The Chicken Farm bias
By Luc Albinski (MBA ’95)
Two thousand chickens are slaughtered worldwide every second. Most, about forty billion or so, live in factory farms and enjoy an unenviable life most certainly, but not an unpredictable one. An unhealthy, carbohydrate heavy diet is served with mind-numbing predictability for forty-one days. On the forty-second, the chickens are shackled upside down and their throats are slit. For a forced-fed chicken, an intelligent and social bird, the regularity of the first forty-one days creates a compelling sense that next day will be drearily similar to the claustrophobic, overcrowded conditions of days gone by. Each successive day confirms this truth until, of course, the forty-second day does not.
Investors are victims of the same Chicken Farm bias. They believe that the future will not be very different from the past and excessively discount the probability of very different events occurring.
About the Author
Luc is the co-founder and co-managing partner of Vantage’s mezzanine funds as well as being one of the two executive members of the mezzanine funds’ investment committees. Prior to joining Vantage he spent time at several well known management consultant firms, the International Finance Corporation (IFC) and Brait.
He has a Master of Business Administration from the INSEAD business school in Fontainebleau, France and an undergraduate economics degree at the Institute for Political Studies in Paris.