Estimating the Probability of Meeting Financial Commitments: A Behavioral Finance Perspective Based on Business Simulations

In an enterprise risk management environment, managers regularly can expect to be called upon to assess the probability that they will meet financial commitments. The ability to do so makes planning easier and enables the prudent risk taking that is crucial to driving growth. But even highly experienced managers are prone to overconfidence—one of the well‐known behavioral biases that can negatively affect their ability to form an accurate...