Imagine as a divisional manager and currently a member of a committee which is considering two product investments proposed by two other divisional managers: Jill and Bill. While walking over to the presentations, Jill seems rather arrogant. He mentions that he golfs with the CEO, is a key player in the firm, and that the divisional manager could really learn a lot from him. In thinking over the projects after the presentations, the manager finds he is really leaning toward Bill’s proposal even though the projects are quite similar in terms of estimated cash lows and risks. How can this be explained in behavioral finance? Please provide references and in text citations.
Imagine as a divisional manager and currently a member of a committee which is considering two product investments proposed by two other divisional managers: Jill and Bill. While walking over to the presentations, Jill seems rather arrogant. He mentions that he golfs with the CEO, is a key player in the firm, and that the divisional manager could really learn a lot from him. In thinking over the projects after the presentations, the manager finds he is really leaning toward Bill’s proposal even though the projects are quite similar in terms of estimated cash lows and risks. How can this be explained in behavioral finance? Please provide references and in text citations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Imagine as a divisional manager and currently a member of a committee which is considering two product investments proposed by two other divisional managers: Jill and Bill. While walking over to the presentations, Jill seems rather arrogant.
He mentions that he golfs with the CEO, is a key player in the firm, and that the divisional manager could really learn a lot from him. In thinking over the projects after the presentations, the manager finds he is really leaning toward Bill’s proposal even though the projects are quite similar in terms of estimated cash lows and risks. How can this be explained in behavioral finance? Please provide references and in text citations.
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