Unauthorized immigration to the united states Essay

Unauthorized immigration to the united states - Essay Example ught to our attention the amount of illegal immigration taking place in the US and what are the affects of the formal on the US labor force and the US economy. It must be remembered why the Europeans migrated from Europe to the Americas. They were facing problems in Europe. Why must today when some Mexican immigrant, is facing difficulty in his/her country and, flees to the US is called an illegal immigrant? He or she should be treated with respect and given proper documentation to become a visitor or a worker. The easiest point to argue is that it is not good for the immigrant themselves to come to US illegally. â€Å"More than a fifth of the illegal sample was paid less than the minimum wage on their most recent job†(Espenshade 207). As mentioned, illegal immigrants are paid overall fewer wages than legal immigrants. One important point must be kept in mind. The so-called fewer wages are still more than what the immigrant can ever earn in a country like Mexico. The immigrant will be able to support their entire family the basis of that low wage. It is a low wage to the average American, not the poverty stricken Mexican who is living like a king in the US compared to his Mexican family members. It important to keep in mind what kind of country the immigrant is arriving from. There should be a different law for people wanting to migrate from third world countries. The general view among the average American citizen is that when immigrants arrive they take away jobs from the average American. Or if not that, due to vast labor availability they lower the wage standard for everyone. However, the truth is anything but that. â€Å"When the broader US economy is examined, it is difficult to find strong evidence of negative effects on native workers†(Espenshade 208). It is a known truth that the undocumented labor force is performing jobs that the average American would like to execute. The undocumented worker in working in the fields, or as labor in the construction

Vietnam and the Twentieth Century Experience Essay

Vietnam and the Twentieth Century Experience - Essay Example The proponent also discusses the resources that could be helpful to students of history particularly in understanding Vietnam’s culture and history. In particular, the proponent discusses the case of Vietnamese students in France during and after the colonial role of the French government in Vietnam, and their specific stand on nationalism that could mirror the Vietnamese culture or entire history. Student migration in France during and after the colonial role of the French government in Vietnam was a significant source of information that could elaborately discuss the issue regarding Vietnamese nationalism (McConnell 1989). Vietnamese students at this very moment in time had learned to communicate using French into newspapers, leaflets and even to letters they sent at home. Most of these students learned to express themselves in the French language, especially on various political ideas. Significantly, a historian having no sufficient background on Vietnamese culture or history would be able to document some substantial information that could elaborately discuss the political stand of Vietnamese students using some sources that could evidently express an essential link with the actual event in Vietnam and its culture and history. In this manner, even though the ideas had not been directly gathered in Vietnam, but the Vietnamese students in France and their specific political stand on some certain issues would specifically pave the way for understanding the actual event happening in their country and their political stand. Furthermore, their specific opinion or stand on the certain issue could be actually gathered through understanding their experiences which could be collected from existing articles or communication they had written.  

Frederick Douglass and His Activism Research Paper

Frederick Douglass and His Activism - Research Paper Example At the age of six, he witnessed the cruelty of masters to slaves. Being a black child, the law required him to become a slave just like his mother. Frederick did not have a chance to attend school except for a little guidance from the wife of his master (Schmitt 6). However, this opportunity did not last long. Frederick took every opportunity to learn and his efforts made him a good orator. He used this skill to create a positive impact in society. Frederick spent his life advocating for justice in society. He was a vessel of justice in society. Frederick adopted principles that guided his life and actions (Reed 4). Despite his status as a slave, he believed in himself, and was always confident that one time he shall achieve what he believed. He did not let the determination to change his situation and that of others die. Although slavery shattered his ego and value as a man, he fought tirelessly and eventually rose above this. Contrary to what others could do or did, Frederick start ed the fight against the horrors of slavery when he was still a slave. He opposed the serious whipping that slaves received from their masters. With the little knowledge of formal education that he received from his master’s wife, he opened a school for slave children. ... Because of his skills as an orator, he created an impact among people. However, he could not disclose specific information for fear of recapture back to slavery (10). The abolitionists promoted him to an antislavery agent because of his intriguing speeches on the suffering if slaves. This promotion granted him an opportunity to lobby for end to slavery. He used this opportunity well as he traversed different cities making speeches at different campaigns. Out of faith in himself, he had learnt how to write and in 1845, he released his first autobiography. This autobiography carried the story of plight in a slave home and his experiences as a slave. From the story of his life, he painted a picture of the real sate of a slave in the minds of many. The autobiography, a narrative of his life preached his message everywhere as it sold as far as Britain. However, publishing the narrative increased the risk of recapture back into slavery. Therefore, he left for Europe. Being in a foreign lan d did stop him from delivering speeches advocating for the end of slavery. Having gained experience in lecturing, he continued doing that in Britain, Ireland, and Scotland. The commitment to fight for the freedom of fellow man earned him fame. Advocates in England helped him buy his freedom from slavery. Now a free man, he was determined to do much more to end slavery, which denied human beings basic rights. Frederick returned to United States with a new strategy in his mind. He ventured into journalism for the sole purpose of being the voice of the oppressed in society. He launched the North Star, a paper expressing his views on slavery. In a short time, he wrote different papers supporting his activism in

