Managerial “irrationality” in financial decision making
Abstract
This paper examines managerial attitudes to risk in the UK to see whether managers are apparently “irrational” and focus on simple heuristics rather than concentrating on statistical outcomes in their decision‐making processes. The findings reported here are based on a large postal questionnaire survey of UK managers in different functional areas. The results suggest that managers exhibit many of the biases that have been documented for executives in other countries. A focus on the framing of a decision, an emphasis on the magnitude of negative outcomes and an insensitivity to the probability estimates are all characteristics of the responses to the scenario cases provided.
Keywords
Citation
Helliar, C.V., Power, D.M. and Sinclair, C.D. (2005), "Managerial “irrationality” in financial decision making", Managerial Finance, Vol. 31 No. 4, pp. 1-11. https://doi.org/10.1108/03074350510769587
Publisher
:Emerald Group Publishing Limited
Copyright © 2005, Emerald Group Publishing Limited