COGNITION
THINKING AND LANGUAGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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cling to our initial beliefs, even though they have been proven wrong.
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search for information that supports our preconceptions.
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underestimate the extent to which our beliefs and judgments are wrong.
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judge the likelihood of an event based on its availability in memory.
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Detailed explanation-1: -The overconfidence effect is observed when people’s subjective confidence in their own ability is greater than their objective (actual) performance (Pallier et al., 2002). It is frequently measured by having experimental participants answer general knowledge test questions.
Detailed explanation-2: -Overconfidence bias is a tendency to hold a false and misleading assessment of our skills, intellect, or talent. In short, it’s an egotistical belief that we’re better than we actually are. It can be a dangerous bias and is very prolific in behavioral finance and capital markets.
Detailed explanation-3: -The overconfidence effect is a well-established bias in which a person’s subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. Overconfidence is one example of a miscalibration of subjective probabilities.
Detailed explanation-4: -Overconfidence is a universal and prevalent cognitive bias affecting decision making in operation management. In this paper, overconfidence is defined as a cognitive bias in which decision makers overestimate the accuracy of demand forecasting or (and) the demand itself.