes. Some of them even move cities. They wait for several years giving multiple attempts. People work extremely hard. Still, success is not guaranteed. There is that luck factor. There is the day’s performance that matters. Some days are important than others. Cracking the JEE is a “discrete” job.

While preparing for JEE, everyone thinks that if they clear the exam, their life is made. They come under the impression that after JEE, life will become smooth. That they won’t need to put any fight for the rest of their lives. That all that matters for their future is their cracking the JEE. And so forth.

It’s only after people come to IIT that they realize that life is not the cakewalk they assumed it to be. It is only after they get there that they realize that life after JEE is quite hard. That it is necessary to work hard. That if they don’t work hard, they will do very badly, and might flunk. It is only when they get to IIT that it hits them. Some learn quickly but others get disillusioned and give up in life. Several people do badly. Some even drop out.

So it’s similar with a romantic relationship. Everyone wants to get into a romantic relationship. Everyone looks only about the “entrance examination”. Everyone believes (before they get in) that life ban jaayegi after they get into a relationship. And getting into a relationship is a “discrete” job. It’s about how you “perform” during those blading sessions. It takes that bit of luck. It takes those set of fateful events to happen together in that precise coincidence.

And it is only when you get into a relationship that you realize how hard it is (provided you haven’t been there before). It is like being in IIT all over again. You know that you will need to work really hard to keep it going (applies to both parties). It is a continuous job, and you need to continuously “perform”. The randomness is much smaller than it is during the “relationship acquisition” phase.  However, you necessarily need to work hard. There is no “stud way out”. Some people give up when they find this out and break up (drop out). Others understand and put in the requisite effort and sustain the relationship. And continue to work hard.

The thing with arranged marriages is that you are typically forced to commit as soon as you’re done with “evaluating” the other person. You don’t get to test the counterparty on their ability to work hard and keep things going. It is like offering someone a job as soon as he has cleared the JEE.

And I wonder if one can draw an analogy between marriage and (academic) tenure.

Sweetie

I wrote this post last evening. Since I didn’t have broadband access then, I’m posting it only now. This was written on my blackberry, so excuse the typos. Also, blackberry meant that I was typing much slower than usual so this post will probably lack the sudden rush of thought that can be noticed in my other posts.

For the first time in my life I really ezperienced and enjoyed a sugar high today. I must say it was almost like being drunk, except for that it’s unlikely to scr3w my health and that I managed to drive fairly peacefully. It was a really wonderful feeling and though it’s unlikely to last as long as an alcohol high, I think it’s really worth it.

Now I was wondering about the reasons for my high today since the quantity of sweet I consumed today was nowhere close to peak consumption. Thinking about it, however, I realized it had everything to do with relative value and by that metric I’d eaten a lot today.

For the last three month, for health reasons, I’ve been competely off sweets. I don’t take sugar in my coffee. No sugar in fruit juice. Diet coke. No tea, since I can’t stomach it without sugar. Hardly any biscuits. Strictly no desserts, etc

Biologically speaking, the human body is favourably disposed towards sweets since sweets are extremely high in energy and in times when food was scarce (till 200 yrs back) it was a mechanism to make sure of getting the maximum possible energy. It can be argued that our instinctive love for sweets is a darwinian advantage. Since 200 yrs is too short for natural selection to act for humans, we still like sweets despite them not being good for us.

So the whole point of eating sweets on special occasions, I guess, is to give you that sugar high. And in times of less abundance when calorie consumption was low, eating the sweet would’ve been worth it for the sugar high alone, with taste being incidental.

So when you’re normally not used to consuming too muxh energy, as was the case with most people until 200 yrs ago, eating a sweet results in a sudden rush of energy to the brain. And this sudden extra rush, which is usually not accounted for by the body, gives the brain extra energy to do stuff. And hence you get what is called as ‘sugar high’. You suddenly become high energy. All the ned goes away. You want to do something to spend the energy stimulus. You get sudden enthu. You get high.

