INSEAD professors and co-author demonstrate how to gain control by exploiting the power of chance
Predicting the future is a continuous human endeavour that most people are all familiar with in almost all domains of life. People consistently look to develop ‘models’ to accurately predict future outcomes. In their new book, ‘Dance with Chance,’ the three co-authors – Spyros Makridakis, Professor Emeritus at INSEAD; Robin Hogarth, ICREA Research Professor at Universitat Pompeu Fabra (Spain); and Anil Gaba, the Orpar Chaired Professor of Risk Management and Dean of Faculty at INSEAD – explain how the ‘illusion of control’ fools us into thinking the future is more predictable and certain than it actually is. The authors point out that only by giving up control and learning how to embrace chance, is it possible to attain more beneficial outcomes. This is called the ‘paradox of control.’
From simple investment strategies to warnings against health screenings, the authors offer innovative, and often counterintuitive advice, to make luck work. ‘Dance with Chance’ provides extensive supporting examples of the paradox of control, including why millions of deaths are caused each year by medical negligence, why no one predicted the worst financial crisis since the great depression and how great athletes become so successful.
‘Much of what appears in management literature is nothing more than a recycling of old ideas. This book is different. In a an extremely erudite but also very readable way, the authors shatter many of our myths about the way we make decisions,’ said Manfred Kets De Vries, INSEAD Professor of Leadership, notable author and one of the world's leading thinkers on management and leadership development, as noted by The Economist andThe Financial Times.
‘Dance with Chance’ emphasizes how to make better decisions by taking advantage of the opportunities chance creates, while avoiding its negative
consequences, to improve ‘personal fortune.’ The authors point out that failure to feel in control of our lives is psychologically disturbing; therefore, people often fall victim to the ‘illusion of control’ in which they assume predictability, ignore uncertainty and minimise the role of luck. Take for instance these examples:
- Why do investment portfolios created by blindfolded monkeys throwing darts at stock listings often outperform those chosen by professional money mangers earning six-figure salaries?
- Why are the richest Americans (as identified by Forbes magazine) no happier than the Inuit people who live in the polar cold of northern Greenland?
- Why did a study in a major metropolitan hospital show that more accurate decisions would have been made in admitting patients to the cardiac unit if they used a simple statistic rule instead of trusting physicians’ judgments?
As discussed in the book, the answers to these questions are illustrated through examples that demonstrate how to overcome the paradox of control by exploiting the power of luck. This concept is based on a combination of the authors’ areas of expertise – statistics, cognitive psychology and decision making science – to test the limits of predictability. By making small lifestyle changes, people can learn to better navigate an uncertain world.
