Overconfidence In Decision Making

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The success of any business in the field is determined by the frequent decisions made not only by the managers at top levels but also managers of significant projects. Decisions in business are closely affected by risks involved in the implementation of strategic business goals and general future plans. Therefore managers need to spend more time in the decision-making process so that the possible outcomes in future are successful. In business a good decision is recognized when the idea achieves two objectives, one being the desirability of each outcome delivered and secondly likelihood of the choices made in generating different outcomes. Generally, good decisions require good judgment as well as greater prediction of final outcomes.…show more content…
Overconfidence can be a good virtue in decision making as for the decision maker there are greater chances of success, confidence gives drive for greater success(Emmons, 2017). In making decisions one ought not to be too certain of outcomes or about everything working their way this is essential to avoid disappointments later.
For example, making a choice between outcome A and B, one is less likely to believe that choice A leads to outcome B. also there is a high probability of overconfidence in believing that outcome B is preferable to outcome C, this will ensure developing logic before finally making a choice. Finally, the decision maker will realize becoming less overconfident is possible but being right all the time is not always the
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Avoiding negativity in relative basic training in probability helps people become better forecasters of expected outcomes. The rules on frequency of outcomes and being less overconfident can be achieved in greater ways through the implementation of probability aspects. These ideals can be helpful for greater achievements of business objectives in the long run whereby decision makers need to constantly revisit them and should not be important only during a crisis(Emmons, 2017).
Great decisions made are greatly concerned with the overall risk status involved therefore decision maker needs to employ strategic risk management strategies. Risk management includes identification of possible issues that will negatively affect the final outcomes if not properly mitigated. The risk management strategies are intended to continuously identify risks, its status and monitoring the progress in reducing its effect on possible outcomes. Risk mitigation techniques involve risk acceptance and monitoring, transfer and avoidance, as well as
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