Appplied Behavioural Finance - Insights Into Irrational Minds and Market PDF

Strictly Private & Confidential
Applied
Applied Behavioural
Behavioural Finance:
Finance:
Insights
Insights into
into irrational
irrational minds
minds and
and market
market
James Montier: Global Equity Strategy
1
“The brain is my second favourite organ”
Woody Allen
“The market can stay irrational, longer than you can stay solvent”
JMK
“There is nothing so dangerous as the pursuit of a rational investment policy in an irrational world”
JMK
“Economists are people who look at reality, and wonder whether it would work in theory”
Ronald Reagan
2
Taxonomy
Taxonomyofofbiases
biases
Biases
Self Deception Heuristic Simplification Social Interaction

(Limits to learning) (Information processing errors)
Overoptimism Representativeness Emotion/Affect Imitation

Illusion of control
Illusion of knowledge
Overconfidence Framing Mood Contaigon
Self Attribution bias Catergorization Self control Herding

(Hyperbolic discounting)
Confirmation bias Anchoring/Salience Ambiguity aversion Casacades
Hindsight bias Availability bias
Regret theory Cue Competition
Cognitive dissonance Loss aversion/Prospect theory
Global Strategy Unit 2
3
4
Cognitive
dissonance
Biased
assimilation
Self
Halo effect
Average American
Fundamental
me
notme
3
attribution
else,not
error
Everyoneelse,
Reactive
spot:Everyone
devaluation
blindspot:
Self interest
biasblind
Global Strategy Unit

Thebias
Self serving
The
4
Dual
Dualprocessing
processingtheories
theoriesofofthought
thought
System One/ X- system System Two C- System

Intuitive Reflective
Process Characteristics
Automatic Controlled
Effortless Effortful
Associative Deductive
Rapid, parallel Slow,serial
Process opaque Self aware
Skilled action Rule application
Content on which processes act
Affective Neutral
Causal propensities Statistics
Concrete, specific Abstract
Prototypes Sets
5
Neuropsychology
Neuropsychologyofofdual
dualprocessing
processing (Liberman)
(Liberman)
X X-system X C-system
X Amygdala X Anterior cingulate cortex
X Basal ganglia X Prefrontal cortex
X Lateral temporal cortex X Medial temporal lobe
6
Klein’s
Klein’sfactors
factorsfor
forNDM
NDM(X-system)
(X-system)
X System X is more likely when:
X The problem is ill-structured & complex
X Information is incomplete, ambiguous and changing
X Goals are ill defined, shifting and competing
X Stress is high (time constraints and/or high stakes)
X Decisions involve multiple participants
7
X-system
X-systemcan
candominate
dominate
3.1
Masters
3
2.9
2.8
Class B players
2.7
2.6
2.5
1 2
Blitz (6 sec per move) Standard (2.25 mins per move)
8
Affect
Affect
The rational model
X Perceptions -> attitudes
X I like this person because I think she is smart and honest
X I like this company because it is low risk and high return
The affect model
X Attitude -> perceptions
X Because like this person, I think she is smart and honest
X Because I like this company, it is low risk and high return
9
Biased
Biasedassimilation:
assimilation:When
Whenattitudes
attitudesdrive
driveperceptions
perceptions
2
1.5
Studies supporting death penalty
1 Studies opposing death penalty
0.5
0
-0.5
-1
-1.5
-2
-2.5
Participants pro death penalty Participants anti death penalty
10
Panda
Pandaand
andaffect
affect
24
22
20 Pictures
18
16
14
12
Dots
10
1 Panda 4 Panda
11
The
Thedark
darkside
sideofofemotion
emotion
90
80
70
60
50
40
30
20
10
0
No invest Invest and lost Invest and won
Target patients Norm al players Patient controls
12
No
Nosign
signofoflearning
learning
90
85
80
75
70
65
60
55
50
45
40
1st 5 2nd 5 3rd 5 4th 5
Target patients Normals Patient controls
13
Self
Self deception
deception or
or perception
perception isis reality
reality
14
Self
Selfdeception
deception
Over-optimism
X People tend to exaggerate their own abilities
X Illusion of control
X Illusion of knowledge
Over-confidence
X People are surprised more often than they expect. Not well calibrated.
X Confidence intervals around a forecast which should yield 2% error,

