Sunday, April 23, 2006

Irrational economics

We continue to do things which are not economically justifiable. We vote, even in places where our vote is irrelevant. We buy lottery tickets. We fear air travel, while happily talking on our cell phones as we drive to the airport. Our instinct lets us down when calculating the odds of so many things.

So if we make these mistakes in regard to such critical matters to ourselves, how reliable are our instincts when we make business judgements or decisions about people. The evidence suggests that they are not to be trusted. Perhaps this is why after more and more managers go through business education, business decisions do not get any better. Our inability to be objective in a way which removes our own psychology from the calculation means that our decisions are often not to be trusted.

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