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:

Cognitive-Behavioral

A psychological approach focusing on modifying dysfunctional emotions, behaviors, and thoughts through goal-oriented, systemic procedures.

Dysfunctional Behavior

Actions or behaviors that are maladaptive, impairing an individual's functioning in various facets of life, such as social or work environments.

Adaptive Alternate Behaviors

Behaviors developed as alternatives to previous, often maladaptive, behaviors to cope with situations in a more healthy or productive way.

Cognitive-Behavioral

Cognitive-Behavioral refers to a type of psychotherapy that focuses on identifying and modifying negative thought patterns and behaviors to improve emotional regulation and develop personal coping strategies.