The collapse of the European economies after World War 1 Essay Example for Free

The collapse of the European economies after World War 1 Essay During the course of this essay I will discuss how America was advantaged by the collapse of the European economies after World War 1. How the policies of the Republican Government helped to surge the American economy. I will discuss how this economic boom did not benefit everyone in America and how the motor car industry helped stimulate Americas growing economy, and how luxury goods became more available in America, and I will continue with how hire purchase and credit was highly available during this time of prosperity. I will outline who did and who did not benefit from this booming economy, also how reversals in U.S. policy occurred during 1919-1922. Then I will continue to explain the McCumber traffic act which issued a tariff on foreign goods entering America to encourage Americas to purchase American goods and thus helping the economy to grow further; leading to an increase in customer spending. I will tell you how Woodrow Wilson introduced the League of Nations, and how the USA isolated itself from the international community so as to avoid conflict. I will look at how Americas vast amounts of natural resources were a contributing factor to the growth of the economy. Before the war, Germany had the largest chemical industry in the world but after the war it was significantly damaged and America took the place of the Germans in this industry, which greatly improved Americas economy. They also took over European trade. Europe was on its knees after the war so they borrowed money from the U.S. This provided the U.S. with a good regular source of revenue. The American economy was running away with itself. This was due to the explosion of the car industry. Henry Ford was a car manufacturer. He came up with the idea of the first production line. This meant that different jobs were allocated to different people and in different stages, meaning production was more effective. The car industry used up to 80% of Americas steel 75% of the glass in the U.S. and 65% of leather and rubber. By the end of the 1920s, the motor car industry was the biggest industry in America. It also employed hundreds of thousands of workers directly. It kept many people in other industries employed. Petrol was needed to run the car which brought about a new branch of businesses, which branched off from the car industries; petrol stations, the road building industry, motels, roadside diners, billboards and mechanic services were just some of these new businesses. Road construction was the biggest single employer in the 1920s. Owning a car was no longer a privilege reserved for the rich. The production line had mad making cars cheaper, so more people could afford them. There was one car to every five people in the USA, compared with one to 43 in Britain and one to 700 in Russia. The car made it possible for more people to buy houses further from the cities. This boosted the house building industry as the American economy grew, more people spent money on luxury goods, this lead to such goods becoming more available in America and more companies making them. Telephones, radios, vacuum cleaners and washing machines were mass produced on a vast scale making them cheaper. New electrical companies such as Hoover became household names; they used the latest most efficient techniques proposed by the industrial efficiency movement. At the same time, the larger industries used sophisticated sales and marketing techniques to get people to purchase their products. Mass nationwide advisements were used for the first time in the U.S. during the war to get Americans to support the war. Many of the people had learned their skills during the war and had now set up agencies to sell cars, cigarettes, clothing and other products. Poster advertisements, radio advertisements and travelling salesmen encouraged America to spend. Even if they did not have money people could now borrow it easily or they could take advantage of the new buy now pay later hire purchase schemes. By this time, the car industry was flourishing; the most famous car produced was the model T. More than 15 million where produced between 1908 and 1925. In 1927 they were produced at a rate of one every ten seconds. In 1929, 4.8 million cars were made. The boom in the American economy was helped by the republican policies from 1920 to 1932. All the U.S. presidents were republicans and republicans also dominated congress. Republicans believed that government should interfere as little as possible in the everyday lives of the people. This attitude is called `laissez-faire`. They believed the job of the president was to leave the business to the businessmen. The republicans believed in import tariffs which made it expensive to import foreign goods. For example, in 1922, Haring introduced the Fordney-McCumber tariff which made imported food expensive in the USA. These tariffs protected businesses against foreign competition and allowed American companies to grow even more rapidly. The USA also began closing its borders to foreign immigrants. Taxation was kept as low as possible this brought some benefits to ordinary working people. But it brought even more to the rich. The republicans thinking was, the more money people had, the more they would spend in America and the wealthy would re-invest in America. They also allowed the development of trusts. These were huge super-corporations which dominated industry. Woodrow Wilson and the democrats had fought against trusts, because they believed it was unhealthy for men such as Garnegie (steel) and Rockefeller (oil) to have almost complete control of one vital sector of industry. The republicans allowed the trusts to do what they wanted, believing that the captains of industry knew better than politicians did. However, this time of prosperity in America was not felt by the whole population. Farming was at a low point. The total U.S. farming income dropped from $22 billion in 1919 to just $13 billion in 1928. There where a number of factors that contributed to these problems. After the war, Europe imported less food from the U.S. This was partly because, Europe was poor and partly due to the tariffs which stopped Europe from exporting to the U.S. farmers were also struggling against competition from the efficient Canadian wheat producers. The population of the U.S. was falling which meant there where fewer mouths to feed. At the route of all these difficulties was overproduction. This resulted in wheat being produced which simply nobody wanted. In the 1920s the U.S. farmer was each year producing enough to feed his family and 14 others. Prices dropt dramatically as desperation kicked in and farmers tried to sell their produce. Most farm prices fell by 50 per cent. Hundreds of rural banks collapsed in the 1900s and there were five times as many farms going out of business as there had been in the 1900s and 1910s. Not all farmers were affected by these problems. Wealthy Americans wanted fresh vegetables throughout the year. For most farmers, the 1920s were a time of great difficulty .and this was a major concern. About half of all Americans lived in rural areas; the difficulty affected more than 60 million Americans. Lots of Americans lost their jobs, these where largely unskilled workers, mainly immigrants.

School Violence Essay -- School Violence Essays

Violence in our schools is an issue that has become more prominent in the last few years. News articles about violent deeds within the school setting are on the increase. Our society demands that schools are safe for our children. In order to maintain a peaceful environment for all, we must address and inform our schools, children, and parents as well as the neighboring communities about the issue of school violence. As David W. Johnson, the author of Reducing School Violence states, â€Å"To eliminate violence and resolve destructive conflicts, schools must first admit that such conflicts are out of control.† (Johnson 7) Schools in general must identify with these issues in order to deal with them. If violence in schools is to be controlled, the entire school community must take a proactive stance against violence. Since the setting is the school, it should follow that the schools are responsible and liable for maintaining violent free environments. This proactive stance can be accomplished by holding seminars informing students, parents, and neighboring communities of what is taking place in the school on a regular basis. Educators and administrators should inform the student body and the community of any precautions and safety measure to take if a violent event should occur. Any type of violence in the school setting should be fully addressed in order to prevent further altercations from occurring. Student seminars that inform students of violent behavior and clearly state consequences are becoming a very popular trend across the U.S. Francis Hoang, of the FBI Law Enforcement Agency believes that each school should make sure that they are aware of what is going on and to include this vital information in a presentation to t... ...ion. Alexandra, Virginia: Curriculum Development, 1997. Saunders, Carol. Safe at School: Awareness and Action for Parents of Kids Grades K-12. Minneapolis, MN: Library of Congress. Publication Data, 1994. This book shows the importance of parents becoming involved with the school setting. Markins, Charles. â€Å"School Fundings.† Pittsburg Post-Gazette 12 Feb. 2001: B 12 Craig, Robert. â€Å"Safe School Prevention.† Rolf Jenson & A ssociates 62.22 (1996): 192 Schwartz, Wendy. â€Å"The Involved Teacher.† 2001. (2001.) Kelly, Melissa. â€Å"Taking the Bully By His Horns.† 2000. (2001.) Christner, Terry. â€Å"Zero Tolerance.† Library Journal 126.18 (2001): 106 This journal is about how schools should take every violent act very seriously and to look into it so it does not get worse.

