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Published by:
Harvard Business Publishing (2009)
Chapter from:
"Think Twice: Harnessing the Power of Counterintuition"
31 pages


Colonies of seemingly simple species - ants, bees, and termites - have flourished for millions of years. An insect colony is an example of a complex adaptive system: one composed of a group of heterogeneous agents. These agents interact with one another, and their interactions create a structure. This structure is a complex system, with characteristics that are distinct from the individuals within it. In this chapter, Michael Mauboussin, an expert in behavioral finance, explores the pitfalls of understanding complex systems on the wrong level: you can't understand an ant colony by watching what one ant does. In business terms, this means that there's no simple method for understanding a complex adaptive system - like the stock market or a large corporation - by studying its parts, and decisions based on misguided interpretations are sure to be faulty. So how do you deal with complex systems? This chapter offers practical advice for decision makers. This chapter is excerpted from ‘Think Twice: Harnessing the Power of Counterintuition'.


Decision making; Complex systems; Strategic thinking

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