Tuesday, June 16, 2009

Why the Iranian Election is Like "Deal Fever"

Dealmakers know the symptoms of "deal fever" - the blowing past objections, rationalizing higher valuations, inflating synergies and discounting diligence items that comes once management has set their eyes on the prize. We try, not always successfully, to avoid it in our own work. Some shops even try to inoculate against deal fever, setting up incentives to kill deals. The idea is to be ever-vigilant against confirmation bias - looking for those things that confirm the direction we want to go, and avoiding/downplaying evidence that runs counter to our bias.

So, Iran. We loathe the sawed-off, anti-Semitic Ahmadinejad. We feel some glimmer of hope that the opposition represents Iranians finally embracing modernity. We imagine that anyone with a brain would vote for progress rather than the incumbent. So we side with the green-clad protesters and call the election a fraud.

Like deal fever, this represents confirmation bias writ large. Leading up to the election, there was little question that Ahmadinejad was going to win at least a plurality. The hope was that he would not win outright, and that in the run-off election Mousavi would have a better shot. However, like deal-hungry CEOs dreaming of industry domination, we've chosen to largely ignore this evidence and cling to anything that confirms our bias - the unsubstantiated rumors of ballot box burning; the images of thronging urban crowds representing the will of a people that remains largely rural, poor and conservative.

Completing a deal often means taking advantage of deal fever on the other side (some might call this selling). We should not be so naive as to believe that the opposition in Iran doesn't realize how its message plays in the West. So while we're right to ask that allegations of election fraud be investigated, and that votes be recounted, we can't accept uncritically any claims made by the opposition. Just as we sometimes have to walk from a soured deal, we sometimes have to accept that the price of democracy is a democratic outcome that we don't agree with.

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