Determining Databases and Data Communications Essay

In this paper the writer will seek to respond to the questions designated for both scenarios. This paper will list typical fields for each type of data. Provide an example of two relationships that you need to track. This paper will also answer the questions of: Do you need a database system? If not, can Excel ® handle the data and the output? What are the advantages and disadvantages? Would you use a personal database or an enterprise database? Explain your answer. Would a decision support system (DSS) be helpful? Explain your answer. When directing companies who work diligently with computer technology, it becomes increasingly imperative to have an adequate knowledge of the technology that is obtainable. This will allow those who have to manage information to make the most effective choice concerning what technology should be used for the company. In the two scenarios, making the best choices in technology allows the manager to best confer time and energy with superficially formi dable responsibilities. For instance, in the first scenario, an marketing assistant of a consumer electronics company is asked to not only maintain the booths for various trade shows from beginning to end, but is also asked to ensure that there any issues that arise during the delivery of the products are resolved. First, it is important to realize what information should be maintained in order to best ensure that the tools that are used during the trade shows. In cases like these, it would be important to have a list that details what displays, equipment and booths are needed for specific trade shows, as well as when the displays, equipment, and booths should be shipped to the area and back. For example, if a trade show located in Tulsa, OK only needed one booth with one display in order to accommodate the space, it would be the job of the marketing assistant to ensure that the various parts made it to Tulsa, as well as ensure that the booth and display made it back to the office f or future use; it would be necessary to know when it would be sent, as well as when it will be delivered back (which could be maintained with the knowledge of the delivering postal tracking number). In order to keep track of what is necessary for each trade show, there are several technological tools that would be instrumental in maintaining the information that will be transmitted. While one could use an Excel to begin the process of tracking the information that is needed, it would not be the best method of collecting that type of information, and it could be overwhelming over time. A database, on the other hand, could handle the information that is contained, and would allow the marketing assistant to create reports later on that can be used to analyze what changes could be made in the future whether it is making earlier shipments in order to ensure that it reaches an area on time, etc. (Middleton, 2009). Since there would only be one person keeping track of the information, it would not be necessary to create an enterprise database, which would have the capabilities of being made available to other departments within the company (Web Definition, 2012). This would allow one person to maintain the pertinent information that other departments may need without having too many people managing information, which could lead to confusion regarding where equipment is or what is needed for certain trade shows. Also, in order to maintain the large amount of information that would come from managing various trade shows, it would be necessary for the marketing assistant to have a decision support system, which is a â€Å"computer system that is designed to provide assistance in determining and evaluating alternative courses of action† by â€Å"acquiring data from the mass of transactions of a firm,† by â€Å"analyzing it with advanced statistical techniques to extract meaningful information,† and by â€Å"narrowing down the range of choices by applying rules based on decision theory (Web Definition, 2012).† This will allow the marketing assistant to gain better knowledge of what could be improved upon for future trade shows. In the second scenario, technology has to be used in order to manage a consulting team of seven, some of whom work in an office and others who work from home. In this case, ensuring that there is equ al accessibility to each employee is paramount to maintaining the business. A wide area network, or WAN, would help to accommodate the needs of employees who are working in the office as well as those who work from home. The WAN would create several LAN connections that would allow workers to the same access to important information regardless of where they are (John, 2009). Also, for projects that more than likely will be time-sensitive, employees within the consulting team will have access to the printers and other equipment’s that is a part of the network, so that tasks are completed in a timely manner (John, 2009). While there are certain security risks with using WAN that includes the potential infiltration from people other than employees and the possible placement of viruses that would threaten the maintenance of information that is stored, the use of anti-virus programs and other programs would help to protect the computers and information that they have, and the benefit far outweigh the potential risks. Also, a wireless access would better assist the team in completing tasks in different areas. Like WAN, wireless access would assist employees in gaining pertinent access to the information may normally be stored in in the office. For a consulting team who works in different areas, privacy and computer protection become a relevant problem that can be addressed with creating a virtual private network, or VPN. A VPN would ensure that the information that is held at the office for the team remains on a network that would only be accessible by the team, and it would prevent others who are not a part of the team from placing viruses on the computers or accessing the information, which could greatly hinder the completion of tasks and the accessibility of information. When considering what wireless networks should be used, cost as well as features must be considered. Excel documents often help to organize this information in order to assist leaders in making decisions regarding the best wireless network to purchase. For instance, if a wireless network is priced low but does not offe r the speeds or other features necessary to operate for a company, the network would not be good to expend money on. However, it could be equally dangerous to expend a lot of money on a wireless network that has a lot of features that may or may not be used. As a result, this requires that a company list the various features that would be necessary for the functioning of the company. The company can then review the list of features that are included for wireless networks that they are considering, listing the price of each network. This allows them to find the wireless network that best meets their company’s needs without paying a lot of money for it. In conclusion, having a working understanding of the technology that is available to a company can help managers make wise and efficient choices regarding what tools should be used. In the first scenario, using databases in comparison to excel documents allows the marketing assistant to properly track equipment that is used on a daily basis, as well as track where it is being shipped to. In the second scenario, using WAN or wireless networks allow a team to maintain access to pertinent information that could help employee’s complete tasks in a timely manner regardless of their location. In these ways, technology assists companies in maintaining their business. References: Decision Support System. (2012). â€Å"Decision support system.† Retrieved from: http://www.decisionsupportsystem.info/ Middleton H. (2009). â€Å"Maintaining a relational vs. flat file marketing database.† Retrieved from: http://www.dbmarketing.com/articles/Art223.htm Charlene N. (2010). â€Å"Benefits of developing & maintaining a database.† Retrieved from: http://www.reviveprojects.com.au/blogs//2010/10/06/benefits-of-developing—maintaining-a-customer-database- Web Definition. (2012). â€Å"Enterprise data.† Retrieved from: www.dataclaritycorp.com/cognos-glossary.html

