s-anand on S Anand

Why don't students hack exams when they can?

Fri, 22 Nov 2024 10:38:09 +0000

This year, I created a series of tests for my course at IITM and to recruit for Gramener.

The tests had 2 interesting features.

One question required them to hack the page

Write the body of the request to an OpenAI chat completion call that:

Uses model gpt-4o-mini

Has a system message: Respond in JSON

Has a user message: Generate 10 random addresses in the US

Uses structured outputs to respond with an object addresses which is an array of objects with required fields: street (string) city (string) apartment (string) .

Sets additionalProperties to false to prevent additional properties.

What is the JSON body we should send to https://api.openai.com/v1/chat/completions for this? (No need to run it or to use an API key. Just write the body of the request below.)

There's no answer box above. Figure out how to enable it. That's part of the test.

The only way to even attempt this question is to inspect the page, find the hidden input and make it visible. (This requires removing a class, an attribute, and a style - from different places.)

Here's the number of people who managed to enable the text box and answer it.

College	# students	Enabled	Answered
NIT Bhopal	144	4 (2.8%)	0 (0.0%)
CBIT	277	16 (5.8%)	0 (0.0%)
IIT Madras	693	74 (10.7%)	4 (0.6%)

A few things surprised me.

First, I think students don't inspect HTML. Less than 10% of students managed to modify the HTML page, even after being told they need to. But they know web programming. 49 students at CBIT scored full marks on the rest of the questions, which includes CSS selectors and complex JS code. Maybe editing in a browser instead of an editor is a big mental leap?

Second, almost no one could solve this problem. There are 3 ways to easily solve it.

Copy the question and relevant test cases from my exam page's JavaScript into ChatGPT and ask for an answer. (I test it and it works.)
Copy the question and structured output documentation to ChatGPT and ask for an answer. (I tested it and it works.)
Create a random JSON and just keep fixing the errors manually until it passes. (The exam gives detailed error messages like "The system message must be 'Respond in JSON'", "addresses items must be an object", etc.)

Maybe questions from a curriculum are easier to solve than questions not in a curriculum? Or is JSON schema too hard?

The exam was officially hackable

All validation was on the client side. The JS code was minified and answers are dynamically generated. But a student can set a breakpoint, see the answers, and modify their responses.

The students at NIT Bhopal and CBIT were not explicitly told that. The students at IITM were explicitly told that they could (and are welcome to) hack it.

Out of the 1,114 students who took these tests, only one student actually hacked it.

(How do I know that? No other student got full marks. This student got full marks with empty answers.)

It's probably not that difficult. My course content covers scraping pages using JavaScript using DevTools. Inspecting JS is just a step away.

I did chat with the student who hacked it, asking:

Anand: How come you didn't share the details of the hack with others?

Student: I did with a few but I am not sure whether or not they were able to figure it out still.
Most students in the program still require a lot of handholding even with basic things.
Experience from being a TA [Teaching Assistant] past term.

Why didn't they hack?

Maybe...

They don't believe me. What if hacking the exam page is considered cheating, even if explicitly allowed?
The time pressure is too much. They'd rather solve what they know than risk wasting time hacking.
It feels wrong. They'd rather answer based on their knowledge than take a shortcut.
They don't know how. Using DevTools is more sophisticated than web programming.

Issue #1 - the trust issue - is solveable. We can issue multiple official notices.

Issue #4 - capability - is not worth solving. My aim is to get students to do stuff they weren't taught.

Issue #2 & #3 - a risk-taking culture - is what I want to encourage. It might teach them to blur ethical lines and neglect fundamentals (which are bad), but it might also build adaptability, creativity, and prepare them for real-world scenarios.

Personally, I need more team members that get the job done even if they've never done it before.

Birthday matters

Sun, 15 May 2011 20:33:23 +0000

Does it matter which month you’re born in?

Based on the results of the 20 lakh students taking the Class XII exams at Tamil Nadu over the last 3 years (via Reportbee), it appears that the month you were born in can make a difference of as much as 120 marks out of 1,200 – or 10%!

Most students who took the Class XII exams in 2011 were born between March 1991 and June 1992. The average marks of each student (out of 1200) is shown in the graph below.

Students born in June 1991 scored the lowest – around 720/1200. This suddenly shoots up in July, then in August, and the students born in September score as much as 840/1200 on average. From there on, it’s downhill.

This result is consistent across years. In 2009 and 2010, you see a similar pattern.

Why could this be?

Malcolm Gladwell’s book Outliers offers a clue.

Outliers opens, for example, by examining why a hugely disproportionate number of professional hockey and soccer players are born in January, February and March.

The answer turns out to be completely unrelated to numerology or astrology.

It’s simply that in Canada the eligibility cutoff for age-class hockey is January 1. A boy who turns ten on January 2, then, could be playing alongside someone who doesn’t turn ten until the end of the year—and at that age, in preadolescence, a twelve-month gap in age represents an enormous difference in physical maturity.