actually get a 30-40% error
15
Overconfidence
Overconfidence
100
90
80
70
60 Weather men
50
40
30
Doctors
20
10
0
0 10 20 30 40 50 60 70 80 90 100
16
Overconfidence
Overconfidenceand
andinvestment
investment
0.9
0.8
0.7
0.6 Lay people
0.5
0.4
P rofessionals
0.3
0.2
0.1
0.55 0.65 0.75 0.85 0.95 1
17
Overconfidence
Overconfidencedriven
drivenby
bythe
theillusion
illusionofofknowledge
knowledge
8.0 Laypeople Professionals
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Previous Other knowledge Intuition Guessing
month's results
18
Does
Doesmore
moreinformation
informationimprove
improveyour
youraccuracy?
accuracy?
19
The
Thewalk
walkdown
downtotobeatable
beatableearnings:
earnings:
average
averagescale
scaleofofforecast
forecasterror
erroratatthe
theearnings
earningslevel
level––US
US(%,
(%,1986-2000)
1986-2000)
20
15
Forecast Error
10
0
-23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0
-5
Months
Source: DrKW Macro research and IBES
20
Trading
Tradingisishazardous
hazardoustotoyour
yourwealth
wealth
30
Net return Turnover
20
10
1 2 3 4 5
Low Turnover High turnover
21
Should
Shouldtraders
tradersbe
bewomen?
women?
100
80 All Women All Men Single Single

Women Men
60 0
40
-2
20
-4
0
-6
All Women All Men Single Single
Women Men
-8
22
Bubble
Bubbleechoes
echoesininthe
thelaboratory
laboratory
10
Once experienced
9
Mixture of twice experienced and novice players
(Ratio of 4/7)
8
7
Novices
6
3
Fundamental value
2
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Source: Ackert and Church
23
Keynes’s
Keynes’sbeauty
beautycontest
contestand
andinvestment
investmentprofessionals
professionals
10
9 Over 1000 players
Average number picked 26
8
2/3rds: 17
7 Average level of thinking 1.6 steps
6
5
4
3
2
1
0
100
40
55
60
65
80
90
30
35
45
50
85
95
10
15
20
25
70
75
0
5
24
Self
Selfdeception
deception
E 4 K 7
25
Self
Selfattribution
attributionbias
bias
X Good outcomes are a testament to your skill, bad outcomes are sheer bad
luck.
X How often do you say that’s just a blip?
26
Hindsight
Hindsightbias
bias
X It is a common observation that events in the past appear simple,

comprehensible, and predictable in comparison to events in the future.
Everyone has had the experience of believing that they knew all along the
outcome of a football game, a political election or a business investment. The
hindsight bias is the tendency for people with outcome knowledge to believe
falsely that they would have predicted the reported outcome of an event. After
learning of the occurrence of an event, people tend to exaggerate the extent to
which they had foreseen the likelihood of its occurrence.
27
Psychological
Psychological Foundations
Foundations
II. Heuristic Simplification
Or
There is no such thing as context free decision making
28
Heuristic
HeuristicSimplification
Simplification
X Conservatism Bias
X Hard to give up a view once it has formed. Leads to:
X Anchoring and slow adjustment
X Depends upon saliency of the anchor
X i.e. analysts will change their views from their forecasts slowly
29
-8
-6
-4
-2
0
2
4
6
8
10
12
Jan-86
Jan-87
Analysts
Global Strategy Unit

