Of Chimps and CEOs

jfc October 9th, 2007 Trends

These two articles were on Drudge today and I see an interesting correlation between the two. Here are the articles and key excerpts from them:

UPI: Chimps choose more rationally than humans

Researchers from the Max Planck Institute of Evolutionary Anthropology in Leipzig studied the chimp’s choices by using an economic game with two players. In the game, a human or chimpanzee who receives something of value can offer to share it with another.

If the proposed share is rejected, neither player gets anything.

Humans typically make offers close to 50 percent of the reward. They also reject as unfair offers of significantly less than half of the reward, even though this choice means they get nothing.

The study, however, showed chimpanzees reliably made offers of substantially less than 50 percent, and accepted offers of any size, no matter how small.

Financial Times: Corporate America racked by uncertainty

Conflicting economic indicators and volatile business conditions make it difficult to take strategic decisions such as whether to hire or fire staff, or increase or slash capital expenditure, business leaders told the Financial Times.

Theodore Chandler, the chief executive of LandAmerica, one of the country’s largest providers of property services, said this was the “most perplexing market” he had ever been in because the economy had remained healthy despite the housing slowdown.

The key point of the chimp story isn’t so much that the chimps choose more rationally but, in their limited intelligence, choose to pick more cautiously. It seems our CEO population has something in common with them since they too are unwilling to take risks in the face of uncertainty. I’d guess a study of CEO’s would show that they too would “reliably made offers of substantially less than 50 percent, and accept offers of any size, no matter how small.” I know from personal experience that Mr. Chandler makes these kinds of choices.

Is your CEO a fearful chimp or a human entrepreneur? Leave me a comment and let me know.

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