Advanced Search
MyIDEAS: Login

Beyond Gaussian Averages: Redirecting Management Research Toward Extreme Events and Power Laws

Contents:

Author Info

  • Pierpaolo Andriani

    ()
    (Durham Business School)

  • Bill McKelvey

    ()
    (Anderson School of Management, UCLA)

Registered author(s):

    Abstract

    Practicing managers live in a world of ‘extremes’ but management research is based on Gaussian statistics that rule out those extremes. On occasion, deviation amplifying mutual causal processes among interdependent data points cause extreme events characterized by power laws. They seem ubiquitous; we list 80 kinds of them – half each among natural and social phenomena. We draw a ‘line in the sand’ between Gaussian (based on independent data points, finite variance and emphasizing averages) and Paretian statistics (based on interdependence, positive feedback, infinite variance, and emphasizing extremes). Quantitative journal publication depends almost entirely on Gaussian statistics. We draw on complexity and earthquake sciences to propose redirecting Management Studies. No statistical findings should be accepted into Management Studies if they gain significance via some assumption-device by which extreme events and infinite variance are ignored. The cost is inaccurate science and irrelevance to practitioners.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dro.dur.ac.uk/10371
    File Function: main text
    Download Restriction: no

    Bibliographic Info

    Paper provided by Durham University Business School in its series Working Papers with number 2006_03.

    as in new window
    Length:
    Date of creation: 19 Jun 2006
    Date of revision:
    Handle: RePEc:dur:durham:2006_03

    Contact details of provider:
    Postal: Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England
    Phone: +44 (0)191 334 5200
    Fax: +44 (0)191 334 5201
    Email:
    Web page: http://www.dur.ac.uk/business
    More information through EDIRC

    Related research

    Keywords: Power laws; fractals; Gaussian; Pareto; Mandelbrot; distribution; robustness; interdependence; positive feedback; extremes; complexity; earthquakes; normal science;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Tim Bollerslev, 1986. "Generalized autoregressive conditional heteroskedasticity," EERI Research Paper Series EERI RP 1986/01, Economics and Econometrics Research Institute (EERI), Brussels.
    2. Levy, Moshe & Solomon, Sorin, 1997. "New evidence for the power-law distribution of wealth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 242(1), pages 90-94.
    3. H.l, 1977. "Introduction," Population (french edition), Institut National d'Études Démographiques (INED), vol. 32(1), pages 129-130.
    4. Zanette, Damián H & Manrubia, Susanna C, 2001. "Vertical transmission of culture and the distribution of family names," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 295(1), pages 1-8.
    5. Abraham Ravid, S., 2004. "Hollywood Economics: How extreme uncertainty shapes the film industry, Arthur De Vany; Routledge, London and New York, 2004, pages xvi + 308, ISBN 0-415-31260-4 (hbk), $135.00, 0-415-31261-2 (pbk), $3," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 895-898, December.
    6. H.l., 1977. "Introduction," Population (french edition), Institut National d'Études Démographiques (INED), vol. 32(1), pages 297-298.
    7. Nonaka, Ikujiro & Nishiguchi, Toshihiro, 2001. "Knowledge Emergence: Social, Technical and Evolutionary Dimensions of Knowledge Creation," OUP Catalogue, Oxford University Press, number 9780195130638.
    8. H. L, 1977. "Introduction," Population (french edition), Institut National d'Études Démographiques (INED), vol. 32(1), pages 33-34.
    9. Forni, Mario & Lippi, Marco, 1997. "Aggregation and the Microfoundations of Dynamic Macroeconomics," OUP Catalogue, Oxford University Press, number 9780198288008.
    10. Carley, Kathleen M., 1996. "A comparison of artificial and human organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 175-191, November.
    11. S. Battiston & M. Catanzaro, 2004. "Statistical properties of corporate board and director networks," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, vol. 38(2), pages 345-352, 03.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:dur:durham:2006_03. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IT Office).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.