Jan-88
Analystslag
Earnings
Jan-89
lagreality
reality
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
29
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Forecasts
Jan-01
Jan-02
Jan-03
30
The
TheFed
Fedmodel
model
1.70 1.70
1.60 1.60
1.50 1.50
1.40 1.40
1.30 1.30
1.20 1.20
1.10 1.10
1.00 1.00
0.90 0.90
0.80 0.80
0.70 0.70
0.60 0.60
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Source: Thomson Financial Datastream
31
Equities
Equitiesvs.
vs.bonds
bondsininthe
theUS:
US:the
theFed
Fedmodel
modelsince
sincethe
the1950s
1950s
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Apr-71
Apr-95
Apr-01
Apr-74
Apr-77
Apr-80
Apr-83
Apr-86
Apr-98
Apr-04
Apr-53
Apr-59
Apr-68
Apr-56
Apr-62
Apr-65
Apr-89
Apr-92
Source: DrKW Macro research
32
Simple
Simplemaths
mathsleads
leadstotoanchoring
anchoring
X 8*7*6*5*4*3*2*1 = median answer 2250
X 1*2*3*4*5*6*7*8 = median answer 512
X Actual answer = 40,320
33
Estate
Estateagents
agentsand
andanchoring
anchoring
160,000
150,000
140,000
130,000
120,000
110,000
100,000
90,000
80,000
1 2
Given Appraisal value
Listing Price Lowest acceptable offer
34
Anchoring
Anchoringand
andvaluation
valuation
60 4
Low SS No.
High SS No. 3.5
50
Ratio
3
40
2.5
30 2
1.5
20
10
0.5
0 0
Cordless Cordless Average Rare Wine Design Belgian
mouse keyboard Wine book Chocolates
35
Cheap?
Cheap?Surely
Surelysome
somemistake
mistake--US
US
Various valuation measures (x)

Current level 1997-2004 Longrun*
Trailing reported PE 21.1 29.0 14.0

Operating PE 17.5 22.5 14.9
Forward operating PE 15.6 19.7 12.5
PB 3.0 4.0 2.4
PC 13.0 14.9 9.2
Graham and Dodd PE 27.5 37.0 16.4
Hussman PE 19.3 23.5 11.0
Trend PE 22.0 29.0 13.9
* the term long run refers to the longest run of data we have which varies from starting in the 1870s to starting in the mid 1980s. All long
run measures end at the end of 1996, effectively stripping out the bubble years.
36
Psychological
Psychologicalfoundations
foundations
X Linda is 31, single, outspoken and

very bright. She majored in
philosophy. As a student she was
deeply concerned with issues
surrounding equality and
discrimination.
X Is it more likely that Linda is
X Works in a bank
X Works in a bank and is active in

the feminist movement
37
Psychological
PsychologicalFoundations
Foundations
Representativeness Heuristic
X Aka law of small numbers – belief that random samples of a population

will resemble each other and the population more closely than statistical
sampling theory would predict.
X Which is more likely HTHTTH or HHHTTT?
38
Earnings
Earningsgrowth
growthas
asrepresentativeness
representativeness
40.0 Trailing 5 year Forward 5 year
Actual 1 Actual 3
35.0
Actual 5
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Q1 Q2 Q3 Q4 Q5
Source:
Source: Montier,
Montier, and Chan
& Chan et al et al
39
Great stories≠≠Great
Greatstories Greatinvestments
investments
18
16
14
12
10
8
6
4
2
0
Glamour (1) Glamour (2) Value (9) Value (10)
40
Under-reaction
Under-reactionand
andOver-reaction
Over-reaction
X Information is judged in two dimensions – strength and weight
X Letter of reference – judged by strength i.e. number of appealing traits
X Weight is neglected. i.e. who wrote it
41
Over-reaction
Over-reactionand
andUnder-reaction
Under-reaction::Information
Informationanalysis
analysis
Weight
Low High
Low Under-
Strength reaction
High Over-
reaction
42
Analysis
Analysisofofover-reaction
over-reactionand
andunder-reaction
under-reaction
Under-reaction Over-reaction
X Dividend omissions, initiations X IPOs, SEOs
X Earnings surprises X High earnings growth
X Analyst recommendations X Cap ex.
X Z-scores X Buybacks on growth stocks
X Buybacks on value stocks X Quarterly earnings announcements
X Goodwill write-offs
X Valuations
43
Bias
BiasofofJudgement
Judgement
X Availability Bias
X Which is a more likely cause of death in the US – being killed by a

