Ep 5 Finance Professors on Why Leaders Can’t “Agree to Disagree” | Summary and Q&A

TL;DR

In business decision making, if there is disagreement, someone is making a mistake, as shown by Nobel Prize winner Robert Aumann's insight. Disagreement stems from different goals, biases, and the inability to exchange subjective probabilities.

Key Insights

• 👨‍💼 Disagreement in business decision making indicates someone is making a mistake and not aligning with the same objectives.
• 🥅 Disagreement can stem from different goals, biases, and the confirmation bias.
• 💁 Exchange of information is not necessary, but sharing subjective probabilities helps reach a common conclusion.
• 🥺 More data can lead to increased disagreement as people find supporting evidence for their views.
• 💁 Disagreement should prompt investigation into the underlying mistakes, including differing objectives and weighing information incorrectly.
• ❓ The ability to admit mistakes, learn, and update beliefs is crucial for reducing disagreement.
• 🦡 Different goals and attributing bad intentions to others are common reasons for disagreement.
• 🔨 Disagreement is a diagnostic tool to identify mistakes and opportunities for learning and improvement.

Transcript

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Questions & Answers

Q: Can people agree to disagree about whether a number is prime?

No, a prime number is either prime or not, and if there is disagreement, it means one person is making a mistake. The only way to know if a number is prime is through a brute force algorithm that checks every divisor.

Q: Can people agree to disagree about the shortest route between two places?

No, if two people have the same information and access to the same maps, either a route is the shortest or it isn't. Disagreement arises when one person has more information about traffic conditions than the other.

Q: Why has disagreement increased in the modern world despite the access to vast amounts of data?

Disagreement is driven by different goals, biases, and the confirmation bias, where people seek confirming evidence and ignore contradictory evidence. More data allows people to find items that support their views, leading to increased disagreement.

Q: Is it possible for there to be information that cannot be exchanged between people?

When it comes to exchanging subjective probabilities in business decision making, the specific information may not be exchanged, but the probabilities can be shared. The focus is on reaching the same conclusion based on the available information and probabilities.

Summary & Key Takeaways

• In business decision making, if there is disagreement, it means someone is making a mistake.

• Disagreement arises from different goals, biases, and the inability to exchange subjective probabilities.

• Nobel Prize winner Robert Aumann's insight shows that even with different information, people cannot agree to disagree, as long as they have the same objectives.