MGX5680 SEMESTER 1, 2015

WEEK 4 HANDOUT FOR STUDENTS

To be read in conjunction with Week 3 Lecture Slides

Contact details:
Chief Examiner / Lecturer / Tutor : Dr. Robyn Cochrane

robyn.cochrane@monash.edu

Mail Box 21, Level 7, Building N, Caulfield Campus
 +61 9905 9974 (business hours)
Action items for Week 4:
1. Students to download the following learning resources located in the Week 4 tab and/or in the folder labelled
Assessment information in the Unit Guide tab:
a. Week 4 Lecture Slides
b. Readings for Week 4
c. Assessment documents:
i. Task 1_Guide for writing a critical review/annotated bibliography
ii. Task 1_Sample formatted template
iii. Task 1_Sample basic annotated bibs on Week 2 readings
iv. How to write an annotated bibliography/critical review powerpoint presentation
v. Quick guide to APA referencing
vi. Active reading and writing guide
vii. Task3_ Reflective Writing Instructions
viii. Assessment rubrics for all assessment tasks
2. Students will need regular access to the prescribed textbook hard copy format or e-text is suitable for this Unit.
Bazerman, M.H. & Moore, D.A. (2013) Judgment in Managerial Decision Making (8th ed). Wiley, USA.

Preparation recommended for Week 5:

Topic: Common biases
 Review the Week 5 readings
 Submit the critical review (Assessment Task 1)
 Commence the essay and review the resources (Assessment Task 2)
 Continue with reflective writing (Assessment Task 3)

Discussion/reflection questions from the Week 4 Lecture Slides:

 Slide 12: There is a range of slang, labels and jargon surrounding overconfidence used in general conversations
and the workplace. On your own or with a partner, identify some words or labels commonly used when someone
shows signs of overconfidence (overprecision, overestimation or overplacement).
 Slide 18: Do these descriptions of overconfidence sound familiar? On your own or with a partner, identify
examples of overconfidence in your workplace (real or fictitious). What workplace problems can be caused by
overconfidence?

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Activities from the Week 4 Lecture Slides:

Slide 13: Overconfidence a self-check: answers are 1513, 191, 206, 10,543, and 9,500,000. On occasions, we are
more confident than we deserve to be regarding the accuracy of our own knowledge.
Slide 21: How susceptible are you to overconfidence? Click hyperlink and complete online quiz. See appendix 1 selfevaluation handout
Slide 22: Reducing and managing overconfidence
 What actions can we take to reduce overconfidence in managerial problem solving and decision making in
our workplaces?

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What if we do not reduce overconfidence in managerial problem solving and decision making in our
workplaces?

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How can we use our knowledge of overconfidence to build a business case to secure increased resources
for our team/project?

Explanatory or additional content to consider for selected Week 3 Lecture slides:

After Slide 21 (new content)
Insights from the Week 4 readings.
 Libby and Rennekamp (2012): Using an abstract experiment involving 47 MBA students from a university in
the USA and survey of 109 experienced financial managers, the authors examine the relationships between selfserving internal attributions and stable individual trait overconfidence (dispositional optimism and miscalibration)
with confidence in improved future performance and commitment to issue forecasts. The authors conclude at
least one additional factor in the decision to provide forecasts may be the managerial overconfidence that results
when positive past performance leads managers to engage in self-servicing attribution to explain their positive
performance. In turn, this self-serving attribution can lead managers to be too confident that future performance
will improve evidence of overconfidence in managerial decision making is widespread.
 Helzer and Dunning (2012): examine self and peer predictions to determine why peer predictions tend to exhibit
significantly more accuracy, particularly when it comes to optimistic bias. The authors propose that people are
prone to an agency bias giving greater weight to agentic aspects of their character in self-predictions than they do
in predictions involving other people. For others, they give heavier weight to the persons past behaviour as an
indicator of future action and achievement because the past is often an accurate prologue to the present thus
avoiding the overoptimism seen in self-predictions. Study 1: Survey data - 42 undergraduate students in the USA focussing on predicting exam performance. Study 2: two waves of 131 participants in two mid-level large lecture
psychology classes which resulted in 103 sets of yoked pairs. Study 3: laboratory study of 121 students in
psychology courses involving two replicated studies focusing on information giving and wanting and peer
prediction with full information. Findings: Participants predictions reflected far more than on their target score
than their past performance score and participants valued the target score for self-prediction more than they did for
peer prediction. Peer predictions were as closely related to actual performance as self-predictions. Peer- and selfpredictions were too optimistic relative to actual performance with self-predictions proving significantly more
optimistic than peer predictions. Self- and peer-predictions given full information displayed virtually identical
relationships to actual performance; however, self-predictions were more optimistic compared with peer
predictions. Although people had insight about how best to predict their peers, they failed to apply that insight
to forecasting themselves feedback fails to lead people toward either better performance or more accurate
self-insight. Instead, people seem to choose to dwell in blissful ignorance of their incompetence.

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So what practical implications:

 Ask how would someone else expect me to perform? If someone else had the same performance record and
goals as I do, how would I expect them to perform?
 Stick to actuarial predictions, ignore the target of prediction altogether. Taking the average of past
performance and allowing for a reasonable margin of error will result in accurate predictions much of the
time
 Ask another person to predict ones own future behaviour in some cases, the wisdom from close others or
from professionals can be absolutely necessary for guiding people toward an acknowledgement of their past
behaviour and toward tempering their overly agentic predictions.
 Be mindful of when self-predictions are most likely to be flawed, relative to peer prediction and reality.

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APPENDIX 1 How susceptible are you to overconfidence self-evaluation some questions to reflect upon
Work locus of control: The questions presented in Table 1 below capture respondents feelings of internality and externality regarding their
beliefs about work in general.
Table 1: Work locus of control
Strongly
disagree

Disagree

Slightly
disagree

Neither
agree or
disagree

Slightly
agree

Agree

Strongly
agree

Total

*People can pretty much

accomplish whatever they set out
to in their jobs
*If you know what you want out of
a job, you can find a job that gives
it to you
Getting the job you want is mostly
a matter of luck

Promotions are usually a matter of

good fortune
*Promotions are given to people
who perform well on the job
It takes a lot of luck to be an
outstanding person when
performing a job
*People who perform their jobs
well generally get rewarded
The main difference between
people who make a lot of money
and people who make a little
money is luck
Note: *denotes negatively-worded statement
Self-efficacy: The questions presented in Table 2 capture respondents feelings of self-belief and how respondents see themselves in coping
with the difficulties and demands of their work as well as able to achieve work goals and ability to handle whatever comes their way.
Table 2: Self efficacy
At work

Not at
all
true

Mostly
untrue

Slightly
untrue

Slightly
true

Mostly
true

Completely
true

I remain calm when facing difficulties in

my job because I can rely on my
abilities
when I am confronted with a problem
in my job, I can usually find several
solutions
I can usually handle whatever comes
my way in my job
my past experiences in my job have
prepared me well for my occupational
future
I meet the goals I set for myself in my
job
I feel prepared for most of the
demands in my job

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