Heuer, Richards J., Jr. Psychology of Intelligence Analysis. Washington, D.C: U.S. Government Printing Office, 1999.
Munger, Charlie. “The Psychology of Human Misjudgments.” Speech at Harvard Law School, circa June 1995.
Nofsinger, John R. Investment Madness. New York: Prentice Hall, 2001.
Pinker, Steven. How the Mind Works. New York: W. W. Norton, 1997.
Schelling, Thomas C. Micromotives and Macrobehavior. New York: W. W. Norton, 1978.
Thaler, Richard H. Advances in Behavioral Finance. New York: Russel Sage Foundation, 1993.
——. The Winner’s Curse. Princeton, N.J.: Princeton University Press, 1994.
INNOVATION AND COMPETITIVE STRATEGY
Axelrod, Robert. The Evolution of Cooperation. New York: Basic Books, 1984.
Besanko, David, David Dranove, and Mark Shanley. Economics of Strategy. 3rd ed. New York: Wiley, 2004.
Christensen, Clayton M., Erik A. Roth, and Scott D. Anthony. Seeing What’s Next: Using Theories of Innovation to Predict Industry Change. Boston, Mass.: Harvard Business School Press, 2004.
Evans, Philip, and Thomas S. Wurster. Blown to Bits: How the New Economics of Information Transforms Strategy. Boston, Mass.: Harvard Business School Press, 1999.
Ghemawat, Pankaj. Strategy and The Business Landscape. 2nd ed. Upper Saddle River, N.J.: Pearson Prentice Hall, 2006.
McTaggart, James, Peter Kontes, and Michael Mankins. The Value Imperative: Managing for Superior Shareholder Returns. New York: The Free Press, 1994.
Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon & Schuster, 1985.
——. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: The Free Press, 1980.
Reichfield, Frederick F. The Loyalty Effect. Boston, Mass.: Harvard Business School Press, 1996.
Shaprio, Carl, and Hal R. Varian. Information Rules: A Strategic Guide to the Network Economy. Boston, Mass.: Harvard Business School Press, 1999.
Warsh, David. Knowledge and the Wealth of Nations: A Story of Economic Discovery. New York: W. W. Norton, 2006.
SCIENCE AND COMPLEXITY THEORY
Arthur, W. Brian, Steven N. Durlauf, and David A. Lane, eds. The Economy as an Evolving Complex System II. Reading, Mass.: Addison-Wesley, 1997.
Ball, Philip, Critical Mass: How One Thing Leads to Another. New York: Farrar, Straus and Giroux, 2004.
Beinhocker, Eric D. The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Boston: Harvard Business School Press, 2006.
Camacho, Juan, and Ricard V. Solé. “Scaling and Zipf’s Law in Ecological Size Spectra.” Santa Fe Institute Working Paper 99-12-076, 1999.
Dawkins, Richard. The Blind Watchmaker: Why the Evidence of Evolution Reveals a Universe Without Design. New York: W.W. Norton, 1996.
Dennett, Daniel C. Darwin’s Dangerous Idea: Evolution and the Meanings of Life. New York: Simon & Schuster, 1995.
Diamond, Jared. Guns, Germs, and Steel: The Fates of Human Society. New York: W. W. Norton, 1997.
Gladwell, Malcolm. The Tipping Point: How Little Things Can Make a Big Difference. New York: Little, Brown, 2000.
Hagstrom, Robert G. Investing: The Last Liberal Art. New York: Texere, 2002.
LeBaron, Blake. “Financial Market Efficiency in a Coevolutionary Environment.” Proceedings of the Workshop on Simulation of Social Agents: Architectures and Institutions, Argonne National Laboratory and University of Chicago, October 2000, Argonne 2001, 33-51.
Mandelbrot, Benoit, and Richard L. Hudson. The (Mis)Behavior of Markets: A Fractal View of Risk, Ruin, and Reward. New York: Basic Books, 2004.
Rothschild, Michael. Bionomics. New York: Henry Holt and Company, 1990.
Schroeder, Manfred. Fractals, Chaos, and Power Laws: Minutes from an Infinite Paradise. New York: W. H. Freeman, 1991.
Seeley, Thomas A., P. Kirk Visscher, and Kevin M. Passino. “Group Decision Making in Honey Bee Swarms.” American Scientist 94 (May-June 2006): 200-229.
Simon, Herbert A. The Sciences of the Artificial. Cambridge, Mass.: The MIT Press, 1996.
Whitfield, John. In the Beat of a Heart: Life, Energy, and the Unity of Nature. New York: Joseph Henry Press, 2006.
FURTHER ACKNOWLEDGMENTS
Sente. www.senteco.com.
CFROI® is a registered trademark in the United States and other countries (excluding the United Kingdom) of Credit Suisse or its affiliates.
