I have learned two terms in the last week that caught my interest. The first is rational ignorance. This was brought up to describe why individuals become passionate about some things and less passionate about others. With voting, it might take a lot of effort to evaluate the different candidates platforms and how they relate to the issues compared to their impact on your personal well being. It can be applied to a variety of other things as well. In the case of recruiters, it is very costly to evaluate every person who applies for the job. In consumer products, laptops have so many attributes it is difficult to decide which laptop is best for you. In response to these dilemmas we rely on heuristics (small pieces of observable information that can be related to to unobservable information) to help with our decision. Heuristics are also low cost. With political candidates, it is their political party; with job candidates, it is their GPA and university; with laptop candidates, it is the brand or memory space.
Another term is zero based budgeting with 3 million results. That's right, this business professor has never heard of zero-based budgeting. Basically, instead of taking last year's budget for your department and adding 1%, departments are now required to build their budget from zero, then justify the entire budget with some contribution to a metric of value.
Here is why I am upset. Rational ignorance and Zero-based budgeting are
terms that describe marginal analysis (one of my favorite topics).
Marginal analysis evaluates the extra benefit from doing something to
the extra cost. If the marginal (not the total) benefit exceeds the marginal cost, you are making a good decision. Any time I am evaluating something (financial decision, parenting problem, conversation engagement) I have the following image in my head. I just can't help it, because it is how I see the world. So when I hear about the term rational ignorance, I think that the marginal cost of learning about the candidates is greater than the marginal benefit of learning about the candidates. When I hear about zero-based budgeting, I think the department's budget is its total cost, which is where marginal benefit equals marginal cost (or when Net Benefits are maximized). This is something that everyone should be doing all the time! Why is it now "very hot" for companies to explore this "new and unknown" strategy? I think it is because college graduates have memory attrition, and probably why they come back to get their MBA. You could also just ask your former professor. 