After studying this chapter, you should be able to: Explain why personal change is critical to managerial success, describe the general process of change, discuss three common failures of change, describe the general process of enhancing change success. | Judgment in Managerial Decision Making 8e Chapter 2 Overconfidence Copyright 2013 John Wiley & Sons 1 Write Your 98% Confidence Intervals Point Estimate Lower Estimate Upper Estimate Wal-Mart’s 2010 revenue Google’s 2010 revenue World population (as of January 2012) 2012 US GDP Population of China (as of December 2011) Rank of McDonald’s in 2010 Fortune 500 Rank of General Electric in 2010 Fortune 500 The national debt of Greece (as of December 2011, in Euros) Please take five minutes to provide your best estimate of each quantity specified to the right and an interval for which you are 98% confident that the truth falls. In constructing your confidence intervals, provide a lower estimate that represents the lowest end of the 98% confidence interval and an upper estimate that represents the highest end of the 98% confidence interval. Write your responses down on a piece of paper. We will return to your answers shortly. 2 The Mother of All Biases Overconfidence is considered robust . | Judgment in Managerial Decision Making 8e Chapter 2 Overconfidence Copyright 2013 John Wiley & Sons 1 Write Your 98% Confidence Intervals Point Estimate Lower Estimate Upper Estimate Wal-Mart’s 2010 revenue Google’s 2010 revenue World population (as of January 2012) 2012 US GDP Population of China (as of December 2011) Rank of McDonald’s in 2010 Fortune 500 Rank of General Electric in 2010 Fortune 500 The national debt of Greece (as of December 2011, in Euros) Please take five minutes to provide your best estimate of each quantity specified to the right and an interval for which you are 98% confident that the truth falls. In constructing your confidence intervals, provide a lower estimate that represents the lowest end of the 98% confidence interval and an upper estimate that represents the highest end of the 98% confidence interval. Write your responses down on a piece of paper. We will return to your answers shortly. 2 The Mother of All Biases Overconfidence is considered robust Some consequences of overconfidence: Wars Stock market bubbles Strikes Unnecessary lawsuits High rates of entrepreneurial failure Failure of mergers and acquisitions Some scholars have declared overconfidence to be the “most robust finding in the psychology of judgment”. Overconfidence is not only considered to be robust, but it is also considered to be responsible for many adverse outcomes, such as: Wars Stock market bubbles Strikes Unnecessary lawsuits High rates of entrepreneurial failure Merger and acquisition failure 3 Three Forms of Overconfidence Overprecision Overestimation Overplacement Being too certain that you know the truth. Excessive certainty in our accuracy Lack of interest in testing assumptions Dismissing evidence suggesting we’re incorrect Overly narrow confidence intervals Thinking you are better than you really are. Overestimating your productivity Overestimating your control Overestimating your test scores Overestimating your attractiveness Falsely thinking that .
