On the Estimationof the Probability of Meeting Financial Commitments: A Behavioraial Finance Perspective using Business Simulations


 

Page 344 - Developments in Business Simulation and Experiential Learning, volume 39, 2012 

ABSTRACT 

Estimating accurate probabilities of Meeting Financial 

Commitments is crucial for both short- and long-term 

decision making.  It is well known, that for a variety of 

reasons, that individuals and teams, on average, 

overestimate the probability of success.  In this article we 

discuss the results of a Prediction Market process to 

estimating the probability of meeting the Net Income and 

Cash Flow commitments in a business simulation that has 

been utilized with Finance majors at undergraduate and 

graduate courses, as well as 12 of the Dow 30 in executive 

education for Finance functions. Our preliminary findings 

indicate that the greater the initial standard deviation of 

individuals estimates, within a team, the higher the 

probability of meeting commitments.  This may be 

consistent with the importance of having significant 

divergence of opinion in decision-making.  

 

ON THE ESTIMATION OF THE PROBABILITY  

OF MEETING FINANCIAL COMMITMENTS:  

A BEHAVIORAL FINANCE PERSPECTIVE  

USING BUSINESS SIMULATIONS 
 

Dr. Thomas E. Conine, Jr. 

Fairfield University  

Cone009@aol.com  

 

mailto:Cone009@aol.com

	Table of Contents
	Volume 39, 2012
	Designing the Training Challenge
	Follow The Leader: Are we Teaching our Students to be Thinkers or Followers?
	Two Free-Rider-Accepting Methods of Organizing Groups for a Business Game
	Additional Benefit Through Competency Models
	Assessing Brand Portfolio Normative Consistency & Trends With The Normative Position of Brands & Trends Package
	Modeling the Impact of Marketing Mix on the Diffusion of Innovation in the Generalized Bass Model of Firm Demand
	Play it Forward! The Design and Development of a Forward Contract Simulation
	Positioning the Company: Increasing Profits in Social Networks
	Merger of Companies in Business Game Exercise
	Towards a Knowledge-Based Approach for Autonomouse Trading Agent
	An Exploratory Study of the Impact of a Simulation Exercise on the Managerial and Personality Traits and the Decision Making Styles of Marketing Students
	Should the Concept of Potential Customers be the Foundation of Demand Theory in Business Simulations?
	Teaching Sustainability Experientially
	Drawing Upon Experience and Research to Improve Future Communications
	Improving Assessments of Student Learning Outcomes (SLO) Over Time
	The Effect of Affective Domain Characteristics on Behavioral or Psychomotor Outcomes
	Gossip?  No, Not Me!  An Experiential Exercise
	Student Advisement Using Gantt Charts: An Experiential Exercise in Management Theory
	Practicing Teachers as Digital Game Creators: A Study of the Design Considerations
	Designing and Solving Crossword Puzzles: Examining Efficacy in a Classroom Exercise
	Difficult Times Call for Innovative Measures: Microfinance as Experiential Learning in Higher Education
	Catalysts, Client Services, and Community Change: Interdisciplinary Collaboration in a Nascent Microfinance Initiative
	Build A Business . . . In An Hour or Less: Getting Closer to Reality into the Classroom
	Smart Goals: How the Application of SMART Goals can contribute to achievement of Student Learning Outcomes
	The Use of Data in "Live" Cases to Encourage Systems Thinking and Integrative Analysis: An Exercise Linking Human Resource Programs and Financial Outcomes in Real Organizations
	Experiential Education as a Process of Changing Mental Frames by Inducing Insight Learning
	Process and Content Integration in an Experiential Learning Guided Internship Program
	Good-bye Discussion Thread:  Creating a Community of Inquiry in an Online Master's Program
	Fiction as a Constructivist Tool for Learning Process Consultation in an Online Environment: Shaping the Context, Introducing the Dialogue
	Can Simulations Provide a Better Experience? A Capstone Application
	Modeling a Modest Proposal for Increasing the Efficiency of Academic Reserarch Dissemination
	Experience GEO: A Massively Multiplayer Game
	SysTeamsGames Three Games for Management Simulation
	SimVenture - A Start-Up Business Simulation
	Stellarbucks Simulation Developing Games Using Strategy Maps and Balanced Scorecards
	Strategy Dynamics Models - Powerful But Simple In-Class Games
	Simulating Scenarios for Financial Statement Analysis
	A Valuation Model of the Simulated Firm
	Writing the Land: An Interdisciplinary Experiential Approach
	On the Estimation of the Probability of Meeting Financial Commitments: A Behavioraial Finance Perspective Using Business Simulations