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Why did VHS, an inferior video recorder
technology, succeed in the marketplace, driving the superior
Betamax out of business? Why do big-budget, acclaimed movies
sometimes flop at the box office, while low-budget, idiosyncratic
films become huge hits? The answers to these questions,
says Paul Ormerod, remind us that economics is a science
based on the workings of human society, as unpredictable
an entity as there is. "Conventional economics is mistaken,"
claims Ormerod, "when it views the economy and society
as a machine, whose behavior, no matter how complicated,
is ultimately predictable and controllable."
In this cogently and elegantly argued analysis
of why human beings persist in engaging in behavior that
defies time-honored economic theory, Ormerod also explains
why governments and industries throughout the world must
completely reconfigure their traditional methods of economic
forecasting if they are to succeed and prosper in an increasingly
complicated global marketplace.
Paul Ormerod has been head of the Economic
Assessment Unit at The Economist and a visiting professor
at the Universities of London and Manchester. He lives in
London.
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