Danielle Steel’s novel “Fine Things” Essay

Novel Title: Fine ThingsAuthor: Danielle SteelSummaryBernard Fine is a successful bachelor managing of the biggest stores in California. Bernie (nickname) runs into a little girl who is very lost and decides to help her out while. Her mother Liz comes to pick up her seven year old daughter Jane Calloway. The two newly met became friends (Bernie and Liz) and eventually fell in love and got married (much to the liking of Jane). Everything goes well and shortly after their marriage Liz gives birth to a son but the doctors decided that Liz has to stay in the hospital for a while and when Bernie asks why, they said that she must be tested for something but they never mentioned anything else to the overly concerned husband. A week later Liz is out of the hospital and with Bernie she finds out that shes a victim of the deadly disease cancer. Liz soon grows so weak that she looses her life and the long and painful journey for the young step-father Bernie has finally hit the saddest dead end. He tried to put up with his lost of his wife with the help of his parents. Bernie has no trouble at all raising Alexander and Jane all by himself then one day he met Jane’s biological father, Carter, and Bernie believes that custody should be his because Carter abandoned his wife and daughter long before. Carter defends himself while Bernie doesn’t believe him but somehow the man gains custody of his daughter then all of a sudden Bernie hears from his agent that Jane is the middle of a drug smuggling havoc in Mexico. He begs to the police that he should go with them to rescue Jane. Bernie drives down to the motel waited for a while until the agent finally has Jane out of the motel and back in her father’s arms. Bernie begins to move on emotionally, and becomes involved with a beautiful doctor, but Jane is still loyal to her mother and can’t accept this new woman but later on realized that his step father deserves to be happy and knew that her late mother would let him to be happy with someone new. Reaction:The story of the novel is not far from happening in real life. To keep a happy and complete family is always a challenge. In this novel, Bernie Fine struggles with the lost of his wife from the early stage of their marriage, leaving him the responsibility of raising their children and the longing of having someone special again. It showed the vulnerability of a man when it comes to losing a very important person forever. Reference: â€Å"Fine Things† by Danielle Steel

Earth-Like Planet Discovered essays

Earth-Like Planet Discovered essays Earth-Like Planet Discovered 50 Light Years Away European astronomers have discovered a planet less than 50 light years away. This planet has come to be known as a sort of super Earth. It takes only ten Earth days to orbit its sun (much like our own) and the surface of the planet is scorched by the close proximity to the sun. The discovery of this planet has lead us to discover two more planets in that solar system made much like our own. Many astronomers not connected to the finding of this planet have begun to make statements of the great data that it has brought to not only them but to the world itself. This is the first planet close to the relative size of Earth found orbiting a live star. It is 14 times the size (close to that of Uranus) but is still rocky. Much controversy over the issue of the physical make-up of the planet is being discussed by astronomers world-wide. While the full reaches of life are unknown, life as we know it could not exist on a planet this close to a star. The discovery of super Earth really does fascinate me. With the possibility of other rocky planets out there it seems as though it is very possible for another intelligent species of creature to exist somewhere in the universe if not our own galaxy. If not intelligent then at least living creatures on a planet other than Earth would stir some extreme amounts of push for science and math to be taught in the United States again. We lost the edge of education in these two areas when we beat the Russians to the moon. If we were to discover another planet that was harboring life we would begin to race to see who could study them better and faster. The composition of the planet would want to be found as well. Any planet that can harbor life in whatever conditions would be very helpful to look at and understand much better. There is possibility of the human race becoming to large for the planet it is on. In such a case i ...

The Seven Seas From Ancient Times to the Modern Era

The Seven Seas From Ancient Times to the Modern Era While a sea is generally defined as a large lake that contains saltwater, or a specific portion of an ocean, the idiom Sail the seven seas, is not so easily defined. Sail the seven seas is a phrase that is said to have been used by sailors, but does it actually refer to a specific set of seas? Many would argue yes, while others would disagree. There has been much debate as to whether or not this is in reference to seven actual seas and if so, which ones? Seven Seas as a Figure of Speech? Many believe that the seven seas is simply an idiom that refers to sailing many or all of the oceans of the world. The term is believed to have been popularized by Rudyard Kipling who published an anthology of poetry titled The Seven Seas in 1896. The phrase can now be found in popular songs such as, Sailing on the Seven Seas by Orchestral ​Manoevres in the Dark, Meet Me Halfway by Black Eyed Peas, Seven Seas by Mob Rules, and Sail over the Seven Seas by Gina T. Significance of the Number Seven Why seven seas? Historically, culturally, and religiously, the number seven is a very significant number. Isaac Newton identified seven colors of the rainbow, there are Seven Wonders of the ancient world, seven days of the week, seven dwarves in the fairy tale Snow White and the Seven Dwarves, the seven-day story of creation, the seven branches on a Menorah, seven Chakras of meditation, and seven heavens in Islamic traditions just to name a few instances. The number seven appears again and again throughout history and stories, and because of this, there is much mythology surrounding its importance. The Seven Seas in Ancient and Medieval Europe This list of the seven seas is believed by many to be the original seven seas as defined by the sailors of ancient and Medieval Europe. The majority of these seven seas are located around the Mediterranean Sea, very close to home for these sailors. 1) The Mediterranean Sea - This sea is attached to the Atlantic Ocean and many early civilizations developed around it, including Egypt, Greece, and Rome and it has been called the cradle of civilization because of this. 2) The Adriatic Sea - This sea separates the Italian peninsula from the Balkan peninsula. It is part of the Mediterranean Sea. 3) The Black Sea - This sea is an inland sea between Europe and Asia. It is also connected to the Mediterranean Sea. 4) The Red Sea - This sea is a narrow strip of water extending south from Northeast Egypt and it connects to the Gulf of Aden and the Arabian Sea. It is connected today to the Mediterranean Sea via the Suez Canal and is one of the most heavily-traveled waterways in the world. 5) The Arabian Sea - This sea is the Northwestern part of the Indian Ocean between India and the Arabian Peninsula (Saudi Arabia). Historically, it was a very important trade route between India and the West and remains such today. 6) The Persian Gulf - This sea is a part of the Indian Ocean, located between Iran and the Arabian Peninsula. There has been dispute as to what its actual name is so it is also sometimes known as the Arabian Gulf, The Gulf, or The Gulf of Iran, but none of those names are recognized internationally. 7) The Caspian Sea - This sea is located on the Western edge of Asia and the Eastern edge of Europe. It is actually the largest lake on the planet. It is called a sea because it contains saltwater. The Seven Seas Today Today, the list of Seven Seas that is most widely accepted is inclusive of all of the bodies of water on the planet, which are all part of the one global ocean. Each is technically an ocean or section of ocean by definition, but most geographers accept this list to be the actual Seven Seas: 1) North Atlantic Ocean2) South Atlantic Ocean3) North Pacific Ocean4) South Pacific Ocean5) Arctic Ocean6) Southern Ocean7) Indian Ocean