INDEX
Page locators in italics indicate exhibits.
academic finance community
Ackerman, Ernest
action
adaptability. See also complex adaptive systems
adaptive decision rules
advertising
affect
after-tax measures
agency costs
agent-based models
aggregate return
aggregation
Alliance Capital
analysts, imitation and
analytical decision making
anchoring
Anderson, Philip
anomalies
ante
ant examples
appropriate reference class
arbitrage
Ariane rocket
Arrow, Kenneth
Arthur, W. Brian
Asch, Solomon
Asch experiment
asset life, average
asset price distributions
As the Future Catches You (Enriquez)
attribute-based approach
authority
automobile industry
availability heuristic
averages
Axtell, Rob
Babe Ruth effect
baboons
Baer, Gregory
Bak, Per
Barlow, Horace
baseball
basketball
Beat the Dealer (Thorp)
beauty-contest metaphor
behavioral finance. See also loss aversion; psychology of investing
behaviors: anchoring; certainty and; herding; information overload; pattern-seeking
Beinhocker, Eric
belief
bell curve
Benartzi, Shlomo
Bernoulli, Daniel
Bernstein, Peter
Bernstein, William
BetFair
Bet with the Best (Crist)
Bezos, Jeff
blackjack
Black-Scholes options-pricing model
Bogle, Jack C.
bomb search
boom-and-bust phenomenon
Bosch-Domènech, Antoni
boundary rules
Brady commission
brain development
Buffett, Warren
buy-and-hold strategy
Calculated Risks (Gigerenzer)
Calvin, William
Camerer, Colin
Campbell, Donald
capital, tangible vs. intangible
capital-asset pricing model (CAPM)
capital gains taxes
card experiment
Carlile, Paul
cash flow return on investment (CFROI); downturns
cash-flow-to-net-income ratio
categorization
cause and effect; complex adaptive systems and; human explanation for; press reports
cause and effect thinking
cave paintings
centralized control
certainty/uncertainty
Chamberlain, Wilt
Chan, Louis K. C.
change
character traits
chess-game analogy
Christensen, Clayton M.
Churchill, Winston
Cialdini, Robert
circumstance-based approach
Citron, Robert
city-size distributions
classical economic theory
clockspeed; evolution
of investors
Clockspeed: Winning Industry Control in the Age of Temporary Advantage (Fine)
coin-toss experiment
collective: accuracy of; decision making; investment edge; markets created from problem solving See also diversity
Columbia Business School
commitment
communication technology
companies: average asset life; niches
company size: distribution of; growth rates and
competence, circle of
competitive advantage; growth and returns
competitive strategy; clockspeed; fitness landscapes; fundamental questions of; leader/challenger dynamics; managing for long term; new entrants to market; price-earnings ratios; reversion to mean; as simple rules; winning behaviors in chess. See also innovation
complex adaptive systems; cause and effect and; control and; properties and mechanisms; stock market
complexity theory
Complexity (Waldrop)
compliance with requests
computer industry
conformity, preference for
consciousness
consilience; areas to address
Consilience (Wilson)
consistency
constructs
context
control: complex adaptive systems and; loss of
conventions
Cornell, Bradford
corporate routines
Corporate Strategy Board
corpus callosum
correctness, frequency vs. magnitude of
correlation
cost of capital, reversion to
costs: agency; portfolio turnover and
Craven, John
creative destruction
Creative Destruction (Foster and Kaplan)
creative thinking
Crist, Steven
critical state
cycle time
Daimler-Benz Aerospace (DASA)
Damasio, Antonio
Darwin, Charles
decision making: accuracy of collective; analytical; certainty; decentralized systems; decision markets; emotions and; experiential system; frame of; individual vs. collective; input diversity; by insects; markets and; principles; prospect theory; suboptimal; weighing probabilities. See also problem solving
decision markets
decision rules, adaptive
decision trees
deductive processes
Deep Blue
DePodesta, Paul
description
destruction, creative. See creative destruction
determinism
digital language
DiMaggio, Joe
discounted cash flow
discount rates
disk drive industry
distribution; asset price; city size; company size; experience vs. exposure; fat tails normal; power laws and; species
diversity; breakdown in; creative thinking; hard-wiring for; stock market and. See also collective
Dow, Charles
Dow Jones Industrial Average
downturns
“Dow 36,000 theory,”
Dugatkin, Lee
Durand, David
efficiency, of collective problem solving
80/20 rule
Eisenhardt, Kathy
El Farol bar example
Ellis, Charles
Elton, Charles
emotions
engineered systems
Enriquez, Juan
Enron
enterprise
Epstein, Richard
equity funds
equity-risk premium
evaluation, frequency of
evolution: average speed of; of brain; fitness landscapes and; of investors
exit rules
expectations; deductive and inductive processes; extrapolative; leader/ challenger dynamics and
expected value; affect and; loss aversion and; pari-mutuel betting and; probability and
experience
experiential decision making
experts, limitations of
explanations
exposure
Extraordinary Popular Delusions and the Madness of Crowds (MacKay)
extrapolative expectations hypothesis. See also price-earnings ratios
extreme-return days
falsifiability
Fama, Eugene
fat-tail price distributions; herding and; self-organized criticality
feedback, mechanisms; negative; positive
“feel, felt, found” method
financial services
financial statements, inflation and
Fine, Charles
Finucane, Melissa L.