Unfortunately, given our high energy lifestyles, normal quantities of sweets are hardly enough to provide any sort of spike in energy flow to the brain, and hence don’t cause any high.  And thus the only thing we can enjoy from the sweets is the taste. The main advantage of sweets seems to have been lost, maybe forever.

I’m glad I’m on this diet. Apart from helping me in terms of general fitness and causing significant weight loss, it has also helped me appreciate sweets better. And experience the real high.

Here’s wishing all my blog readers a happy and prosperous deepAvaLi.

Pricing My Best Friend’s Wedding

Any of you remember this movie called “My Best Friend’s Wedding”? If you don’t, here is a brief description of the plot. Julia Roberts and Dermot Mulroney (had to look up imdb to remember his name) have this agreement that if they are both single as of her 28th birthday, they will get married to each other. As it happens, 3 weeks before that, the hero announces that he’s found a woomaan and is going to get married to her, much to the dismay of the heroine, who now puts fight to somehow spoil this new relationship.

I was thinking of this kind of arrangement as a financial product. Actually, the movie has what I call as the “European version”. More complicated is the “American version” which I describe here. Basically I give you the OPTION to marry me on any day before my 28th birthday (6th Dec 2010). That would be simple enough to “price” (or “value”, to put it in layman’s terms) – it is a standard American option. However, let me add this twist into it. I also reserve the right to withdraw this option on any day before expiry or exercise.

So basically some day before my 28th birthday I can wake up and cancel this option that I’ve given you. Now the challenge is to price this. One thing that is obvious is that the value of this is now less than the value of the pure American option. But pricing it is a challenge (though, thinking about it carefully, it shouldn’t be too hard to solve. I think we can use option-on-option fundaes in order to price it, but still it’s nontrvial).

The European option, of course (as it is done in My Best Friend’s Wedding) easier to price. Basically, there are two events that need to happen on the day of expiry for the option (ok technically it isn’t an option since if these two events happen, then the parties are forced to execute the contract) and so it can be easily modeled using a two-factor model. The American, as we discussed, is tougher (though I’m sure that if I were to present this problem to my colleagues, they’d solve it in a jiffy).

So the reason I’m writing this is that I’m planning to enter this kind of a deal with someone. And I’m wondering if it’s better to enter into a European deal or into an American. Remember that if it is the “American” deal, I’ll be giving away the option (to marry me before either my 28th birthday or I withdraw the option) for free. Considering this, under what conditions should I try to sign the European contract, and under what conditions should I give away the American?

Also, how does the pricing of the American option change if I’m allowed to give it away to more than one person (with the understanding that as soon as one person exercises the option, I withdraw the option from all the other people I’ve given it to). And typically, will I be able to get more benefit in total by giving away this American option to a number of people than if I give it away to one person (assuming I’m indiffernet between all these people with respect to marriage).

Ok it’s late in the night and it’ s my third post in the last 1 hour, so it might be a bit muddled up. Also, you might find it a bit too technical (remember that I’m a quant). Nevertheless, I hope I’ve been able to communicate what I wanted to communicate. And am looking forward to your advice on this.

Arranged Scissors 15: Stud and Fighter Beauty

Ok so here we come to the holy grail. The grand unification. Kunal Sawardekar can scream even more loudly now. Two concepts that i’ve much used and abused over the last year or so come together. In a post that will probably be the end of both these concepts in the blogging format. I think I want to write books. I want to write two books – one about each of these concepts. And after thinking about it, I don’t think a blook makes sense. Too  many readers will find it stale. So, this post signals the end of these two concepts in blog format. They’ll meet you soon, at a bookstore near you.

So this post is basically about how the aunties (basically women of my mother’s generation) evaluate a girl’s beauty and about how it significantly differs from the way most others evaluate it. For most people, beauty is a subjective thing. It is, as the proverb goes, in the eyes of the beholder. You look at the thing of beauty (not necessarily a joy forever) as a complete package. And decide whether the package is on hte whole beautiful. It is likely that different people have different metrics, but they are never explicit. Thus, different people find different people beautiful, and everyone has his/her share of beauty.

