Overconfidence Among CEOs

A colleague of mine, Kristen Jane Freiburger, and myself worked on a project we submitted for one of our courses in the doctoral program at the Warrington College of Business at the University of Florida. The study was based upon the work of Professors Ulrike Malmendier and Geoffrey Tate who specialize in a category of research called Executive Overconfidence. “Overconfidence” represents a particular form of executive or managerial bias, which represent a substantial bulk of the Professors’ work. Specifically, overconfidence can presumably be seen in specific ways. This particular study was evaluating the extent to which overconfidence influences the way executives make decisions as to their capital investments from internal or external sources, as well as credit allocations. While Kristen and I are not sure we buy into the premise of the study, it was nonetheless an interesting and somewhat entertaining study which we thought we’d pass on to you. I hope you enjoy it.