Self-enhancement causes managers to overestimate the probability of success in investment decisions

Question

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Self-enhancement bias refers to the tendency for individuals to perceive themselves in a positive light and to overestimate their abilities, knowledge, and achievements. This bias can impact managerial decision-making, leading them to be overly optimistic about the probability of success in investment decisions. Studies have shown that this bias can lead to increased risk-taking and a willingness to make questionable or risky investments, ultimately leading to negative financial outcomes.

Self-Enhancement Causes Managers to Overestimate the Probability of Success in Investment