What is Behavioral Finance? How Psychology Shapes Investment Decisions

Behavioral Finance

Financial Economics · Behavioral FinanceWhat is Behavioral Finance?Traditional finance assumes investors are rational. Behavioral finance asks: what happens when they’re not? The answer rewrites everything we thought we knew about markets.In 1987, global stock...

Heteroskedasticity: What It Is, Why It Matters, and How to Fix It

Econometrics, Regression Analysis, Statistics

Heteroskedasticity Your coefficients are fine — but your standard errors are lying to you What even is heteroskedasticity? Let’s start with an analogy. Imagine you’re trying to predict how much money people spend on food. For someone earning £1,000 a...

Dominant Strategy in Game Theory: Definition, Examples and How to Find It

Game Theory

Game Theory · StrategyDominant Strategy in Game TheoryThe clearest solution concept in game theory — when one strategy is always best, regardless of what anyone else does.In most strategic situations, the best thing to do depends heavily on what your opponent does....

Instrumental Variables and Two-Stage Least Squares: Solving the Endogeneity Problem

Econometrics, Regression Analysis, Statistics

Instrumental Variables and Two-Stage Least Squares When your data is lying to you — and how to get the truth anyway Here’s the problem with just running a regression Imagine you want to know: does more education make you earn more? Simple — just look at the...

Zero-Sum vs Non-Zero-Sum Games: Key Differences with Examples

Game Theory

Game Theory · Core ConceptsZero-Sum vs Non-Zero-Sum GamesOne of the most fundamental distinctions in game theory — and one that determines whether cooperation is even possible between rational players.When two people negotiate a salary, does one person’s gain...

Omitted Variable Bias: How to Predict the Direction Before You Run the Regression

Econometrics

Econometrics · Causal inferenceOmitted Variable Bias: How to Predict the Direction Before You Run the RegressionYour supervisor asks “which way is it biased?” — and you can answer without collecting a single data point. Here’s...

Fiscal Policy: Government Spending, Taxation, Multipliers, and the Debt Debate

Macroeconomics

Fiscal Policy Government spending, taxation, and the big question: does it actually work? What is fiscal policy and why does it matter? When the economy goes into recession — people lose jobs, businesses close, spending falls — there are essentially two things a...

What is Variance in Statistics? Formula, Examples and Interpretation

Statistics

Statistics · Descriptive StatisticsWhat is Variance?The average squared deviation from the mean — why it matters, how to calculate it, and how it relates to standard deviation and risk.Two investment portfolios both return an average of 8% per year. But Portfolio A...

The Prisoner’s Dilemma Explained: The Classic Game Theory Problem

Game Theory

Game Theory · Classic ProblemsThe Prisoner’s DilemmaWhy two perfectly rational individuals can end up worse off by acting in their own self-interest — the most famous problem in all of game theory.Imagine you and a friend are arrested for a crime. The police...

The Phillips Curve: Inflation, Unemployment, and the Expectations Trap

Macroeconomics

The Phillips Curve The trade-off between inflation and unemployment — and why it fell apart in the 1970s A tale of a curve that got too famous for its own good In 1958, a New Zealand economist named A.W. Phillips published a paper that seemed to show something...