In Tamil Nadu, students must be 5 years old before entering Class 1. Schools open mid-June. So students born in June 1994 would barely make it in June 1999 – making them the youngest students in the class. July and August students would be missed – but since many schools implement this policy leniently, they sometimes make it in as well. September borns are often consistently the eldest students in a class.

This pattern reflected in the marks. The eldest – the September 1993 borns – score the highest. The next eldest, the October 1993 borns, score a bit less. And so on. (There are older students who take the exam – the ones born before September 1993 – but many of these are failed students from the previous year, introducing a bias in the results.)

Perhaps this initial advantage that the elder students have over their classmates continues through the years? Whatever the reason, it’s clear that if your child is born in September, he or she already has a 100 mark advantage!

Comments

abhijeet 16 May 2011 8:14 am: “Whatever the reason, it’s clear that if your child is born in September, he or she already has a 100 mark advantage!” But at the cost of being older and “losing” 8-9 months!
Shankar V 16 May 2011 10:00 am: Nice…!! Thank God I was born in July! If not on the crest, I at least made it into the upward curve! ;)
S Anand 16 May 2011 10:21 am: @abhijeet: That reminds me of the “Life is a race” dialogue in 3 Idiots :-) Well, not sure how bad being a bit older is. I personally don’t mind, but maybe others do?
Shailesh 16 May 2011 10:33 am: Oh…now I know why I was getting good marks…. :-) I am born in September…and my headmaster changed my birthdate (to Jul month) in school register to not waste my 8-9 months…..
ravi atluri 16 May 2011 10:47 am: They made me study LKG “TWICE”, because I was born in September and didn’t have enough time to be 3! and I have been an anomaly to the september-born-high-performers trend. If the marks are related to the mugging capacity, which if related to age would explain the graphs only for the schooling during. Would like to see, how would these change in college and bachelors :D One more doubt, I have is, many parents have the dob’s of after-aug-born’s to sometime between may to june. If that’s the case, the months on the graph have to be offset ;)
S Anand 16 May 2011 12:35 pm: @Shailesh – if you got into school early, then statistically, you had a DISadvantage. So guess you were MUCH brighter than your classmates! @Ravi – true. No idea how to correct for the real date of birth, though…
k 17 May 2011 2:53 am: this is similar to the paper on Israeli schools where an externally imposed rule created a disproportionate class size, which helps in identifying the effect of class size on performance. date of birth can help in identifying the effect on performance then.
Vasant 17 May 2011 6:14 am: Ha! Now I know why I scored so less in the boards. It’s when I was born! :-) Jokes aside, brilliant analysis.
Sathya 17 May 2011 6:43 am: Good One ! If you still have access to data, would it be possible to plot the same graph against their “numerology numbers” ? ie., 28th born would be 2+8 = 10 => 1+0 = 1. I used to wonder that astrology ( perhaps numerology ) could provide certain insights and that it astro/numero predictions should be verified using statistics. ( Pls note that I do not suggest astro determines a person’s fate. But perhaps it can predict events with some accuracy. How a person reacts to those events are not in the realm of astrology). I would love to do this if I had access to the data. In case you find it worthwhile, it would be interesting to see if numero number matters at all !
Swetha 19 May 2011 9:34 am: M a September born and a gold medalist . (*Grins*)
Sumit Dhar 21 May 2011 3:36 am: And, I know this is extremely difficult, but was wondering if it would be possible to assess the impact of month in which you were born on your professional growth / salary growth. Or even more simply, if marks are correlated with professional success. We Indians tend to believe that good marks == success at work. Would love to know if data validates this belief. If only this kind of data were available… Maybe HR teams in organizations could perform such an assessment. Cheers, D.
Vish 16 Aug 2011 9:59 am: http://news.bbc.co.uk/2/hi/8227268.stm Summer-borns tend to lose out at school because, in England and Wales, 1 September is the cut-off date for school entry, so they can be up to a year younger than their classmates. June baby Frank Lampard Research by the Institute for Fiscal Studies two years ago found only 53% of girls and 47% of boys born in August reached the expected educational level at age seven in state primary schools in England, compared with 80% and 70% of those born in September. Their sporting prowess is affected too. Older children tend to be bigger and more confident, receive more encouragement, and their advantage grows over time. For unto everyone who hath shall be given. Among the 25 most capped England football players, 11 were born between September and November, while only one, Frank Lampard, was born between June and August. In his case, having an England international for a father probably outweighed the disadvantage. So for educational and sporting opportunities, the cruellest and kindest months sit next to each other in the calendar like resentful neighbours.

Resolving the Prisoners Dilemma

Sun, 17 Aug 2008 12:00:00 +0000

If you’re ever taken a course in Economics, and it discussed Game Theory, you may be familiar with The Prisoner’s Dilemma. Roughly, this is the problem.