lightening strike or as a result of a shark attack?
X Shark attacks receive more publicity, they are easier to imagine (thanks to
Jaws). However, the chance of dying from a lightening strike are 30x
greater than chances of being killed by a shark.
44
Narrow
NarrowFraming
Framing
X Context sensitivity. Aka frame

dependence or mental accounting.
X We can’t see through how things are

actually framed.
X Separate funds for separate

purposes – holiday money, house
keeping
45
When
Whenisisaabuyback
buybacknot
notaabuy
buyback?
back?
announced,
announced,actual
actualand
andnet
netshare
sharebuy-backs
buy-backsininthe
theUS
US
350,000
300,000
Announced
250,000
200,000
150,000
Completed
100,000
50,000 Net
-50,000
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
46
Repurchases
Repurchases&&their
theirimpact:
impact:
dividend,
dividend,repurchase
repurchase&&total
totalyield
yieldfor
forthe
theS&P500
S&P500(%)
(%)
6.00
5.00
4.00
3.00
Total yield
2.00 Dividend yield
1.00 Net repurchase yield
0.00
-1.00
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
47
Prospect
ProspectTheory
Theory
X People value changes not states. 2

Rational man tries to maximise the
utility of wealth. 0
-20 -15 -10 -5 0 5 10 15 20
X Real people worry far more about -2
gains and losses than levels.
-4
-6
-8
-10
-12
48
Stock
Stockbroker
brokerSample
Sample
25
20
15
10
0
50
00
10
10
11
15
20
32
50
00
10
00
10
49
Prospect
Prospecttheory
theory
• Leads to
• Endowment effect
• Status quo bias
• Disposition effect
50
Endowment
Endowmenteffect/Status
effect/Statusquo
quobias
bias
8
Sellers Choosers Buyers
7
6
5
4
3
2
1
0
1 2 3
51
US
USmutual
mutualfund
fundmanagers
managersand
andthe
thedisposition
dispositioneffect
effect(1980-2002)
(1980-2002)
25
Proportion of losses realized
Proportion of gains realized
20
15
10
Low return 2 3 4 High All
return
Source: Frazzini (2004)
52
Top
Toptips
tipsfor
forbetter
betterdecision
decisionmaking
making
X This applies to me, you and everyone else
X You know less than you think you do
X Be less certain in your views, aim for timid forecast and bold choices
X Don’t get hung up on one technique tool, approach or view – flexibility and
pragmatism are the order of the day
X Listen to those who don’t agree with you
53
Top
Toptips
tipsfor
forbetter
betterdecisions
decisions
X You didn’t know it all along, you just think you did
X Forget relative valuation, forget market prices, work out what the stock is worth
(Use reverse DCFs)
X Don’t take information at face value, think carefully about how it was presented
to you
X Don’t confuse good firms with good investments, or good earnings growth with
good returns
54
Top
Toptips
tipsfor
forbetter
betterdecisions
decisions
X Vivid, easy to recall events are less likely than you think they are, subtle
causes are underestimated
X Try to focus on facts, not stories
X Sell your losers and ride your winners
55
Beating
Beatingthe
thebiases
biases
X Being aware of the biases is not enough. It is just an important first step.
X Need to create a framework that incorporates mental best practice. Easier said
than done. Mental bad habits are persistent.
X The good news, we continue to create new brain cells throughout our lives.
56
Strictly Private & Confidential
Applied
Applied Behavioural
Behavioural Finance:
Finance:
Are
Are two
two heads
heads better
better than
than one?
one?
The
The psychology
psychology ofof group
group decisions
decisions
James Montier: Global Equity Strategy
57
“Madness is a rare thing in individuals – but in groups...it is the rule”
Friedrich Nietzsche
“To associate with other like-minded people in small, purposeful groups is for the great majority of
men and women a source of profound psychological satisfaction..”
Aldous Huxley
“Deliver us from committees”

Robert Frost
“Committees are groups of people who keep minutes but waste hours”
Berle Milton
“A committee is an animal with four back legs”

