Chapter 02

Question 1

What is the mother of all biases?

Answer 1

Overconfidence

Question 2

___ effects are the most potent, pervasive, and pernicious of any biases we document in our textbook.

Answer 2

Overconfidence

Question 3

No problem in judgment and decision-making is more prevalent and more potentially catastrophic than ____

Answer 3

Overconfidence

Question 4

According to our textbook, what are the three basic ways overconfidence has been studied?

Answer 4

1. Overprecision
2. Overestimation
3. Overplacement

Question 5

What is Overprecision as it relates to overconfidence?

Answer 5

Being too sure our judgments and decisions are accurate, uninterested in testing our assumptions, and dismissive of evidence that suggests we are wrong. It leads to drawing overly narrow confidence intervals and being too certain that we know the truth.

Question 6

What is Overestimation as it relates to overconfidence

Answer 6

We think we are better, smarter, faster, more capable, more attractive, or more popular (and so on) than we are. We overestimate how much we will accomplish in a limited time or believe we have more control than we actually do.

Question 7

What is Overplacement as it relates to overconfidence?

Answer 7

The tendency to falsely think we rank higher than others on certain dimensions, particularly in competitive contexts. Leads people to be too interested in competing with others in negotiations, in markets, in courts, or on the battlefield.

Question 8

Good managers appraise ___, ___, and ___, especially their own.

Answer 8

risks, dangers, and errors

Question 9

Mahatma Gandhi: “It is unwise to be too sure of one’s own ___. It is healthy to be reminded that the strongest might ___ and the wisest might ___.

Answer 9

wisdom; weaken; err

Question 10

To plan effectively, every organization must have forecasts of ___ events.

Answer 10

uncertain

Question 11

Continue on Page 19. Causes of overprecision