What Are the Consequences of Excessive Optimism or Pessimism in Forecasting

question 58

Essay

What are the consequences of excessive optimism or pessimism in forecasting expected project cash flows?

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Definitions:

Evolutionary Change

Refers to the process by which different kinds of living organisms are thought to have developed and diversified from earlier forms during the history of the Earth.

Environment

The surrounding conditions and factors that influence living organisms, including natural, social, and built aspects.

Average Value

A statistical measure that describes the central tendency or typical value of a set of numbers, often calculated as the sum of the values divided by the number of values.

Trait

A specific characteristic of an organism, which can be physical like height or color, or behavioral, often influenced by both genetics and environment.