John le Carre
“A committee is a group of the unwilling, chosen from the unfit, to do the unnecessary “
Unknown
58
Types
Typesofofgroups
groups
¾Statistical groups = large number of people asked for an answer, take the mean.
¾Deliberative groups = discussion is necessary
¾Evidence suggests that statistical groups outperform deliberative groups and

individuals
¾E.g. when judging the number of beans in a jar, the group average is almost always
better than the vast majority of the individual members. In one such experiment, a
group of 56 students was asked about a jar containing 850 beans; the group estimate
was 871, a better guess than all but one of the students
59
Statistical
Statisticalgroups
groups
¾ Only work when:
¾ People are unaffected by others’ decisions (errors are uncorrelated)
¾ Probability of being correct must be independent of the probability of

everyone else being correct
¾ The participants must be unaffected by their own vote possibly being

decisive
¾ When participants have some idea of the answer.
¾ Anchors are avoided
60
Deliberative
Deliberativegroups
groups
¾ Such groups seem to amplify:
¾ Representativeness
¾ Framing
¾ Overconfidence (simple repetition of views leads to people having greater

confidence)
¾ Anchoring
¾ Availability
61
The
Theestablishment
establishmentofofnorms
norms(Sherif
(Sherif1936)
1936)
8
7 1
6 2
3
5
4
3
2
1
0
Alone Session 1 Session 2 Session 3
62
Conformity
Conformity(Asch
(Asch1955)
1955)
63
¾ On 12 of the 18 rounds, confederates unanimously agreed on a wrong answer
¾ ¾ of participants agreed with the confederates in at least one round. Half

agreed in 6 or more rounds. Only 25% resisted in all rounds!
64
Does
Doesgroup
groupsize
sizematter?
matter? (%
(%conforming
conformingtotowrong
wronganswers)
answers)
35
30
25
20
15
10
0
1 2 3 4 15
65
Herding
Herdingwhen
whenuncertain
uncertain––Baron
Baronetetalal
4
Low uncertainity
3.5 High uncertainty
3
2.5
2
1.5
1
0.5
0
Unimportant Important
66
Sharing
Sharinginformation
information(Stasser
(Stasseretetalal1989)
1989)
80
70 Shared
Unshared
60
50
40
30
20
10
0
Unstructured Structured
67
Why
Whyare
arewe
weso
sobad
badatatsharing
sharinginformation?
information?
¾ Shared information is more likely to be discussed and repeated and this will
influence the individuals in the group, and hence influence the group’s eventual
outcome.
¾ Social pressure
¾ Cascades
68
Social
Socialpressure
pressure::Those
Thosewho
whoconform
conformare
arerewarded
rewarded(Wittenbaum
(Wittenbaumetetalal1999)
1999)
7
6.8
6.6 Self
6.4 Others
6.2
6
5.8
5.6
5.4
5.2
5
Shared Unshared
69
Cascades
Cascades
Cascade creation: Actual pot used B
Player 1 2 3 4 5 6
Private a a b b b b
signal
Decision A A A A A A
Source: Anderson and Holt (2004)
70
Group
Grouppolarisation
polarisation
• Group polarization is the tendency for members of a group to end up in a more

