The Pareto principle refers to the situation in which a large amount of the total output comes from a small amount of the total input. This is typified by the "80/20 rule" which states that 80% of the output comes from 20% of the input. Typically, a Pareto analysis is conducted to determine the areas … Continue reading Pareto Principle
Originally formulated by Albert W. Tucker, the prisoner's dilemma is a type of non-zero-sum game that has become a classic model of such games. In this game, as in many others, it is assumed that each individual player ("prisoner") is trying to maximize his own advantage, without concern for the well-being of the other players. … Continue reading Prisoner’s Dilemma
The following table is a look at leading economic indicators, and whether their rise or fall signal positive economic events or negative economic events. For finance interviews, know this chart cold.
Inflation is the rise of prices over time – it is why over the long-term, we are guaranteed to hear and (sorry, it’s true) speak phrases like: “When I was your age, a can of Coke was only 50 cents.” Prices rise over time because of increases in population and resultant demands for products. Inflation … Continue reading Central bank(Fed) and Inflation
The Federal Reserve Board has broad responsibility for the health of the U.S. financial system. In this role, the Fed sets the margin requirements on stocks and options, and regulates bank lending to securities market participants. The Fed also has the responsibility of formulating the nation’s monetary policy. In determining the monetary policy of the … Continue reading Central Bank(Fed) and its Role