Free sample - The White Power. translation missing

The White Power. The White PowerWhite power is a collective term used to describe white racial movement as they dominate almost every thing in the United States of America. This can be illustrated by looking at Ku Klux Klan, the name given to three different ancient and current supreme organizations in the United States. These clans are said to have boomed in different times (Leeper, 2000) .For example, the first Klan boomed in the years 1860s and became in existence in the 1870s and it was only available on the southern parts with their white costumes consisting of makes and robes. The second Klan came into existence in the early and mid 1920s while the third was known after the famous Second World War with their unforgettable records of practicing terrorism, a tactic that is believed to have been boosted by the second KKK. History holds that, during the reconstruction of Radical republican, the first Klan sought to restore superiority by engaging in criminal acts characterized by murder and so much violence against the blacks and white Republicans. This led the Federal government to put force acts, which advocated for the Klan prosecution (Leeper, 2000). The second Klan is said to be very different from the first Klan as it was a formal organization with its activities practiced country wide. This Klan taught about clean politics and advocated for Unity in American states. One of the biggest criticisms to this Klan is the fact that, some local groups went to extremes of attacking civilian houses and did other unnecessary violence. When you compare the history of these Klan’s you find that, the third Klan caused a very high destruction ,as it is believed to be responsible for the historic bombing of Birmingham 16th street Baptist church, that claimed lives of   so many civil rights workers and innocent children(Leeper,2000). Today many people believe that, the KKK is a rebellious organization as declared in 1999 by the city council of Charleston, in southern Carolina and the unforgettable campaigns made by the University of Louisville professor in the year 2004 to have the Klan declared illegal organization, so that it may be abolished from the campus. Currently the Klan is said to have so many members after the 2008 election of President Obama.The main objectives of the current membership is based on rising issues of illegal immigrants and increase of urban crimes.

Knowledge, Truth, and Belief Case Study Example | Topics and Well Written Essays - 500 words

Knowledge, Truth, and Belief - Case Study Example Hence, assumption of burnt bulb cannot be taken as final but considered along with the issue of fuse. Only when the fuse is also tested, that the reality of bulb being burnt or not can be conclusively defined. Thus, rational approach of problem, where well articulated or logical arguments become basis for problem solution, needs to be adopted. (words: 158) Russell’s approach of looking at things is hugely important because it uses empirical knowledge to interpret the world around from wider perspective of rational approach. He believes that perceived reality is important part of human interaction with the world which is often interpreted in context with the real life situation. While perception is linked with the sensory organs, its interpretation and understanding hugely depends on cognitive processes that relies on manipulation of information as stored in memory. At the same time, Russell also employs skepticism to understand emotional and metaphysical reaction. The expanding knowledge promotes rational approach where skepticism facilitates in coming to the right conclusion. As part of experience, skepticism helps to evolve options that support not only accrued knowledge comprising of scientific and priori knowledge but also the intuitive and inductive knowledge that comes from experience. Hence Russell’s approach lends credibility to the wider empirical knowledge of rationalization process. (words: 151) Out of the variety of considerations that Reid presents in support of his common sense position, I believe the strongest argument is that human intellect is most important factor in social interaction. The human intellect takes into consideration the conscious and unconscious working of mind along with the ability to rationalize events based on construction and deconstruction of object reality. The cognitive theory helps to explain why and how the events take place and subsequent pattern of

Immigration issues in the USA Essay Example | Topics and Well Written Essays - 2500 words

Immigration issues in the USA - Essay Example A nation without borders is not a nation and this country has been losing control of the borders for many decades, losing prosperity, security and autonomy along with them. The massive numbers of illegal aliens pouring across mainly the southern border has and continues to cause substantial economic, social and physical harms to legal citizens. These harms occur predominantly to those who are among the most vulnerable segments of the population: minorities, children and the poor. Harms to the poor, minorities and children are indeed occurring but mainly to illegal aliens. An argument can be made if they should be afforded similar rights and protections as legal citizens but not if they deserve human rights considerations. Many at all level of government and in state and federal legislatures have continually attempted to deny access to housing, schools, medical treatment and social programs to non-citizens. Some argue that U.S. laws apply to all within its borders, legally or not such as the Fifth Amendment right to due process of law. The laws certainly apply to all when they are broken. The federal government, to no one’s surprise, has been no help. ... Genesis of the Issue The fundamental reason for the flood of immigration from Latin America, specifically Mexico, is the disintegration of the Mexican economy predominantly resulting from free-trade strategies employed by the North American Free Trade Agreement and the International Monetary Fund (IMF). The rampant corruption within the Mexican government has also contributed significantly to the collapse of the Mexican economy. Due to IMF policies regarding Mexico, its economic output dropped 33 percent in the past two decades. During this period, its foreign debt rose 359 percent because of widespread looting of the national coffers. These factors caused the â€Å"collapse of all areas of productive economic activity and employment, is the primary driver of the flood of emigrants desperate to leave Mexico, to find some livelihood for themselves and their families in the United States† 1 Amnesty, an Unpopular Concept Reward for Crime Throughout the history of America, people of differing ideologies have generally agreed on immigration controls. Public opinion polls have continually shown an overwhelming opposition to illegal immigration as well as for the concept of amnesty. The majority of Americans believe amnesty for illegal aliens is merely a reward for law-breaking and by whatever name, causes ever escalating future illegal immigration. â€Å"No system depending on a strict regard for the rule of law can treat law-breaking so casually† 2 Those who favor amnesty for illegal aliens, specifically those crossing the southern border do not seem to realize that a crime has been committed and not, as they might have you believe, one without a victim. Simply enforcing the laws

Research paper Example | Topics and Well Written Essays - 2250 words - 2

Research Paper Example For instance, they offer prescription drugs for treating respiratory illness, HIV, hypertension and others. The parent company of Boehringer Ingelheim is C.H. Boehringer Sohn; in fact, they have affiliates such as Boehringer Ingelheim USA Corporation (Icon Group International, 2000). Nevertheless, this paper focuses on exploring compensation and benefit challenge faced by Boehringer Ingelheim Inc., and other recommendations for addressing this situation. Therefore, by achieving objectives in this research, the paper will make a substantial contribution to training literatures regarding compensation and benefit system. II. A Brief Historical View of the Organization Boehringer Ingelheim Company was established at Ingelheim am Rhein in 1885 by Albert Boehringer; In fact, during this period, this company had capacity to employ twenty-eight employees in Nieder-Ingelheim. Nevertheless, this company has grown over the years to become a multinational corporation, thereby supplying pharmaceu ticals to consumers from different countries around the world. Moreover, this company has a primary focus on various therapeutic areas such as respiratory, virological, metabolic, cardiovascular diseases, and other diseases that affect the central nervous system. In addition, the company has been actively involved in numerous research and development programs aimed at drugs and fine chemicals innovations. III. Assessment of Company’s Compensation and Benefit System Challenges In Boehringer Ingelheim Company, five years ago, their human resource system was decentralized. In this case, company’s human resource system was serving employees from different locations. Therefore, processes involved in offering human resource services to employees were disorganized because these human resource departments were managed by small groups of staff members. Besides, these groups were dedicated to oversee functions of human resource departments in Boehringer Ingelheim, and they could offer support to employees in this company, but they were not efficient. In fact, their inefficiency was caused by lack of required training and human resource tools, which were needed to improve their efficiency. Furthermore, this company experienced numerous errors within their compensation and benefit system, and inconsistency in the process of handling inquiries from their employees. Moreover, company management did not have a solution to these problems; in fact, they were undecided on whether to undertake strategies such as training or hiring more staff to solve these challenges (Icon Group International, 2000). The company management came up with an idea of seeking guidance from an expert in the field of human resource in order to facilitate positive transformation of company’s operations. In this case, the Watson Wyatt Company was chosen as partner experts due to their experience and in-depth knowledge in the field of h

