MGCR 423 Lecture Notes - Capital Budgeting, Risk Management, The Technique

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There is a fundamental paradox in human behaviour the more unpredictable the world becomes, the more we seek out and rely upon forecasts and predictions to what we should do. Anthropologists and psychologists have long argued that magical rites and superstitious behaviour serve very important functions: they make the world seem more deterministic and give us confidence in our ability to cope. Easy to establish under conditions of uncertainty, and are highly resistant to change. Managers try to predict and control events which, in terms of current conditions and technology, are manifestly unpredictable and out of control. A special reputation accrues to those who, affirming the mystery presume to penetrate it. They are in touch with the occult; others should trust them. Superstitions are the vehicle whereby charismatic leaders provide feelings of certainty in otherwise uncertain times. When large numbers of consumers can perceive a need ofr a product, it is usually a simple product improvement.

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