The document summarizes key concepts in banking, finance and economics including induction, deduction, framing, abstraction and modeling. It provides examples to illustrate each concept. Induction reasons from specific observations to broader generalizations. Deduction moves from general rules or assumptions to specific conclusions. Framing refers to how information is presented influencing decision making. Abstraction ignores details to focus on core aspects while modeling creates simplified representations of reality.

1. LOGO
BPE Workshop 9: The skills of
banking, finance and
economics professtionals
Group 11
1. Vũ Trung Hiếu 16043553
2. Trần Thùy Nhung 16043566
3. Lê Ngọc Tú 16043583
4. Tạ Ngọc Anh 16043538

2. IBD@NEU
Contents
Induction
Deduction
Framing
Abstraction and Modeling

3. IBD@NEU
Abstraction and Modeling
an essential
feature of the
scientific
method
ignoring some
aspects of a
thing to focus on
one or a small
number
the scientific
method would
not, could not,
exist without
abstraction
Abstraction

4. Abstraction
IBD@NEU
Example: Moral hazard
- Refer to change in feeling because you know someone else will take
responsibility for your actions
- Become careless
Consider you are a banker and you have insurance for your bank. And you decide
to make a big gamble

5. IBD@NEU
Abstraction and Modeling
models are a
simplified
representation of
reality
captures the big
picture of thing
Modeling

6. Modeling
Example
help people to living in a peacefully life
IBD@NEU

7. IBD@NEU
Framing
people tend to
avoid risks
when a positive
frame is
presented and
seek risks when
a negative one
is presented.
refers to the
social
construction of a
social
phenomenon
often by mass
media sources,
political,…
framing effect is a
case of mental
bias, in which
people process
and respond to a
specific decision
in different ways
based on how it is
introduced
Framing

8. Framing
To understand framing effect, there are
two scenarios for insurance company:
 Scenario 1: In situation of car accident, insurance company will pay 80% of
the cost for repairing
 Scenarios 2: In situation of car accident, the driver has to pay 20% of the
cost for repairing
The outcomes are the same, so people are likely to prefer scenario 1
because it is presented as a gain instead of a loss.
IBD@NEU

9. IBD@NEU
Deduction
move from
assumptions to
conclusions
deductive,
based on
generally
accepted
principles,
movement
from the
general rule to
the specific
case
Deduction

10. Deduction
E.g.: syllogism
 A1: Cody has just bought a brand new car.
 A2: He wants to protect his car
 A3: The laws said “You must have car insurance to be able to
drive”
Conclusion: Cody goes to Bao Viet insurance company to buy car
insurance
IBD@NEU

11. Deduction
Assumptions can be “covering laws”, i.e
universal statements
 E.g: using a general assumption
 A1: Cody is a driver
 A2: Every driver buys insurance for their car
 Conclusion: Cody goes to insurance company to buy car insurance.
IBD@NEU

12. IBD@NEU
Induction
is a kind of
reasoning that
constructs or
evaluates general
propositions that
are derived from
specific
examples.
inductive
reasoning, in
which general
principles are
formed from
observed
events
Induction

13. Induction
Example: definition of concept “Moral
Hazard’ and ‘adverse selection’
 Moral hazard
 Adverse selection
- 2 definitions above didn’t exist until these events appear.
- The researchers of ‘insurance companies’ field after
observing the specific reality, release two definitions belonging
this field to refer to the risk that insurance companies can
meet.
Company Name

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