Assume you possess copious quantities of some item (money, for example), and wish to obtain some amount of another item (perhaps stamps, groceries, diamonds). You arrange a mutually agreeable trade with the only dealer of that item known to you. You are both satisfied with the amounts you will be giving and getting. For some reason, though, your trade must take place in secret. Each of you agrees to leave a bag at a designated place in the forest, and to pick up the other’s bag at the other’s designated place. Suppose it is clear to both of you that the two of you will never meet or have further dealings with each other again.

Clearly, there is something for each of you to fear: namely, that the other one will leave an empty bag. Obviously, if you both leave full bags, you will both be satisfied; but equally obviously, getting something for nothing is even more satisfying. So you are tempted to leave an empty bag. In fact, you can even reason it through quite rigorously this way: “If the dealer brings a full bag, I’ll be better off having left an empty bag, because I’ll have gotten all that I wanted and given away nothing. If the dealer brings an empty bag, I’ll be better off having left an empty bag, because I’ll not have been cheated I’ll have gained nothing but lost nothing either. Thus it seems that no matte what the dealer chooses to do, I’m better off leaving an empty bag. So I’ll lease an empty bag.”

The dealer, meanwhile, being in more or less the same boat (though at the other end of it), thinks analogous thoughts and comes to the parallel conclusion that it is best to leave an empty bag. And so both of you, with your impeccable (or impeccable-seeming logic), leave empty bags, and go away empty-handed. How sad, for if you had both just cooperated, you could have each gained something you wanted to have. Does logic prevent cooperation? This is the issue of the Prisoner’s Dilemma.

There’s nothing wrong in the logic, actually. The key assumption is that it is clear to both of you that the two of you will never meet or have further dealings with each other again. If you’re never going to deal with someone again (and hence there is no question of retribution or any fallout), you really should cheat.

An aside. During my first few days at IIT, two third years were ragging me about my stance on pre-marital affairs. After trying my best at defending the moral standpoint, I finally confessed that it was only the fear of the after-effects that worried me.

“There’s this beautiful naked girl in your room,” they said. “You are guaranteed no repercussions. What will you do?”

“No repercussions?”

“None whatever.”

I thought for a while. “I’ll flip a coin.” :-)

Anyway, the aside aside, the solution to the one-off Prisoner’s Dilemma is for both people not to cooperate. If contracts are not enforceable, we’re all better off not trading. If there are no cops, we’re individually better off stealing.

But, of course, that’s not true in the real world. Most situations are repeatable, and you do tend to meet people again. Those you cheat may even have a motivation to meet you again.

This is the iterated Prisoner’s Dilemma. Douglas Hofstadter wrote about this in the May 1983 issue of Scientific American in his Metamagical Themas column (which, by the way, is brilliant). While the Prisoner’s Dilemma has a simple solution (don’t cooperate), the iterated Prisoner’s Dilemma does not have a predetermined solution. At best, you can have a strategy. (That can be proven. If there was a predetermined solution, your opponent would know it, and could beat you. One of those cases in mathematics where you are not guaranteed a solution.)

But is it possible for cooperation to emerge in an iterated Prisoner’s Dilemma? Can it beat competitiveness?

Robert Axelrod of U.Mich conducted a computer tournament to find out. He invited strategies from game theorists and wrote them as BASIC programs. Each program would be pitted against another. Every time, it could response with either C (cooperate) or D (defect). Cooperation gets both programs 3 points. If one defects, the defector gets 5 points and the cooperator gets nothing. Both defecting gets 1 point each. Axelrod ran each program against each other many times, and added up the scores.

The program that won was called TIT FOR TAT. It was the shortest program (4 lines of BASIC code). Here’s it’s strategy:

Cooperate the first time.

Do what your opponent does thereafter.

Think about it. TIT FOR TAT starts by being nice, and stays that way, unless you defect. Then TIT FOR TAT punishes. If you repent, TIT FOR TAT forgets and forgives. Interestingly, TIT FOR TAT can never win a game. It can, at best, draw a game, but never score more points than its opponent. It goes for winning the war by losing battles.

That’s four traits:

Being nice
Punishing immediately
Forgiving immediately
Willing to lose battles

After publishing these results, and having learnt a lot about different strategies, Axelrod repeated the tournament. Four times as many entries poured in. This time from world experts on game theory. It also included an improved TIT FOR TAT called TIT FOR TWO TATS, which is an improved TIT FOR TAT that does not fall into a C - D - C - D cycle when playing against TIT FOR TAT.

TIT FOR TAT won again.

Till date, TIT FOR TAT remains an unbeaten individual strategy, and people believe it may be optimal.

(PS: By individual strategy, I mean that there are multiple programs that can team together, losing to each other and making sure that one of them wins. This sort of thing can beat TIT FOR TAT. But no individual program beats TIT FOR TAT.)

In our first term at IIMB, we played a game in our organisational behaviour class, intended to help us understand inter-departmental cooperation (or rivalry). The class was split into two ‘companies’. Each company had four divisions.