Fisher, Lawrence
fitness landscapes; short vs. long jumps; types of
flight simulators
focus; short-term.See also long term, management for
Fooled by Randomness (Taleb)
Fortune 50,
Foster, Richard
fractal systems
French, Kenneth
frequencies; magnitude vs.
fruit flies (Drosophila melanogaster)
fundamental analysis
Galton, Francis
gambling
Gates, Bill
Gazzaniga, Michael
General Electric
General Theory of Employment, The (Keynes)
Gensler, Gary
Gibrat’s law
Gigerenzer, Gerd
global economy
Go (game)
Gordon, Deborah
Gorilla Game, The (Moore)
Gould, Stephen Jay
Greenspan, Alan
Gross, Bill
gross domestic product (GDP)
growth ratescompany size and; returns and; species distribution; stall point; variance of
growth-stock investing
“Growth Stocks and the Petersburg Paradox” (Durand)
growth-stock valuation
guppies
handicapping
Hanson, Robin D.
Hargadon, Andrew
Harmon, Butch
Hayek, Freidrich
hedge funds
Henry, David
herding
Hewlett-Packard
hieroglyphics
hindsight bias
hitting streaks
Holland, John H.
Hollywood Stock Exchange
honeybees
hot hand phenomenon
Howard, Jack
how-to rules
Human Behavior and the Principle of Least Effort (Zipf)
Huston, Larry
imitation; fat tails and; positive feedback and; suboptimal
impressions
imprinting
inactivity, value of
incentives
index funds
inductive processes
Inefficient Markets: An Introduction to Behavioral Finance (Shleifer)
inflation
Influence: The Psychology of Persuasion (Cialdini)
information
information cascades
information flows
Innocentive
innovation communication technology; considered by market; creation of wealth; creative destruction; dynamics of; leader/ challenger dynamics; overproduction and pruning; phases of; recombination See also competitive strategy
Innovation: The Attacker’s Advantage (Foster)
Innovator’s Solution, The (Christensen and Raynor)
insects; ants; honeybees; stock market parallels with
instructions
intelligence, diversity and
Internet
intuition
investment business
investment philosophy: decision-making principles; evaluation of winners; internalizing; long-term perspective; process vs. outcome; scouting report. See also psychology of investing
investment process
investment profession
investors: average holding period diversity of evolution of understanding of power laws
Iowa Electronic Markets (IEM)
janitor’s dream
jellybean-jar experiment
Johnson, Norman
judgment
Kahneman, Daniel; decision-making model
Kaplan, Sarah
Karceski, Jason
Kasparov, Garry
Kaufman, Peter
Keynes, John Maynard
Knight, Frank
Krugman, Paul
kurtosis
lack of representation
Lakonishok, Joseph
Laplace, Pierre Simon
Laplace’s demon
leader/challenger dynamics
LeDoux, Joseph
Legg Mason Value Trust
Leinweber, David
Lev, Baruch
Lewis, Michael
life cycle: clockspeed of companies of fruit flies of industries
liking
limited-time offers
linear models
lions
liquidity
lollapalooza effects
long term, management for strategies for winners strategy as simple rules
Long Term Capital Management
long-term investment, loss aversion and
Lorie, James
loss, risk and
loss aversion equity-risk premium exhibits myopic portfolio turnover ratio of risk to reward utility
lottery players
Lowenstein, Roger
luck
MacGregor, Donald G.
MacKay, Charles
Malkiel, Burton
Mandelbrot, Benoit B.
market capitalization
markets: bubbles and crashes collective decisions and decision effect of psychology on efficiency of innovation considered by interpreting new entrants and competitive strategy parallels with insect colonies
market timing
Mastering the Dynamics of Innovation (Utterback)
mathematical expression, symbols for
maze problem
McKinsey Quarterly
mean, reversion to
mental-models approach
Milgram, Stanley
Miller, Bill
Moneyball (Lewis)
money managers scouting report and stresses on
Moore, Geoffrey
Moore’s Law
Morningstar
multidisciplinary perspective. See consilience
Munger, Charlie
mutual funds
myopic loss aversion
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