Causal Ambiguity

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Description of Causal Ambiguity. Explanation.

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Causal ambiguity of share prices...Definition Causal Ambiguity. Description.


Causal Ambiguity is the situation where it is hard or even impossible to relate the consequences or effects of a phenomenon to its initial states or causes.

 

One area were this phenomenon is well known is the development of the prices of shares, options, futures, and similar products on exchanges (picture).

 

But is phenomenon is also very common in strategy where it is often impossible to determine whether the success of a company is due to solid strategic thinking or due to sheer luck.

That is particularly relevant for the Resource-based View, because it is a condition that prevents both a firm and its rivals from determining the causes of the firm's above average  performance. This may arise because a competence is complex, tacit, or firm specific; or because the causal path from the competence to performance is impossible to specify; or because a large number of competencies interact in ways that resist precise articulation and imitation.


Also causal ambiguity applies to leadership: are the actions, charisma or vision of the CEO the reason for the success of his corporation, or was he just at the right place at the right moment?


Causal Ambiguity Forum
  Examples of Causal Ambiguity
Many are intimidated just by hearing the words 'causal ambiguity' thinking they might not understand the concept. Well, I tried my best to simplify it with 2 examples:

EXAMPLE OF CAUSAL AMBIGUITY IN DAILY LIFE
  • Let's say a ...
     
 
  Quotes on Causes, Effects and Consequences
When anger rises, think of the consequences.
Confusius

I believe that we are solely responsible for our choices, and we have to accept the consequences of every deed, word, and thought throughout our lifetime.
Elisabeth K...
     
 

Causal Ambiguity Special Interest Group


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How to Improve Strategic Decision Making?

In this video Michael Mauboussin, Credit Suisse's Head of Financial Strategies, briefly explains parts of Philip E. Tetlock's Model of 3 areas that ar...
Usage (application): Strategic Decision Making, Cognitive Bias, M&A, Corporate Finance
 
 

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Compare with: Cognitive Bias  |  Paralysis by Analysis  |  Analogical Strategic Reasoning  |  Bounded Rationality  |  Strategy Dynamics  |  Feedback Loops  |  Tacit Knowledge  |  TRIZ  |  Lateral Thinking  |  Synectics  |  Chaordic Organization

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This ends our Causal Ambiguity summary and forum.

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