extreme position in line with their original beliefs after talking to one another.
The increased confidence in view mentioned earlier, begins to create feedback
into the extremity of view, generally creating a loop of increased confidence in
more and more extreme views
71
Groupthink
Groupthink
¾ A tendency to examine too few alternatives
¾ A lack of critical assessment on each other’s ideas
¾ A lack of contingency plans
¾ Poor decisions are often rationalized
¾ Illusion of group invulnerability and shared morality
¾ True feelings and beliefs are suppressed
¾ Illusion of unanimity is maintained
¾ Mind guards are appointed to protect the group from negative information
72
Solutions
Solutions
¾ Secret ballots
¾ Devil’s advocates
¾ Authentic dissent
¾ Respect for other group members
73
Beware
Bewareofofauthority
authority––Milgram
Milgramexperiments
experiments
74
Bandura’s
Bandura’sdriving
drivingforces
forces––turning
turninggood
goodpeople
peoplebad
bad
• Moral justification
• Euphemistic labelling
• Advantageous comparison
• Displacement of responsibility
• Diffusion of responsibility
• Disregard or distortion of consequences
• Dehumanisation
75
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sell or offer to buy or sell such securities or any related investments as principal or agent on the open market or otherwise. This presentation does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or
subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. The information and opinions contained in this presentation have been compiled or arrived at from sources believed to be
reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. Any price targets shown for companies discussed in this presentation may not be achieved due to multiple risk factors including without
limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by DrKW or by other sources relied upon in the presentation were inapposite. Dresdner
Kleinwort Wasserstein accepts no liability whatsoever for any direct or consequential loss or damage arising from any use of this presentation or its contents. Whilst Dresdner Kleinwort Wasserstein may provide hyperlinks to web-sites of entities mentioned in this presentation, the
inclusion of a link does not imply that Dresdner Kleinwort Wasserstein endorses, recommends or approves any material on the linked page or accessible from it. Dresdner Kleinwort Wasserstein accepts no responsibility whatsoever for any such material, nor for any
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© Dresdner Kleinwort Wasserstein Securities Limited 2004
DRESDNER KLEINWORT WASSERSTEIN RESEARCH – RECOMMENDATION DEFINITION

(Except as otherwise noted, expected performance over next 12 months)
Buy 10% or greater increase in share price Reduce 5-10% decrease in share price
Add 5-10% increase in share price Sell 10% or more decrease in share price
Hold +5%/-5% variation in share price
Distribution of DrKW equity recommendations as of 1 Apr 2004

Companies where a DrKW company has provided
All covered companies investment banking services (in the last 12 months)
Buy/Add 337 53% 55 57%
Hold 188 30% 31 32%
Sell/Reduce 108 17% 11 11%
Total 633 97
Source: DrKW
76

Appplied Behavioural Finance - Insights Into Irrational Minds and Market PDF

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James Montier: Global Equity Strategy

Self Deception Heuristic Simplification Social Interaction

Overoptimism Representativeness Emotion/Affect Imitation

Overconfidence Framing Mood Contaigon

Self Attribution bias Catergorization Self control Herding

Confirmation bias Anchoring/Salience Ambiguity aversion Casacades

Hindsight bias Availability bias

Regret theory Cue Competition

Cognitive dissonance Loss aversion/Prospect theory

Global Strategy Unit 2

Global Strategy Unit

System One/ X- system System Two C- System

Rapid, parallel Slow,serial

Process opaque Self aware

Skilled action Rule application

Content on which processes act

Causal propensities Statistics

Concrete, specific Abstract

Global Strategy Unit 4

X Amygdala X Anterior cingulate cortex

X Basal ganglia X Prefrontal cortex

X Lateral temporal cortex X Medial temporal lobe

Global Strategy Unit 5

X System X is more likely when:

X The problem is ill-structured & complex

X Information is incomplete, ambiguous and changing

X Goals are ill defined, shifting and competing

X Stress is high (time constraints and/or high stakes)

X Decisions involve multiple participants

Global Strategy Unit 6

Blitz (6 sec per move) Standard (2.25 mins per move)

Global Strategy Unit 7

The rational model

X Perceptions -> attitudes

X I like this person because I think she is smart and honest

X I like this company because it is low risk and high return

The affect model

X Attitude -> perceptions

X Because like this person, I think she is smart and honest

X Because I like this company, it is low risk and high return

Global Strategy Unit 8

Global Strategy Unit 9

Global Strategy Unit 10

Global Strategy Unit 11

Target patients Normals Patient controls

Global Strategy Unit 12

X People tend to exaggerate their own abilities

X Confidence intervals around a forecast which should yield 2% error,

Global Strategy Unit 14

Global Strategy Unit 15

0.6 Lay people

Global Strategy Unit 16

8.0 Laypeople Professionals

Global Strategy Unit 17

Global Strategy Unit 18

Global Strategy Unit 19

Net return Turnover

Low Turnover High turnover

Global Strategy Unit 20

80 All Women All Men Single Single

Global Strategy Unit 21

Source: Ackert and Church

X 8765432*1 = median answer 2250

X 1234567*8 = median answer 512