1. What is the "equity premium puzzle"? Can you give a personal example?

2. Why do you suppose that "work on self-control problems such as procrastination is catching on most quickly"? Can you provide an example and explanation of why people do this?

3. Why do you think it has taken so long for the "human face" to be widely recognized in decision-making analysis and practice?

Organizational Behavior Case: Harry Smart-Or Is He?

Harry Smart, a very bright and ambitious young executive, was born and raised in Boston and graduated from a small New England college. He met his future wife, Barbra, who was also from Boston, in college. They were married the day after they both graduated cum laude. Harry then went on to Harvard, where he received an MBA, and Barbra earned a law degree from Harvard. Harry is now in his seventh year with Brand Corporation, which is located in Boston, and Barbra has a position in a Boston law firm.

As part of an expansion program, the board of directors of Brand has decided to build a new branch plant. The president personally selected Harry to be the manager of the new plant and informed him that a job well done would guarantee him a vice presidency in the corporation. Harry was appointed chairperson, with final decision-making privileges, of an ad hoc committee to determine the location of the new plant. At the initial meeting, Harry explained the ideal requirements for the new plant. The members of the committee were experts in transportation, marketing, distribution, labor economics, and public relations. He gave them one month to come up with three choice locations for the new plant

A month passed and the committee reconvened. After weighing all the variables, the experts recommended the following cities in order of preference: Kansas City, Los Angeles, and New York. Harry could easily see that the committee members had put a great deal of time and effort into their report and recommendations. A spokesperson for the group emphasized that there was a definite consensus that Kansas City was the best location for the new plant. Harry thanked them for their fine job and told them he would like to study the report in more depth before he made his final decision.

After dinner that evening he asked his wife, "Honey, how would you like to move to Kansas City?" Her answer was quick and sharp. "Heavens, no!" she said, "I've lived in the East all my life, and I'm not about to move out into the hinterlands. I've heard the biggest attraction in Kansas City is the stockyards. That kind of life is not for me." Harry weakly protested, "But, honey, my committee strongly recommends Kansas City as the best location for my plant. Their second choice was Los Angeles and the third was New York. What am I going to do?" His wife thought a moment and then replied, "Well, I would consider relocating to or commuting from New York, but if you insist on Kansas City, you'll have to go by yourself!"
The next day Harry called his committee together and said, "You should all be commended for doing an excellent job on this report. However, after detailed study, I am convinced that New York will meet the needs of our plant better than Kansas City or Los Angeles. Therefore, the decision will be to locate the new plant in New York. Thank you all once again for a job well done."