Dance with Chance

Dance with Chance

Harnessing the Power of Luck

Spyros Makridakis, Robin Hogarth, and Anil Gaba

(OneWorld, 2009)

The recession has made a hash of many a predictive model, and now several books are piling on the critiques. This engaging account, by a statistician, a psychologist, and a decision scientist, looks at failed attempts to reduce risk in areas such as medical science, happiness psychology, and the stock market. Attempts to generalize about future management performance, the authors argue, are especially problematic. Companies proclaimed to have been “built to last,” or to have gone from “good to great,” often started tanking soon after appearing in best sellers. We humans are overconfident in our predictions because our minds excel at imposing patterns even when none exist. So we succumb to a dangerous illusion of control. Yet fatalism is no better. The book urges us to adopt simple heuristics to guide decision making.