Management and Leadership Paper Essay Example | Topics and Well Written Essays - 750 words

Management and Leadership Paper - Essay Example Likewise, the discourse aims to propose recommendations and strategies that organizational managers and leaders can use to create and maintain a healthy organizational culture; through the support of the concepts discussed in the course module. Differentiation between Managers and Leaders The executive team of Westgate Resorts is composed of the founder and president, David A. Siegel; as well as five other officers: Jim Gissy, the Executive Vice President of Sales and Marketing; Barry W. Siegel, the Executive Vice President of Sales; Tom Dugan, the Chief Financial Officer; Mark Waltrip, the Chief Operating Officer; and finally, Michael E. Marder, the organization’s General Counsel (Westgate Resorts). These members of the executive team could be considered both leaders and managers. The differentiating factor between managers and leaders are the nature of roles and responsibilities that each person is entrusted with. As managers, they are expected to be knowledgeable in underta king functions of planning, directing, organizing and controlling facets of the organization that are entrusted to them. For instance, Tom Dugan, as Chief Financial Officer, is also a manager in terms of planning, directing, organizing and controlling crucial aspects pertaining to the finances of the Westgate Resorts. Thus, all people under his tutelage: finance and accounting personnel, are expected to abide by their respective roles and responsibilities relating to the funds of the Westgate. According to Martires and Fule, â€Å"managers are concerned with the creation of an environment for performance. They achieve goals through the efforts of other people. They have to influence the behavior of other people in order to get things done. This requires leadership, and, managers have to be leaders as well† (150). Within the organization, some groups or teams could assign leaders, but who are not necessarily managers. Roles and Responsibilities of Managers and Leaders As previ ously mentioned, managers have primary roles and responsibilities that pertain to functions of planning, organizing, directing and controlling the department or people concerned of a specific area: marketing, sales, finance, administration, human resources, and customer service, among others. Thus, at Westgate Resorts, the Executive Vice President for Sales, Barry W. Siegel’s role and responsibilities include: â€Å"oversee(ing) the company's multiple sales resorts. He is responsible for the strategic planning, cost/profit analysis, development of staff, corporate identity, and development of procedures and performance standards† (Westgate Resorts par. 1). Concurrently, Mark Waltrip, the Chief Operating Officer, also assumes the responsibilities of both manager and leader through his focus diverse areas such as: â€Å"corporate leadership, sales, marketing, real estate development, project acquisitions, construction, resort operations, asset management, procurement se rvices, information technology and human resources† (Westgate Resorts par. 1). Thus, Waltrip ensures that all areas are operated in a unified and collaborative manner, avoiding conflicts and chaos, to ensure that a smooth process and a health organizational culture is

The great man theory Assignment Example | Topics and Well Written Essays - 1500 words

The great man theory - Assignment Example The article takes a deeper look at the great man theory that puts it clear that a great leader is God given not man-made. It only provides two options; either one is born as leader or one is not born a leader. The history of the great man theory dates back to the 19th century, when great leaders seen at that time were in born heroes, for instance Abraham Lincoln, Mahatma Gandhi and Alexander the Great. The theory had also focused on the highly quested positions in the army which were hereditary from father to son. This also led to the name, great man theory since no women were holding commanding positions. In the 1800s, military authoritative positions would paint the leadership skills of a man. With the assumption that the skills are inborn, the son of the leader was to take over since it was believed they had the same skills as their fathers. Thomas Carlyle, a Scottish writer, is credited for his move to popularize the theory in the 1840s. According to Thomas Carlyle, the history o f the world is nothing, but a bibliography of great men. He also believed that great leaders are those born with divine inspiration and proper characteristics to lead a group of people. The theory simply tends to separate leaders and followers. It gives the assumption that leaders differed from their followers. The theory portrays the fact that, in society different people posses different levels of intelligence, energy and moral strength, and in whatever way people are influenced to go, they are always led by the superior minded few. (Miller, Vandome & McBrewster, 2010). Back in the days, many leaders had the opportunity of having a chance of leadership through the birthright. This hindered the lesser in society in having the opportunity to be leaders. This brought up the assumption that leadership abilities are inherent. Proponents of this theory comprise of the world great leaders who came into power due to situational causes, for instance, John F Kennedy, Martin Luther King and Lee Lacocca. In another concept, a great leader always steps up regardless of their social status or location. A person with inborn leadership qualities will effect positive change in every place he or she goes. A person may not be a holder of an authoritative post but influences great masses to any direction he or she wishes. In deed, this is a description of a born leader according to the great man theory. Applications of this theory are visible in modern day management. Apart from government organizations, private company owners prefer to hand over their businesses to their sons after their retirement. They believe the leadership skills in them have been passed on to their sons. With this, one is able to see the long life of an organization, which has been led by one family for over 40 years. In some cases, the application of the inherent leadership posts may be difficult for offsprings but situational purposes make the shoes fit for them. Another application may be evident in co ntesting of parliamentary or presidential posts. In many instances, it has been

Management and Leadership Paper Essay Example | Topics and Well Written Essays - 750 words