So I would like to call that as the “stud” way of evaluating beauty. It is instinctive. It is about insights hitting your head (about whether someone is beautiful or not). It is not a “process”. And it is “quick”. And “easy” – you don’t sweat much to decide whether someone is beautiful or not. It is the stud way of doing it. It is the way things are meant to be. Unfortunately, women of my mother’s generation (and maybe earlier generations) have decided to “fighterize” this aspect also.

So this is how my mother (just to take an example) goes about evaluating a girl. The girl is first split into components. Eyes, nose, hair, mouth, lips, cheeks, symmetry, etc. etc. Each of these components has its own weightage (differnet women use different weightages for evaluation. however for a particular woman, the weightage set is the same irrespective of who she is evaluating). And each gets marked on a 5-point likert scale (that’s what my mother uses; others might use scales of different lengths).

There are both subject-wise cutoffs and aggregate cutoff (this is based on the weighted average of scores for each component). So for a girl to qualify as a “CMP daughter-in-law”, she has to clear each of the subject cutoffs and also the total. Again – different women use different sets of cutoffs, but a particular woman uses only one set. And so forth.

I wonder when this system came into being, and why. I wonder if people stopped trusting their own judgment on “overall beauty” because of which they evolved this scale. I wonder if it was societal pressure that led to women look for a CMP daughter-in-law for which purpose they adopted this scale. It’s not “natural” so I can’t give a “selfish gene” argument in support of it. But I still wonder. And my mother still uses scales such as this to evaluate my potential bladees. Such are life.

Head, heart, phallus and arranged louvvu

In response to my arranged scissors series, my stalker has started her own thing called the “karabath series“. In the first (and so far, only) post in that series, she talks about this concept that she describes as “arranged louvvu”. It is a bit convoluted but the essence is that in “arranged louvvu” you don’t blindly get into it. Instead, you put on a rational approach to decide if the counterparty is best for you and if the cost of giving  up on all the other women in the world is covered by the joy this woman brings you, and then make sure that the counterparty satisfies all CMP constraints and only then, in a phased manner, do you fall in louvvu with the person.

It is a nice concept but unfortunately I think the way the stalker has explained it is extremely convoluted, and I think using the head-heart-phallus framework (Kunal Sawardekar, you can abuse me for this also) I can explain this a lot better. So basically the idea is that the phallus is the quickest to react, followed by the head and the heart takes the longest to react.

The way most louvvu happens, the way they show it in the movies is that phallus reacts first (it’s a purely biological reaction, so it’s quick and trustworthy). And then, quickly enough, the heart gets involved. And the thing with heart involvement is tthat it is an extremely illiquid investment – it is really tough to liquidate the “heart investment” without booking significant losses. And since the heart entered the scene before the head also gave its verdict, when the head finally comes into the picture, it finds the whole thing irrational, and thus it goes “love is blind”.

The typical arranged scissors process, however, doesn’t leave you with enough time for the heart to enter the process. And since relatives can’t help you with the phallus process (and since that’s anyway instantaneous) it’s the head that gets involved. It’s the head, the rational head that takes all the decisions there. The heart enters only later, in most cases after marriage.

So the funda is that the stalker is confusing “head involvement” for “arranged process”. What she calls as “arranged louvvu” is a case where one holds back the heart (yeah, it takes effort to do that after phallus has said yes) in order to allow for the head to take a rational decision, and then go ahead with “heart investment” only after head has said yes. This way, the head always has buy-in on any relationship that the heart has gotten into, so irrationality gets minimized to a large extent. And some of the problems of “pure louvvu” are hedged off.

Yeah, it takes effort. It takes effort to hold back the heart once the phallus has given go-ahead. But getting the right amount of head involved at the right time helps in preventing much disaster. It’s the logical way to go about things. “Arranged louvvu” is only a fancy name people give it. And now I don’t really know if the head-heart-phallus framework has made it any easier for you to understand this.

