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By Sebastian Serfas

In today’s aggressive company setting, an optimum funding procedure is essential for each corporation. in spite of the fact that, it's always endangered via subconscious psychological biases inherent in each man or woman. construction on findings from cognitive psychology learn, Sebastian Serfas exhibits intimately that and the way those so-called cognitive biases systematically impact and warp capital investment-related selection making and enterprise decisions. He offers numerous examples that each company practitioner may possibly stumble upon each day, demonstrates the harmful results via a number of empirical experiments, and descriptions power counterstrategies to mitigate those destructive effects.

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Additional resources for Cognitive Biases in the Capital Investment Context: Theoretical Considerations and Empirical Experiments on Violations of Normative Rationality

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51 A decision model is in essence a particular type of model that has the purpose of supporting decision making, especially in a business-related context. While von Halle/Goldberg (2009: p14) describe it in a more abstract way "as an intellectual template for perceiving, organizing, and managing the business logic behind a business decision", Bhimani et al. 52 Using formalized decision models in a business-related context usually improves decision making and delivers several potential benefits for the decision maker and the respective company:53 they improve the consistency of 48 49 50 51 52 53 See Bamberg/Coenenberg (2002: p13f).

Each module processes one parti- 134 135 136 137 138 See for instance Andrade/May (2004: p1). See for example Bruner et al. (1951) for an illustrative demonstration of cognition being often a mixture of both top-down and bottom-up processing, based on color experiments. See for instance Eysenck (2006: p4). See for example Gerrig/Zimbardo (2008: p238) or Eysenck (2006: p4). 2 for more information on heuristics and their effects on information processing outcomes. 139 This modularity becomes also evident in the classifications of topical subjects covered by cognitive psychology and the resulting approaches that form its sub-disciplines.

For details regarding the components of decision models see for example Resnik (1987: p6ff), Salinger (1993: p2ff), Laux (2005: p19ff), or Bamberg/Coenenberg (2002: p15ff), whose works constitute the source for the following explanations. This element can also consist of and be split into several sub-components, depending on the degree of complexity of the particular model. The derivation of potential outcomes is independent of the decision maker's preferences. In addition, outcomes must not be confused with goals, which are part of the 'objectives component'.

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