Check it out: For prices starting at a mere $50,000, you can get important, mathematically-generated insights into how your counterparties in a transaction are likely to behave. The service is offered by Bruce Bueno de Mesquita, a professor of politics at New York University, a senior fellow at the Hoover Institution and a consultant too.
The professor, author of a
book called The Predictioneer's Game, does it with a game-theory model. And as the Wall Street Journal's Dennis Berman writes in a Tuesday
column, Bueno de Mesquita "remains confident that with rigorous data his model could predict outcomes with uncommon success."
Ah, yes: nifty mathematical models that predict human behavior based on rational expectations theory. The same basic idea that helped blow a huge hole in the world's financial plumbing last year. Why not put it to work in M&A right away?
To be fair, the professor's model has a history, having been funded by the Pentagon and CIA for use in the Cold War. Maybe his book, which apparently ranges far and looks at such contemporary issues as Israeli-Palestinian relations, is even good. He did get George Schultz to blurb it.
It's strange, though, to see the M&A angle explored on page C1 of the Wall Street Journal without any examination of a basic premise that, at least in the financial world, is looking pretty tattered these days. Just a half-grain of salt in the form of a snipe at Bueno de Mesquita's "self regard."
But wait: here comes another Tuesday column to the
rescue. It's David Brooks writing in the New York Times about social cognitive neuroscience, which explores the biological basis of often-irrational social behavior. Brooks reports that the field is burgeoning but still new. A quick web search indicates that only a few researchers have thought about M&A so far. Just wait, though.-
Kenneth Klee
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Another misapplication of mathematical method trying to predict the unpredictable, save your $50K and go to a fortune teller.
As a long time follower of the cognitive sciences and the marketplace I agree that there are many lessons to be learned from that field applied to economic policy, but see this company as being the latest in the line of the Long Tree Capital Management style of brainy guys playing with themselves and someone else's money that always end badly.