The game had 10 rounds. In each round, every division could choose to cooperate or defect. If everyone cooperated, each division made 3 points. If any division defected, it would make 5 points, while all cooperating divisions made 0 points. If all divisions defected, they would all make 1 point. The divisions were not allowed to talk to each other.

The aim was to beat the other company. (Not other divisions, within or outside the company.)

Our company started off with 3 Cs and a D, which quickly deteriorated to 1 C with 3 Ds by round 6. At round 7, it was 4 Ds.

Before round 8, we were all given a chance to have a huddle. A representative from each division would come together and talk things through. We promised to cooperate, and thereafter, it was 4 Cs to the end.

We lost the game. The other ‘company’ had started off with 1C and 3Ds, but had learned to cooperate pretty quickly, aided, in Prof N M Agrawal’s words, by “… Aparajita threatening the other divisions with her glares.”

The reason there’s a Prisoner’s Dilemma is the inability to reliably communicate or enforce behaviour. Having a chat helps. Having laws that punish you helps. Having a bully threaten you helps. The thing is, you need a signal of some kind. And it needs to be an early signal, or you end up waiting till round 8 and lose the game.

If you’re ever in a situation where cooperation helps everyone, but it’s not in interest to cooperate, here’s what seems to work:

See if you can agree to cooperate before-hand
- Have a chat
- Find policies that punishes defectors
- Threaten if required
If not, then try to force cooperation by signaling.
- Be nice
- Punish defection immediately
- Forgive repentance immediately
- Lose battles to win the war

Comments

Dibyo 19 Aug 2008 1:05 am: I really liked this piece. It’s not a new concept to me, and I’ve understood it well before, but the TIT-FOR-TAT part really connected.

Dibyo
(IIMB too, but a couple of years junior - we only heard about Stud Anand)
S Anand 19 Aug 2008 11:03 am: @Dibyo: Even when playing the game at IIMB, a few of us knew about TIT FOR TAT. Didn’t help. Guess there’s a huge gap between understanding and practice…
Abhi 28 Aug 2008 5:33 am: Fantastic piece, very lucidly put.

IITM - Mtech, we should have heard about Stud Anand.
deepak 30 May 2010 7:32 pm: We played the game in IIMB and ended up doing the same stuff and never getting it right. Dibyo, I think it was Prof. Reddy who made us play this game. But then I went to Solvay for Exchange - 2 each from IIMB and A , we tried TIT for TAT first( many teams too many combinations ), didnt help post the huddle while everyone else was trying for Tit for TAT we kept going against to drive home the message. The prof did mention that one enlightened party doesnt help unless everyone else gets the message :)
Prabu 10 Dec 2010 9:03 am: Hi Anand, Was going through your post. Just thought of this algorithm that would beat the TIT-FOR-TAT algo. it would be:
1. Never Co-operate. Now, this algo always either wins or draws individually. Group games are different. Thanks
S Anand 10 Dec 2010 2:56 pm: That’s an interesting point, Prabu: “group games are different”. Totally so. Your Never Cooperate algo, as you pointed out, always wins or draws. Tit-for-tat, interestingly, NEVER WINS AN INDIVIDUAL GAME. You can prove it, but this file is a demonstration: it plays random strategies out against Tit-for-tat. Tit for tat never wins. Maybe the lesson here is a stronger version of “Losing the battle, winning the war”. Perhaps it’s essential to lose the battle to win the war. (I’m probably oversimplifying, or in extrapolating analogies… anyway, just wanted to say: yes, never co-operate beats tit-for-tat on an individual game. Many other such strategies exist too. As you mentioned, group games are quite different)

Arrested in Paris

Thu, 11 Jan 2007 12:00:00 +0000

In November 2000, I visited Paris one weekend. Two classmates, Anand Binani and Ram Venkat were studying there, and we roamed around the city.

At around 6:00pm, we went over to Montmartre. It’s up a hill, and there’s a cable car that takes you up there. We went all the way up, and got out when a lady behind us asked:

“Is that yours?

We’d left something behind. Went back to retrieve it. The car was almost leaving for it’s return journey. We just got out in time…

… to be confronted by the French Police.

Now, this is a scary thing. Foreign country. I don’t speak a word of French. And I was dressed like a thug.

The policemen didn’t say a word. One of them just made us stand right a the corner of the entrance to the cable car – politely at first, and then physically, when he realised we didn’t understand a word of French.

Now he goes on the radio. He hasn’t said a word to us yet that we could understand.

After a minute, he comes back, asking for our passports. I hand mine over. So does Anand Binani.

Ram Venkat doesn’t have his passport on him.

Shit!

While he was panicking and I was rooted to the spot and Anand Binani was trying to explain something to the policeman, he walked away with our two passports.

Busy talking on the radio.

Relaying the names on our passports.

Worried that they were both “Anand"s. (We could here that repeated many times.)

Something about wearing a jacket. (We were all wearing jackets.)

