November 16, 2006

The Spooky Action of Money at a Distance

Einstein used the phrase "spooky action at a distance" to describe instantaneous actions at a distance, or quantum entanglement. I seriously doubt if he would have ever imagined the phrase being applied to the quantum entanglement of money and motives. That's what appears to be the results of a series of nine experiments by Kathleen Vohs of the Carlson School of Management at the University of Minnesota, and her team.

As thought experiments are often used to explain quantum principles, I'll attempt to construct one to explain this. Imagine a pair of couples sitting down to watch TV in their respective living room. The husbands are huge fans of the shopping channel, but the wives are football fanatics. The Smiths have been just shown a wad of dollars — fake dollars or even a picture of dollars may do — but the Millers have not been anywhere near a dollar for, say, 24 hours. What sort of behavior will you expect from them? If we applied Vohs' results to the experiment, the Smiths will spend more time switching the channels than watching either of their favorite shows, whereas the Millers will agree to watch the shopping channel for half the time, and the football game for the other half. The mere thought of money could turn one into a selfish, social moron, to use Amartya Sen's term to describe the purely economic man!

I used to begin my classes in competitive strategy by writing a large sign of $ on the black board, with an admonishment that the case course was about money, money, and more money. Now, I wonder if that explained why the class would never reach a consensus on any issue!

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