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Blindsided by Jonathan Gifford

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Why Were We So Blindsided by Enron?

There are several reasons we were so blindsided by the Enron scandal. They do not make for very reassuring reading, but here we go.

Wishful Thinking

We allowed ourselves to be blindsided by complexity and innovation. We persuaded ourselves that, although we didn’t actually understand how the thing worked, a lot of very clever people assured us that it did work and so it must be true. Another way of putting this would be to say that we indulged in wishful thinking, and allowed ourselves to be persuaded by plausible stories without thinking too hard about them.

In order for analysts to persuade themselves, for example, that Enron was worth its sky-high valuation, they would need to know that the company had some ...

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