Say no to ATM fees and improve your finances forever
Suppose you need $100 to pay a tab at a cash-only bar and your friends are gone. Which of the following options would you choose to get cash? (a) Withdraw money from the nearest ATM, which is not owned by your bank ($3 fee from your bank, $3 fee from ATM ...

Why those price match guarantees may end up costing you a fortune
This week's game theory post is motivated by a question from loyal reader JoeP about pricing strategies. If you have a question about personal finances or game theory, feel free to send me a line. Here is what JoeP wrote: An interesting thought stuck me yesterday as I drove by the ...

Putting financial jargon in plain English–Warren Buffett style
I believe many financial misconceptions arise from poor writing. The SEC shares this view and in 1994, Arthur Levitt, the SEC Chairman, talked to the National Press Club about the SEC's campaign for consumer education. He gave one example of how financial prospectuses are difficult to understand. Here is a passage from ...

Can you stop a jerk without becoming one yourself?
In the discussion that followed my book reaction to The No Asshole Rule, one reader commented that he was implementing a personal "no asshole policy" to remove jerks from his life. I fully support the move, but I have an unresolved question: is it possible to remove assholes from your ...

Credit cards, debit cards, and cash–which way of paying is best?
At a bar, I once saw three people at a table receive separate checks, and amazingly, each of them paid in a different method. The first person threw down cash, the second a debit card, and the third a credit card. It got me thinking about why people pay in ...

Understanding sunk costs
A sunk cost is an expense that you cannot recover. Accordingly, economic theory says a sunk cost should not affect your decision making. Psychologically, it is hard to ignore sunk costs. Here are a few examples where sunk costs come into play. Example 1: Attending an NFL game with already purchased ...

5 ways to make your threat appear credible
A word of caution: I write this article not to encourage deceit, but to arm honest people with the means for proper defense. There are two kinds of threats: credible and non-credible. A threat is credible if it will likely be followed through. For instance, when utility companies threaten to disconnect ...

Economics: the formal definition of a game
I gave a brief history of game theory in my introductory post. Game theory is about making actions based on what you think others might do, taking into account that other people are acting based on what you might do. The circularity is what makes game theory interesting. For completeness, here ...

Book reaction to The No Asshole Rule
I've always felt being friendly gives results than being a jerk. On that note, I enjoyed reading Robert Sutton's book The No Asshole Rule, which argues that businesses can be more successful if they avoid hiring assholes. Sutton defines assholes in the first chapter as people who (1) make a target ...

What beer can teach you about comparison shopping
I'm almost always thinking numbers. Yes, even when shopping for beer. Recently, I was choosing between the Red and Blue Chimay varieties. I have a slight preference for the Blue, but the Red was a couple dollars cheaper and figured I'd give it a try. But I wondered why it was ...

What is the difference between APY and APR? How is interest actually computed in my savings account or on my loan?
Whether you are financing a loan or getting a savings account, you need to know about interest rates. Banks talk about interest rates using the acronyms APR and APY, but what exactly do they mean? I'll explain why banks conveniently quote one figure or the other. But first, I will ...

Motivational tool: paying yourself first
Today, I focus on the method known as "paying yourself first." Chris Johnson at Wisebread explains the principle: The key to increasing your wealth without knowing it, is to take away your money before you even think you have it. This money is not actually being lost, you are simply just ...

What is game theory?
It's strange when you think about how television and movies affect your life. It was the Teenage Mutant Ninja Turtles that inspired me to take seven years of Shotokan karate. And it was the movie A Beautiful Mind that motivated me to study and discover my passion for game theory. Game ...

Why buying on credit online may make sense: my experience buying business cards
Recently I received business cards from an online purchase. After checking the quality and looking for misprints, I was satisfied with the cards. But being a paranoid, I wondered if I got all 500 cards I ordered: I mean, if they sent fewer cards as standard practice, what sane business ...

The lowest gas price you’ll ever see, and other decimal mistakes
I almost caused an accident when I saw this gas price today: To my dismay, it turned out the station was undergoing maintenance, and the attendant apparently chose this price on purpose. What a lousy way to indicate a gas station is closed...Blatant false advertising I say! The incident did remind me ...