Management and Leadership Paper - Essay Example Likewise, the discourse aims to propose recommendations and strategies that organizational managers and leaders can use to create and maintain a healthy organizational culture; through the support of the concepts discussed in the course module. Differentiation between Managers and Leaders The executive team of Westgate Resorts is composed of the founder and president, David A. Siegel; as well as five other officers: Jim Gissy, the Executive Vice President of Sales and Marketing; Barry W. Siegel, the Executive Vice President of Sales; Tom Dugan, the Chief Financial Officer; Mark Waltrip, the Chief Operating Officer; and finally, Michael E. Marder, the organization’s General Counsel (Westgate Resorts). These members of the executive team could be considered both leaders and managers. The differentiating factor between managers and leaders are the nature of roles and responsibilities that each person is entrusted with. As managers, they are expected to be knowledgeable in underta king functions of planning, directing, organizing and controlling facets of the organization that are entrusted to them. For instance, Tom Dugan, as Chief Financial Officer, is also a manager in terms of planning, directing, organizing and controlling crucial aspects pertaining to the finances of the Westgate Resorts. Thus, all people under his tutelage: finance and accounting personnel, are expected to abide by their respective roles and responsibilities relating to the funds of the Westgate. According to Martires and Fule, â€Å"managers are concerned with the creation of an environment for performance. They achieve goals through the efforts of other people. They have to influence the behavior of other people in order to get things done. This requires leadership, and, managers have to be leaders as well† (150). Within the organization, some groups or teams could assign leaders, but who are not necessarily managers. Roles and Responsibilities of Managers and Leaders As previ ously mentioned, managers have primary roles and responsibilities that pertain to functions of planning, organizing, directing and controlling the department or people concerned of a specific area: marketing, sales, finance, administration, human resources, and customer service, among others. Thus, at Westgate Resorts, the Executive Vice President for Sales, Barry W. Siegel’s role and responsibilities include: â€Å"oversee(ing) the company's multiple sales resorts. He is responsible for the strategic planning, cost/profit analysis, development of staff, corporate identity, and development of procedures and performance standards† (Westgate Resorts par. 1). Concurrently, Mark Waltrip, the Chief Operating Officer, also assumes the responsibilities of both manager and leader through his focus diverse areas such as: â€Å"corporate leadership, sales, marketing, real estate development, project acquisitions, construction, resort operations, asset management, procurement se rvices, information technology and human resources† (Westgate Resorts par. 1). Thus, Waltrip ensures that all areas are operated in a unified and collaborative manner, avoiding conflicts and chaos, to ensure that a smooth process and a health organizational culture is

Essay and Multiple choice Exam Example | Topics and Well Written Essays - 500 words

And Multiple choice Exam - Essay Example rmance over a 6- to 12-month period, _____ ratings may result, especially if information has been stored in a raters memory according to irrelevant, oversimplistic, or otherwise faulty categories. BÂ   Employees represent the quality of service of an organization. Thus, the recruitment and staffing approach is such a crucial stage in filling in a particular position in the company. It could make or break the successful operations of the company. It is essential that every employee is the perfect candidate for each job. In the case of hiring Regional Managers for Baroque, Inc., it is important that a very careful and rigorous approach be applied during the selection process. Basically, this should consist of a series of interviews, skill testing, background checks, employment verification, right to work, and medical evaluation. (Cohesive Technologies, 2011) The ideal candidate for the Regional Manager position must possess an excellent fashion sense and a vast knowledge of clothing line operation. It is important for the candidate to have passion for the kind of business he or she would be managing. He or she should be a people person who knows the right approach for different personality types. He or she should have exceptional persuasive skill as well. Sales proficiency is an indispensable factor since this type of business is profit-oriented, which should be optimized considering the upscale nature of its target market. Likewise, the aspiring Regional Manager should have the legal right to work in the his/her area of assignment. It is important that his/her connections with previous employers have ended properly. Thus, interview with a number of references should be conducted. Hiring a Regional Manager must focus on the totality of the candidate. Applicants may all have comparable skills, to the extent that their qualifications are almost of the same level. Thus, personality and attitude also count greatly. In every organization, there is a constant battle

Slaughterhouse Five Essay Essay Example for Free

Slaughterhouse Five Essay Essay Kurt Vonnegut wrote the book Slaughterhouse-Five in order to express his feeling of disgust towards the brutality of World War II. It was written as a general statement against all wars. Vonnegut focuses on the shock and outrage over the havoc and destruction man is capable of reeking in the name of what he labels a worthy cause, while learning to understand and accept these horrors and ones feelings about them. Through his character, Billy Pilgrim, he conveys not only these feelings and emotions, but also the message that we must exercise our free will to alter the unfortunate happenings that might occur in our lives. Vonnegut had tremendous difficulty writing this novel. He says, I thought it would be easy for me to write about the destruction of Dresden, since all I would have to do would be to report what I had seen (Vonnegut 2). He did not count on his emotions interfering with his attempts at a factual and logical report of such atrocities. It took Vonnegut twenty years to directly face his private demon of the firebombing of Dresden in the form of this novel. He had trouble recalling any memories of substance about his time in Dresden. It could be said that he was blinded by the firebombs of Dresden. It was not until Vonnegut returned to the sight of the bombing twenty years later, along with one of his war buddies, that he was able to recall the disastrous and horrific incidents in Dresden. The novel served as a form of therapy for Vonnegut; it enabled him to examine the events of the past that impacted on his life, and to come to terms with them. Vonnegut chooses to focus the novel on events surrounding the firebombing of Dresden, Germany.

Efficient Markets Hypothesis (EMH)

