Surprise, Surprise 2

At the ERM Symposium, Michael Thompson presented the Surprise Matrix.  Several people asked for copies, so here it is…

There are 16 possibilities.  The rows represent the expectations based upon the risk attitude.

The Pragmatists expect things to be unsettled.  They can be surprised by a recession, where things are consistently bad, a boom where they are consistently good and by normal markets with moderate volatility.  THey are expecting high volatility and unpredictability.

The Conservators expect a recession anr are surprised by the other three environments.

The Maximizers expect a boom and the Managers expect a normal market.

By the way, both neo classical economics and ERM are based upon the managerial mind set.  So you can see how they will be surprised.

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