Managing Cognitive Bias in Finance: A Practical Framework for Better Decisions
Publikation: Beitrag in Fachzeitschrift › Forschungsartikel › Beigetragen › Begutachtung
Beitragende
Abstract
Finance leaders make high-stakes judgments every day. They evaluate investment proposals, revise forecasts, approve budgets, assess risk, and rate performance. In theory, these decisions are data-driven. In practice, they are not always. Numbers do not capture everything that matters: competitive dynamics, execution risk, shifting customer demand, organizational constraints, or strategic trade-offs. As a result, finance decisions rely on judgment and subjective evaluation—a mix of quantitative indicators and human interpretation. That reliance is necessary. But it creates a predictable vulnerability: when judgment fills the gaps, cognitive bias can quietly distort decisions—especially under pressure. Research in psychology has described dozens of biases that trick our minds. But which ones matter most for finance leaders? And when do they strike? This article provides an overview and specific examples. It also shows how to fight back. Science has tested ways to reduce bias—and we review what the evidence says actually works. We then translate this into hands-on recommendations that finance leaders can apply directly. The goal isn’t to eliminate judgment. The goal is to improve judgment quality by understanding where predictable error occurs and redesigning decision processes, so bias has less room to operate.
Details
| Originalsprache | Englisch |
|---|---|
| Fachzeitschrift | Strategic Finance : SF |
| Publikationsstatus | Veröffentlicht - 2026 |
| Peer-Review-Status | Ja |
Externe IDs
| ORCID | /0000-0002-8891-3861/work/222089835 |
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