BIASES IN MANAGERIAL JUDGMENT – OVERESTIMATION

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One topic usually covered in a principles of management course is that of overconfidence and one of its forms, overestimation.

Overestimation is “the common tendency to think we’re better, smarter, faster, more capable, more attractive, or more popular (and so on) than we actually are. As a consequence, we overestimate how much we will accomplish in a limited amount of time or believe we have more control than we actually do.”  (Bazerman & Moore, 2013, p. 15)

Overestimating our own qualities and traits is a form of self-enhancement. Instead of viewing ourselves as accurately, we prefer to view ourselves positively. We belong to superior groups. We overestimate our performance and talents. Overestimation also gives us an illusion of control over our own circumstances than we actually have. We think we can get tasks done faster than we actually get them done. If a project we manage is large and complicated, we are more likely to fall into this planning fallacy having a higher expectation than is reality. We have the tendency to overestimate the optimism of our future.

People of all ages and all settings are subject to this bias in judgment. Students underestimate the amount of time required to complete a term paper, adequately prepare for an exam or organize a club event. Professors overestimate their ability to cover new material in one class period. They overestimate their ability to construct examinations that reflect the learning taking place in their courses. They overestimate their ability to teach effectively or carry out research projects professionally. Leaders in organizations overestimate the amount of influence they have when communicating the vision of the organization.

Here are passages from the Bible that speak to the issue of overestimation:

  • Do you see a man wise in his own eyes? There is more hope for a fool than for him. (Pro 26:12)
  • The sluggard is wiser in his own eyes than seven men who can give a discreet answer. (Pro 26:16)
  • For through the grace given to me I say to every man among you not to think more highly of himself than he ought to think; but to think so as to have sound judgment, as God has allotted to each a measure of faith. (Rom 12:3)
  • For I do not want you, brethren, to be uninformed of this mystery, lest you be wise in your own estimation, that a partial hardening has happened to Israel until the fulness of the Gentiles has come in; (Rom 11:25)

Reference

Bazerman, M. H. & Moore, D. A. (2013). Judgment in managerial decision making. (8th ed.). Hoboken, NJ: John Wiley & Sons.

Class Discussion

  1. Is it overestimation to think that you probably don’t have a problem with overestimation?
  2. Where have you seen overestimation in your own experience or in the experience of others (fellow students, parents, professors, leaders)?
  3. Can you think of a Bible character who overestimated his/her true capabilities? What was their experience?
  4. What part of overestimation is sin?  Is overestimation simply a human condition that we have to manage and, if possible, overcome?
  5. What problems can be caused, or made worse, if a manager overestimates?
  6. To what degree, if at all, might overestimation reduce a manager’s effectiveness?
  7. What is the good, if any, that can come from overestimation?
  8. Where might overestimation become a high-risk bias?
  9. Does a committed Christian have less of a problem with overestimation compared with a non-Christian?
  10. How does a Christian counteract or overcome overestimation?
  11. What role, if any, does religious experience play in overcoming the problems associated with overestimation?

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