The Daily Parker

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Overconfidence in management

We had an interesting lecture this morning on overconfidence and decision making. Here's a quiz: guess the range that you can say, with 90% confidence, contains the correct value. So for example, if the question were "Parker's weight in kilograms," you could guess a range of 10 to 40, which means you are 90% confident that Parker weighs between 10 and 40 kilos. (You'd be right; he weighs 25 kilos.)

Here are the questions our prof hit us with today:

Fact Units Low end? High end?
GE total revenues (2003) $ bn
Michael Eisner's salary (2003) $
Microsoft employees worldwide (2004) thousands
Starbuck's stores worldwide (2004) stores
McKinsey Group annual revenue per consultant (2001) $
United Auto Workers total membership, non retired (2004) thousands
Blockbuster share of U.S. video rentals (2003) %
Canadian citizens per donut shop (2001) people
Ameritrade total daily trades by members (2004) thousands
Berkshire-Hathaway cumulative returns (1999-2004) %

Also guess how many of these you got right.

Answers tomorrow.

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