1. The Bat and Ball Problem
- A bat and a ball cost $1.10.
- The bat costs $1.00 more than the ball.
- How much does the ball cost?
Nearly all people have a first reaction of 10 cents which is wrong. The correct answer is 5 cents.
In a study of 3,428 university students, 50% of participants across Harvard, MIT and Princeton gave the incorrect intuitive response and did not actively check their response. A failure to check is instructive because it requires such minimal mental effort.
- FTX was hit with record bank run, and filed for bankruptcy in days, with no central bank to bail it out.
- Credit Suisse hit with record bank run, and both the SNB and Fed rushed to bail it out.
One wonders which system is a better representation of what true capitalism should be.