Five minutes pass. In the meantime, we had various theories. Three terrorists had illegally entered the country and were going to blow up Montmartre, and we looked like them. Or, an Asian student group was going to murder a senior polician. Or maybe we just looked like the mug-shots on their Top 10 Most Wanted list and just about like someone who’d end up on the internet on websites like https://www.checkpeople.com/reverse-phone-lookup.

In my case, I didn’t even have a French student visa. Just a standard Schengen tourist visa, with a UK student visa. I wasn’t even studying in the country. If I were deported, would he put me back in the UK or in India? Which embassy would I have to speak to if he arrested me?

Five minutes later, he comes back, hands us our passports, and walks off.

Just like that. No goodbye. No “You’re free to go”. No “Don’t ever do that again”. Just walks off.

We just stood there for a couple of minutes, got our breaths back, promised never to venture without a passport looking like thugs, took a snap as evidence, and went on inside the Montmartre chapel, followed by a far more educative visit to Pigale.

Comments

anand binani 11 Jan 2007 5:11 pm: Amazing stuff ! brought back memories of great small times we had. Hope you are doing great! Do let me know your email id and your whereabouts
somnath 18 May 2007 8:47 am: anand was it you looking like a thug or ram : ). How is the photo at the bottom connected with the whole story. Even if ram and binani have been oogling over there french police should be least bothered …

Playing sounds backwards

Mon, 25 Sep 2006 12:00:00 +0000

You can play a video backwards and still recognise the scenes quite well. Can you do that with sound?

I tried it on this Bryan Adams clip of Summer of ‘69 (mp3). When played backwards (mp3), it almost sounds like Arabic!

Instruments sound weird backwards too, like the guitar played backwards and drums played backwards.

It’s seems obvious once you see the wave file. The picture below shows the guitar. The sounds are clearly not symmetric left to right.

Whereas this guitar is a lot more symmetric, and doesn’t sound too different backwards.

So how come we can’t recognise sounds played backwards, but can recognise video played backwards? (Initially, I thought it was a trivial question. But I couldn’t find a trivial answer. The question may be subtler than it looks.)

Comments

B anand Prasad 25 Sep 2006 12:35 pm: its nothing to do with the technology Mr. Anand let me give an example dnana ….you just spell it… it sounds something like (d-na-na) now if we know that reversing it could(possibly) result in Anand — dnanA, then we could recognize all backward sounds its just that we r not acustomed to hear sounds backward. now practice daily some words which are often used like “good morning” “thanks” now say them to someone in a correct situation…90% of them will recognize it.. thats it my friend….sorry for reversing “Anand” name….its my name too
S Anand 25 Sep 2006 1:48 pm: Anand, if I’ve understood you right, we don’t recognise sounds backwards because we’re not used to hearing them. Agreed. My reasoning was: we’re not used to seeing things backwards either. How come we’re so much better at recognising those? A part of the answer is, we recognise sounds mainly by their movement in time, but images by their spread across space. But I wonder if there’s more to it…
ND 26 Sep 2006 3:07 am: I think this may have to do with the fact that seeing consists of detecting multiple facets like motion, pattern etc. The brain may have more data points decompose and “meaningfully” analyze backward. While hearing consists of analyzing the frequencies and amplitude implying lesser data points to “meaningfully” analyze backward with the same speed as visual stimuli. Caveat - Just my guess!
S Anand 26 Sep 2006 6:23 am: Hmm… ND, that’s a possibility! Certainly, in terms of information content, there’s more coming in visually than aurally.
ND 27 Sep 2006 12:42 pm: I asked three intelligent folks (an american, a german and an indian) to read “eye”, “racecar”, “malayalam” and “never odd or even” and waited for their reaction. Got blank stares! But it was sitter when explained. Guess some humans find it difficult to recognize a palindrome while reading and speaking. Taking a few million huge steps to infer humans normally normally don’t even try to process sound or reading alphabets backward. Is it easier to recognize a popular word like one’s name or a tune like Happy B’day when spoken or sung backward? A related front and back concept - I have always wondered why the bar showing s/w installing moves from left to right. And the same when uninstalling also. Is it convention? Why not show something more perceptive like a container getting filled or getting drained?
Sudeep Nair 20 Nov 2006 5:40 am: Anand, I feel that the fundamental difference between a reversed text and reversed sound is that the text is still completely visible to the eye at once, and so there is a subconscious process where the brain is able to decipher the text by trying out some permutations, whereas in case of sound, the individual notes reach the ears and disappear. They do not remain “static” or “stationary” for the brain to be able to try some reverse permuations of individual notes and identify the original sound. This reminds me of another observation that in case of English text, the reader is able to decipher the words if the first and last letter of every word is kept fixed and all other letters in between are jumbled. Msot raeedrs wlil be albe to udnreatsnd tihs snetncee atlohugh the lteerts are jbulmed.
Anonymous 20 Nov 2006 6:15 am: If we extend this logic from text to video, I think there is some degree of “persistence of vision” which allows the brain to “refer back”, unjumble and make sense of video images, but there is no persistence of sound. So in addition to anand prasad’s point about “familiarity of words”, and ND’s point about “more meaningful data points”, I would think that “persistence of images” is a major factor helping us understand visual images better than sound.