Arranged Scissors 14 – Losing Heart

I’ve been in this market for a while now. It was sometime in February that my mother decided that I had utterly failed in my attempts to find myself a long-term gene-propagating female partner, and that she needed to step in and find someone for me. It was sometime in March that I went to this shady photo studio at DLF Galleria in Gurgaon and got a “wedding profile” snap taken. Later in March, I got listed at some shadymax exchange in Malleswaram. And there was the “market visit”.

The last weekend of this March I was in Bangalore, and was taken to this shady-max exchange in Malleswaram for a “market visit”. My uncle had told me that we needed to go sufficiently early, since there were apparently profiles of six hundred girls that I had to inspect that day, and make a shortlist. We had had a hurried breakfast at a Darshini in JP Nagar and then headed out to the exchange. My uncle, aunt and mother took turns to go up to the counter there and fetch the “smartha brides” files one by one. And I would spend about a minute on each file – which had fifty profiles. The six hundred profiles were done in less than a quarter of an hour. Phallus had simply refused to budge.

Aadisht, via his friend Vishakh, came up with this awesome framework of “head, heart, phallus“. The basic funda is that in order for you to enter into a long-term gene-propagating relationship, your head, heart and phallus need to independently like the counterparty (women insert appropriate substitute into the 3rd component). There is nothing earth-shaking about this framework as another of my friends pointed out, but the important thing is that it distinguishes between heart and phallus. Which I think most other explanations of louvvu (including bollywood movies) tend to ignore. And people also ignore it and get confused between heart approval and phallic approval, leading to disaster.

I had taken a long break from this arranged scissors market – a combination of being generally disgusted, poor health and being in between jobs. Recently (with the advent of Navaratri) I’d gotten back, and realize that I’ve lost my heart. Yeah, you might think this sounds funny but it’s not. I’ve truly lost my heart. And the only good that can come out of this is that if a crocodile catches and threatens to eat me, I can tell it the truth.

This whole arranged scissors concept seems to dehumanize the wonderful concept of long-term gene-propagating relationships. You are expected to make your decisions quickly, and you are expected to design “questionnaires” so as to get the maximum amount of info through each meeting. You are expected to browse through files containing six hundred profiles and make a shortlist. And when you are in the process of making the shortlist, you have your mom and aunt peering over your shoulder with helpful comments such as “this girl’s mouth is too wide” or “that girl’s nose is too blunt”.

For a while you resist, and resolve that you won’t get sucked into this mess. You resolve that you are still looking for “true louvvu” (whatever that is) and won’t settle for a common minimum program. You resolve that you’ll use the arranged marriage exchange as a dating agency. And soon it begins getting to you. You begin to see the merits of judging noses as too flat and mouths as too wide. You start breaking a girl down into components, and giving marks to each, and taking a weighted average to see if it is beyond “pass marks” (ok I’m obviously exagggerating here). You agree to meet potential counterparties even if you know that it’s improbable that you’ll like her.

My head, I think, is doing quite fine. So is the phallus. However, I think I’ve lost my heart. It’s been three and a half years since I even hit on someone. My heart seems to have forgotten how to love, and to have a “crush”. I’ve forgotten how my heart used to react during prior blades. In each of those cases, if I remember right, it was the heart that initiated it, and the head and phallus only gave approval later. Now, I have no clue how that used to happen. That seems so improbable.

This whole concept of meeting people with the explicit intention of evaluating them for long-term gene-propagating relationships is seedy. I think it goes against the laws of nature, and completely ruins that wonderful feeling that one usually associates with louvvu. It makes you too judgmental (I’m judgmental otherwise also, but not this judgmental), and you are so busy evaluating her that you don’t enjoy it at all. And how can you trust your judgment when you know that you haven’t liked the process of judgment at all?

Yesterday I met a friend, an extremely awesome woman. Once I was back home, I sent a mail to my relationship advisor, detailing my meeting with this friend. And I described her (the awesome friend) as being “super CMP”. I wrote in the mail “I find her really awesome. In each and every component she clears the CMP cutoff by a long way”. That’s how I’ve become. I’ve lost it. I’ve lost my heart. And I need to find it back. And I don’t know if I should continue in the arranged scissors market.