Efficient Markets Hypothesis (EMH) INTRODUCTION: Much of modern investment theory and practice is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the â€Å"Capital Asset Pricing Model†, the â€Å"Arbitrage Pricing Theory†, the â€Å"Cox Ingersoll-Ross theory† of the term structure of interest rates, and the â€Å"Black-S[choles/Merton option pricing model†, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it can overreact one day and make amends the next. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that Investors are not as rational as traditional theory has assumed, and biases in their decision-making can have a cumulative effect on asset prices. To many researchers behavioral finance is a revolution, transforming how people see the markets and what influences prices. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp†. (Gervais, 2001, P.2) . On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. He gave little credit to behaviorist explanations of trends and anomalies(any occurrence or object that is strange, unusual, or unique) arguing that data-mining techniques make it possible to locate patterns. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally the market behavior displayed is attributed to overreaction and sometimes to under reaction. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are the result of underlying economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both academic psychology and traditional finance and so the models that are being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior influencing asset prices, suggesting that behavioral finance is in its developmental stage and not yet a mature one, theres a lot of disagreement but productive one. Hirshleifer agrees that applying behavioral-finance concepts to corporate finance can pay off. If managers are imperfectly rational, he says, perhaps they are not evaluating investments correctly. They may make bad choices in their capital-structure decisions. Few people realistically think behavioral finance will displace efficient-markets theory. On the other hand, the idea that investors and managers are not uniformly rational makes insightful sense to many people. Traditional Finance Empirical Evidence: â€Å"Traditional theory assumes that agents are rational the law of one price holds† that is a perfect scenario. Where the law of â€Å"One price† states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as â€Å"Arbitrageurs†. And the agents rationality explains the behavior of investor â€Å"Professional Individual† which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of â€Å"noise traders† (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naà ¯ve diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviours. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be ‘rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited â€Å"assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category ‘instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as ‘What is the cost of capital for this firm? or ‘What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of ‘testability and ‘predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. BODY: A cognitive bias is a persons tendency to make errors, based on cognitive factors. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings. (Crowell, 1994, p. 1) â€Å"Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing†. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups. One who forecasts positively and one negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the â€Å"illusion of validity† which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. There are three main themes in behavioral finance and economics Heuristics: People often make decisions based on approximate rules of thumb, not strictly rational analysis. See also cognitive biases and bounded rationality. Prospect theory Loss aversion Status quo bias Gamblers fallacy Self-serving bias Money illusion Framing: The way a problem or decision is presented to the decision maker will affect their action. Cognitive framing Mental accounting Anchoring Market inefficiencies: There are explanations for observed market outcomes that are contrary to rational expectations and market efficiency. These include mis-pricings, non-rational decision making, and return anomalies. Richard Thaler, in particular, has described specific market anomalies from a behavioral perspective. Anomalies (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Equity premium puzzle Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Models in behavioral economics are typically addressed to a particular observed market anomaly and adjust standard neo-classical models by describing decision makers as using heuristics and being affected by framing effects. In general, economics sits within the neoclassical framework, though the standard assumption of rational behavior is often challenged. Loix et. Al in their paper â€Å"Orientation towards Finances† explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior Investing and cognitive bias: Money Managers Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem.The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less than optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rate companies in their industries on eight factors: Quality of management, Quality of products services, Innovativeness, Long term investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise use of corporate assets. The assumptions that we made were that that â€Å"Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns†.(Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk, Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: â€Å"We have a double cognitive error: a Good company make good stocks (representativeness), and involves less responsibility(Less aversion to regret† (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 â€Å"Tony Blair† stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment In 2005 president bush also portfolio announced one such plan for personal account â€Å"life cycle fund† which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily tat same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theoretical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. Agents Rationality: Global culture Culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people actually arise as a logical consequence of a belief system of a nation group of people. Cultural factor were found to have great influence on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebellious, other than these we find more factors in producing internationally- similar human behaviors then just rational reactions. Therefore it is a difficult job to decide in what avenues global culture exerts Efficient Markets Hypothesis (EMH) Efficient Markets Hypothesis (EMH) INTRODUCTION: Much of modern investment theory and practice is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the â€Å"Capital Asset Pricing Model†, the â€Å"Arbitrage Pricing Theory†, the â€Å"Cox Ingersoll-Ross theory† of the term structure of interest rates, and the â€Å"Black-S[choles/Merton option pricing model†, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it can overreact one day and make amends the next. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that Investors are not as rational as traditional theory has assumed, and biases in their decision-making can have a cumulative effect on asset prices. To many researchers behavioral finance is a revolution, transforming how people see the markets and what influences prices. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp†. (Gervais, 2001, P.2) . On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. He gave little credit to behaviorist explanations of trends and anomalies(any occurrence or object that is strange, unusual, or unique) arguing that data-mining techniques make it possible to locate patterns. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally the market behavior displayed is attributed to overreaction and sometimes to under reaction. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are the result of underlying economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both academic psychology and traditional finance and so the models that are being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior influencing asset prices, suggesting that behavioral finance is in its developmental stage and not yet a mature one, theres a lot of disagreement but productive one. Hirshleifer agrees that applying behavioral-finance concepts to corporate finance can pay off. If managers are imperfectly rational, he says, perhaps they are not evaluating investments correctly. They may make bad choices in their capital-structure decisions. Few people realistically think behavioral finance will displace efficient-markets theory. On the other hand, the idea that investors and managers are not uniformly rational makes insightful sense to many people. Traditional Finance Empirical Evidence: â€Å"Traditional theory assumes that agents are rational the law of one price holds† that is a perfect scenario. Where the law of â€Å"One price† states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as â€Å"Arbitrageurs†. And the agents rationality explains the behavior of investor â€Å"Professional Individual† which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of â€Å"noise traders† (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naà ¯ve diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviours. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be ‘rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited â€Å"assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category ‘instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as ‘What is the cost of capital for this firm? or ‘What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of ‘testability and ‘predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. BODY: A cognitive bias is a persons tendency to make errors, based on cognitive factors. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings. (Crowell, 1994, p. 1) â€Å"Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing†. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups. One who forecasts positively and one negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the â€Å"illusion of validity† which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. There are three main themes in behavioral finance and economics Heuristics: People often make decisions based on approximate rules of thumb, not strictly rational analysis. See also cognitive biases and bounded rationality. Prospect theory Loss aversion Status quo bias Gamblers fallacy Self-serving bias Money illusion Framing: The way a problem or decision is presented to the decision maker will affect their action. Cognitive framing Mental accounting Anchoring Market inefficiencies: There are explanations for observed market outcomes that are contrary to rational expectations and market efficiency. These include mis-pricings, non-rational decision making, and return anomalies. Richard Thaler, in particular, has described specific market anomalies from a behavioral perspective. Anomalies (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Equity premium puzzle Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Models in behavioral economics are typically addressed to a particular observed market anomaly and adjust standard neo-classical models by describing decision makers as using heuristics and being affected by framing effects. In general, economics sits within the neoclassical framework, though the standard assumption of rational behavior is often challenged. Loix et. Al in their paper â€Å"Orientation towards Finances† explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior Investing and cognitive bias: Money Managers Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem.The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less than optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rate companies in their industries on eight factors: Quality of management, Quality of products services, Innovativeness, Long term investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise use of corporate assets. The assumptions that we made were that that â€Å"Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns†.(Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk, Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: â€Å"We have a double cognitive error: a Good company make good stocks (representativeness), and involves less responsibility(Less aversion to regret† (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 â€Å"Tony Blair† stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment In 2005 president bush also portfolio announced one such plan for personal account â€Å"life cycle fund† which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily tat same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theoretical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. Agents Rationality: Global culture Culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people actually arise as a logical consequence of a belief system of a nation group of people. Cultural factor were found to have great influence on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebellious, other than these we find more factors in producing internationally- similar human behaviors then just rational reactions. Therefore it is a difficult job to decide in what avenues global culture exerts