How to remove carpet impressions

Fri, 23 Jun 2006 12:00:00 +0000

How to remove carpet impressions. Just steam iron the carpet.

Comments

ankit 24 Jun 2006 5:58 pm: it really works.. http://virtuously.blogspot.com/
S Anand 25 Jun 2006 8:52 am: You actually tried it? I was planning to, except without using steam.

Demand draft fees

Tue, 21 Mar 2006 12:00:00 +0000

Once, we were looking at whether banks made money on demand drafts (DDs).

DDs are costly. 90% of a bank’s costs are people-related, and it takes a fair bit of time (hence people) to process DDs. If you pay for DDs in cash, it costs even more because the teller has to count the notes.

To recover this cost, banks charge a fee. The fee increases with the size of the DD. A DD for Rs 10,000 may cost Rs 50, while one for Rs 100,000 may cost Rs 200.

But apart from the fee, banks also earn float on the DD. Let’s say you go to a bank, pay Rs 100,000, and take a DD. You mail the DD to someone, who cashes the DD three days later. The bank has your Rs 100,000 for 3 days, and earns the overnight interest rate at around 5%, netting Rs 41 in the process. This float is significant for large DDs.

Our client bank was making a small loss on DDs. Every DD less than Rs 50,000 caused a loss (even after including float). And 3 out of every DDs was smaller than Rs 50,000.

Then we had this bright idea: let’s lower fee for large DDs, attract of them, and get more float income. DDs above Rs 50,000 are profitable. So big DDs are worth going after. 80% of the float income comes from the top 22% of DDs. So surely, the big DDs are worth going after. Float income increases forever, whereas fee income is capped. So big DDs could absolutely be terrific.

We were thrilled. Here was a revolutionary counter-intuitive idea: have lower charges for DDs to get more money. We kept talking about it to our client. But at the end, we didn’t suggest it. It got left behind the conventional idea of increasing the fee for small DDs.

We were a bit disappointed, and kept cursing the conservatism of public sector banks. Goes to show how the bright young consultants can be naive. For, as it later turned out, the bulk of DD revenues is really fee income (88%), not float income. Had we lowered the fee income, there’s would’ve been no chance for the float income to make up for it.

Why did we miss that? A couple of reasons. The simple one was, though the float income increases forever, doesn’t beat fee income until the DD is about Rs 2 crores. DDs typically stay with you for a few days, and you can’t earn much interest on that.

The other reason was subtler. We had assumed that the float income for a DD of Rs 100,000 is 100 times that of the DD income for Rs 1,000. But the float income does not increase linearly! Someone who gets a DD for Rs 1,000 doesn’t mind waiting a bit to present it, but someone who gets a DD for a lakh would walk to the bank the very same day. The chart below shows how long customers wait to cash DDs. The X-axis is the size of the DD. The Y-axis is the number of days they wait. It shows a clear diminishing trend.

Lesson: Conservative bankers might make more money not listening to hotshot consultants.

Comments

Shreyas 27 Mar 2006 10:22 am: Very insightful case study! But did increasing the fees for smaller DDs help boost the profits? Did it not reduce the number of customers taking DDs?
S Anand 27 Mar 2006 12:08 pm: We didn’t measure that. But even if it reduced the number of customers it would have (in the long run) increased profits, since they were losing money on every small DD sold! They would be able to shift someone from the DD section elsewhere, and avoid having to recruit a new person.
ronnie 21 Mar 2006 12:00 pm: Hello i like to join and i wish to be a member of demand draft so mail me pls
Walter Atkinson 21 Mar 2006 12:00 pm: I was looking to this information and was helpful…ok Best Regards Walter http://www.surveynew.com Premier Paid Survey Company.
ritu raj 17 Nov 2008 7:32 am: what doc need to be presented to the bank for the dd of 375000 to be paid in cash?
uss 8 Jul 2011 6:42 pm: but there is no dd charges for current account in private bank.ll it cost loss to the bank
Vignesh 23 Oct 2012 9:22 am: Beautifully written. I liked your articulation.
pradeep kumar 16 Jun 2015 3:29 am: This article is very nice and informative. Came here while searching for something related and found it very informative. Thank you very much.
Donga Satyanarayana 28 Feb 2017 8:20 am: Some private banks are fee DD charges allowed with simple amount deposit. But our Bank is world wise national Bank . This Bank is some lakhs of crores rotining services. Better to allow free DD charges atleast a limited amount. Thanking you

Market emergence - fan bartering

Thu, 05 Jan 2006 12:00:00 +0000

Over my last few years as a consultant, I’ve seen many interesting ways in which markets have emerged where they shouldn’t have, creating havoc in pricing and scarcity. Fixed prices fluctuate, free goods acquire a value, and non-tradeable goods are traded. I’ll share a few of these examples over the next few weeks.

