Traditional finance theory assumes that people make rational decisions to maximize their wealth in the face of risk and uncertainty. Because money is involved, reason and logic will overcome emotion and psychological biases, it would seem. Is this a good assumption? In reality, the situation might be just the opposite. Emotion might overcome reason when one is making a risky decision involving money.

Psychological research has also shown that the brain uses shortcuts to reduce the complexity of analyzing information. These mental shortcuts allow the brain to generate an estimate of an answer before fully digesting all the available information. Two examples of shortcuts are known as representativeness and familiarity.

In the context of cross-border M&A, how do you think these psychological biases could affect the end result of a cross-border M&A attempt?