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Chapter 11 discusses cognitive/behavioural biases. Consider I. Apruv is estimating the inputs to a series of capital budgeting projects. Some biases may be creeping into
Chapter 11 discusses cognitive/behavioural biases. Consider I. Apruv is estimating the inputs to a series of capital budgeting projects. Some biases may be creeping into the analysis. Consider each of the following biases and indicate how it might impact the input values, the interpretation of the risk analysis, the decision, the project value, or the value of the options (abandon, expand, etc.) or if the bias should have no impact. a) Optimism Bias b) Anchoring c) Confirmation Bias d) Commitment Bias e) Base Rate Neglect
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