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.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2TP: Roald is the sales manager for a small regional manufacturing firm you own. You have asked him to...

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