If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can, they might demonstrate ______ and trust only their own judgment rather than conduct sufficient analysis.

Question

Quizplus · Accepted Answer

Managerial conceit occurs when decision makers who have made successful choices in the past come to believe that they possess superior expertise for managing uncertainty. They believe that their abilities can reduce the risks inherent in decision making to a much greater extent than they actually can. Such managers are more likely to shift away from analysis to trusting their own judgment. In the case of real options, they can simply declare that any given decision is a real option and proceed as before. If asked to formally model their decision, they are more likely to employ variance estimates that support their viewpoint.

If Managers Believe That Their Abilities Can Reduce the Risks