1. Anytime Ted analyzes a proposed project, he always assigns a much higher probability of success to the project than is warranted by the information he has gathered. Ted suffers from which one of the following?
Frame dependence
Mental accounting
Endowment effect
Confirmation bias
Overoptimism
2. It is believed by some individuals that, In an efficient market, the actions of traders who constantly buy and sell on any perceived market mispricings will in effect cause market prices to correctly reflect asset values. A person who believes that the actions of these traders will not result in correctly valued prices are most apt to believe in which one of the following?
Gambler's fallacy
Limits to arbitrage
Availability bias
False consensus
Clustering illusion
3. Which one of the following best illustrates an error which you, as a project manager, might make due to confirmation bias?
Overestimating the best outcome expected from a project while underestimating the possibility of a less favorable outcome.
Assuming that a new project will be profitable since similar projects in the past were successful.
Assuming that your expectations of the future outcome from a project are more accurate than the expectations of others within your organization.
Listening to the advice of subordinates with whom you agree while ignoring the advice of subordinates with whom you tend to disagree.
Downplaying the cost of future failure of an existing project since the project has already paid for itself.