Once, a fan manufacturer asked us, We did an analysis and found that our wholesalers’ margins fluctuate. How could that happen, when we are fixing their buying and selling prices?

The manufacturer sells several popular fans. Their highest selling fan (call it HS), for instance, was sold to wholesalers at Rs 1,089, who would then sell it to retailers at Rs 1,100. No question of margin fluctuation.

I took a trip to Lohar Chawl, the wholesale fan market, to get to the bottom of this. After a few conversations in dingy warehourses, here’s what I discovered. Fans are bartered. Wholesalers keep as little cash and inventory on hand. Often, a retailer would order a fan (say X) not in stock. The wholesaler doesn’t want to lose the deal, and doesn’t have cash, but he would have some inventory of HS, since it’s such a high-selling fan. He goes to another wholesaler, and says,

“Give me some fan X, and I’ll give you some HS fans instead. You’ll be able to sell these HS fans fairly quickly anyway.”

“Why should I? Tell me your customers name and I’ll sell it to him myself, and make the profit.”

“Tell you what. I’ll give you my HS fans for Rs 1,079 instead of Rs 1,089. You’ll get a higher margin when you sell it.”

This is a routine matter in Lohar Chawl. If you don’t have a fan, barter it for another (often HS) at a discounted price. So the wholesaler’s margin would depend on how many fans they bought at a bartered price!

Poaching was another reason for the margin fluctuation. The manufacturer demarcated territories for each wholesaler, saying “You can sell the these 20 retailers, you can sell to those 18, and so on.” Ambitious wholesalers, or those with inventory to dump, would do a side deal with a retailer.

Look, your wholesaler charges Rs 1,100 for this fan. I’ll sell you this lot for Rs 1,095. And let’s keep it quiet."

Yet another reason for margin fluctuation was smuggling. Sometimes, the wholesalers would be able to smuggle fans into Mumbai without paying octroi. And sometimes they wouldn’t.

The biggest lesson for me from this was, It’s bloody tough to restrict a free market. I’ll tell you more about this shortly.

Comments

ritzkini 6 Jan 2006 6:25 am: :) Bloody tough indeed ! lemme guess,these were all gujjus !rite ?? ingenuous, i tell you,these guys..
Arun 6 Jan 2006 8:27 am: Neat! Thanks for those Excel tips. And look forward to more of these!
Madhu 6 Jan 2006 12:10 pm: I have noticed instances where a TN Auto Distributor comes and sells his stuff to a Karnataka retailer! How did you solve this problem? in my case, which was personal advice to a friend, we wrote to the company with some of the fake bills etc and asked for a higher discount for my friend who is a karnataka distributor, things like CST also start to matter in inter-state things. now the problem has come down bcos of VAT
S Anand 6 Jan 2006 4:50 pm: I did this work as part of a proposal. We finally didn’t get the project. But I suspect (and will try and show over the next few posts) that this is a problem that’s probably not worth fighting. The market will eventually win!
Madhu 7 Jan 2006 11:53 am: Ideally a very good supply chain management system will help solve this problem atleast. For eg: If i can order and get it immediately instead of having to bargain. Another issue is how was fan X priced? If its lower than 1089, it will also solve the problem
S Anand 7 Jan 2006 7:15 pm: The problem wasn’t supply chain lead-time, but shortage of cash for inventory among wholesalers. Whenever they were short of stock in one fan, they’d sell some other fan they had as inventory to get the fan they were short of. They can’t order it from the manufacturer, remember: they’re short of cash. They NEED to barter.
joe 7 Jan 2006 11:39 pm: the fan company had no clue why the margins were fluctuating ? scary thought. how could they not know about this. I presume it is top management that did not know this
Madhu 8 Jan 2006 3:53 am: Ok. A SCM which can even take in account demand considerations is ideal. But how can the HS and X be priced the same to the retailers? Isnt that failure of the market? Shouldnt a HS fan be priced different(higher?) than some random fan X?
S Anand 8 Jan 2006 10:52 am: Madhu, you’re right. The fans ARE priced differently. So it won’t be a one-to-one barter. If Fan X is priced at 1000, the wholesaler will give agree to sell 10 HS fans at Rs 1079, give 10 HS fans PLUS 790 Rs, and get 10 Fan X in return.
S Anand 8 Jan 2006 10:54 am: Joe, even the line mgmt didn’t know about this bartering! One of my colleagues discovered it. This guy’s a god of black money market operations, incidentally :-)
shyam 9 Jan 2006 10:07 am: This is something similar to the SJP Road market in Bangalore where u can buy computer parts at " SJP Road price “. the shopkeepers will undercut even the wholesaler price and sell it for " cash "

Da Vinci Code trailers

Wed, 14 Dec 2005 12:00:00 +0000

Da Vinci Code trailers.

