Overconfidence in decision making
Overconfidence in Professionals
Application 1
NBA6630 Managerial Decision Making
The Application Exercise
The two professionals selected for this study were Senior V.P (from here in after referred to as subject one) and Manager (from here in after referred to as subject two).
Both subjects were asked ten questions each and were asked to give answers in terms of high-low range numbers. After this exercise they were asked to give relevance rankings (on a scale of 1 to 7, 1 being least relevant for their job and 7 being most relevant for their job). They were also asked the ten questions each from the other subject’s industry area.
The subjects were then briefed about their performance on the tests and their reactions, performance and relevance numbers were analyzed to answer three key questions:
1. Does overconfidence occur on estimates of job-related facts?
2. Is overconfidence lower for job-related than for unrelated items?
3. How do subjects deal with feedback of their own overconfidence?
Key Relations, Figures & Observations
Following are some key numbers and figures deduced from carrying out some basic analysis on the questionnaire data:
S.no.
1
2
3
4
5
Particulars
% Correct (Test 1- Expertise)
Correlation Relevance Vs Correct
Average Relevance for Correct
Average Relevance for Incorrect
% Correct (Test 2- Non-Expertise)
Subject 1
60%
-0.08
5.57
5.75
40%
Subject 2
70%
0.55
5.25
3.33
40%
*1. % correct (test 1 expertise) - shows the % of correct answers by the subjects on test 1 (expertise tests)
*2. Correlation relevance vs correct- Shows the correlation between the correct/incorrect answers and relevance scores given by the subjects.
*3. Avg. relevance for correct- shows the average relevance score given by subjects to the questions they answered correctly.
*4. Avg. relevance for incorrect- shows the average relevance score given by subjects to the questions they answered incorrectly.
*5. % correct
Application 1
NBA6630 Managerial Decision Making
The Application Exercise
The two professionals selected for this study were Senior V.P (from here in after referred to as subject one) and Manager (from here in after referred to as subject two).
Both subjects were asked ten questions each and were asked to give answers in terms of high-low range numbers. After this exercise they were asked to give relevance rankings (on a scale of 1 to 7, 1 being least relevant for their job and 7 being most relevant for their job). They were also asked the ten questions each from the other subject’s industry area.
The subjects were then briefed about their performance on the tests and their reactions, performance and relevance numbers were analyzed to answer three key questions:
1. Does overconfidence occur on estimates of job-related facts?
2. Is overconfidence lower for job-related than for unrelated items?
3. How do subjects deal with feedback of their own overconfidence?
Key Relations, Figures & Observations
Following are some key numbers and figures deduced from carrying out some basic analysis on the questionnaire data:
S.no.
1
2
3
4
5
Particulars
% Correct (Test 1- Expertise)
Correlation Relevance Vs Correct
Average Relevance for Correct
Average Relevance for Incorrect
% Correct (Test 2- Non-Expertise)
Subject 1
60%
-0.08
5.57
5.75
40%
Subject 2
70%
0.55
5.25
3.33
40%
*1. % correct (test 1 expertise) - shows the % of correct answers by the subjects on test 1 (expertise tests)
*2. Correlation relevance vs correct- Shows the correlation between the correct/incorrect answers and relevance scores given by the subjects.
*3. Avg. relevance for correct- shows the average relevance score given by subjects to the questions they answered correctly.
*4. Avg. relevance for incorrect- shows the average relevance score given by subjects to the questions they answered incorrectly.
*5. % correct