Document Type Master's Dissertation Author Paluch, Dov URN etd-07292012-144827 Document Title Overconfidence bias in decision-making at different levels of management Degree MBA Department Gordon Institute of Business Science Supervisor
Advisor Name Title Dr C Lew Supervisor Keywords
- cognitive bias
- managerial decision-making
- cognitive reflection
Date 2012-03-08 Availability unrestricted AbstractBehavioural economics has established that cognitive biases such as the overconfidence bias impact managerial decision-making. Literature has also shown that different levels of management require different skills, values and decision-making processes and styles. It would likely follow that cognitive biases would impact different levels of management in varying ways. This research seeks to expand on current literature in drawing on principles of behavioural economics to further investigate the overconfidence bias and its relationship with different levels of management. This research also seeks to explore whether cognitive ability or reflection can further explain any relationship between overconfidence and level of management.
A sample of managers at professional services firms was surveyed using various assessments of overconfidence. Utilising statistical techniques, it was found that in fact there were differences in overconfidence between levels of management. Specifically, middle management appeared to display different overconfidence tendencies than upper and lower management levels. The relationship between cognitive ability, level of management and the overconfidence bias also appeared to be significant enough to warrant further investigation. The results also showed insight into problems with the current definitions of overconfidence.
Based on the findings, this study concludes by providing several business and academic recommendations.
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Please cite as follows:
Paluch, D 2011, Overconfidence bias in decision-making at different levels of management, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-07292012-144827/ >
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