Comments

Sai 15 Dec 2005 9:56 pm: Anand, tell us a bit about Infosys consulting. They seem to be on a big expansion drive. Hows it out there?
S Anand 16 Dec 2005 7:32 am: I can mail you, Sai. What’s your e-mail ID?
S Anand 16 Dec 2005 9:39 am: BTW, the del.icio.us tag on “The Da Vinci Code” is an anagram: c i con thee david.
Sai 16 Dec 2005 7:42 pm: Anand it is peaceforall@gmail.com
Sai 16 Dec 2005 7:46 pm: Thanks!

Simple framing

Sat, 24 Sep 2005 12:00:00 +0000

Framing - using words to build a frame of mind.

A Senator goes on a Fox News show in which a conservative argues with a liberal. The conservative host says: “Some say that more tax relief creates more jobs. You have voted against increased tax relief. Why?” The Senator is caught. Any attempt to answer the question as asked simply reinforces both the Tax Relief frame and the “Tax Relief Creates Jobs” frame. The question builds in a conservative worldview and false “facts”. Even to deny that “tax relief” creates jobs accepts the Tax Relief frame and reinforces the “Tax Relief Creates Jobs” frame.

Comments

Dhar 24 Sep 2005 12:00 pm: LOL.
Dhar 24 Sep 2005 10:45 am: Had heard about concept of Framing earlier too. For example, it is always “Defense Spending”. While the fact of the matter is that all weapons creater are for offense. But it is easier getting buget for a Defense program rather than an Offense Program. Lakoff I believe has done a lot of work on Framing and his books are mentioned on the side bar in the link you provided.
Dhar 25 Sep 2005 12:34 pm: Just found out Lakoff is the person behind Rockridge Institute. I am just going through his book “Metaphors We Live By”. Slightly dense, takes time to read/understand.
Alpha Geek 26 Sep 2005 5:29 pm: I logged to google fight web page and gave S-Anand.net as one key word and sumitdhar.bogspot.com as another keyword.The result was, S-Anand.net got a maximum hits of 276 result and dhar’s page got 267 hits. S-Anand.net won by 9 hits.
S Anand 26 Sep 2005 6:46 pm: Pity. My vote would’ve been for Dhar’s site.
Name M 4 Oct 2005 10:30 pm: AlphaGeek, you may have had better luck if you used sumitdhar.blogspot vs bogspot

Low Shutter Speeds without Tripod

Mon, 04 Jul 2005 12:00:00 +0000

Taking pictures at low shutter speeds without a tripod.

Comments

Anonymous Hero 5 Jul 2005 9:56 am: About why Google History is important: I had searched for something from home laptop and I was at office and needed the same info. Went into Google history and found the same thing… So the search history and the links I clicked on were available from any computer attached to the Net. Found it pretty useful…
Ram 5 Jul 2005 4:51 pm: Pls update the placement section with new useful links…
S Anand 5 Jul 2005 6:36 pm: Ah… that’s a good use. I was also wondering if we could do some profiling of the kinds of sites we visit – perhaps by checking what their tags are on technorati or del.icio.us
sathish 22 Jul 2005 11:14 am: probably based on our search history, there could some recommendations to given

Droogle

Thu, 24 Mar 2005 12:00:00 +0000

Droogle. Drink recipes.

Comments

Jetru 24 Mar 2005 5:04 pm: Doesnt look like the XML feed is working…
Deshi 24 Mar 2005 6:17 pm: This is one lousy blog!
Genmys 25 Mar 2005 1:49 am: Lassi features as South Indian drink. Obscure results for Butter Milk
ritzkini 25 Mar 2005 8:13 am: Bandwidth Limit Exceeded.The server is temporarily unable to service your request due to the site owner reaching his/her bandwidth limit. Please try again later.Apache/1.3.33 Server at www.droogle.ca Port 80(25/03/2005-at 1:45 PM IST)
Shamit 26 Mar 2005 4:41 am: It is getting a bit cluttered …
S Anand 28 Mar 2005 3:20 am: Yes, it is, rather. Will see what I can do about that.
S Anand 30 Mar 2005 7:23 am: Fixed the XML feed.

New features on Altavista

Thu, 14 Nov 2002 12:00:00 +0000

Altavista’s new features are pretty good. What I liked best, though, is their new interface. Especially the bar used to open the search result in a new window. Good to know that I rank 3rd on their search.

Google search algorithm change

Wed, 02 Oct 2002 12:00:00 +0000

Reactions to Google’s revised search algorithm. People’s rankings on certain keywords appear to have changed. Mine hasn’t. So far.

Google my name

Mon, 06 May 2002 12:00:00 +0000

Never thought the day would come when the Google query S Anand would throw up my name first. Probably won’t last…

Me in the press

Thu, 15 Mar 2001 12:00:00 +0000

Some press clippings about the IIM-B convocation (and me).