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CMA Final · Entrepreneurship and Startup · Entrepreneurial Skill Sets

Arvind, a Hyderabad fintech founder, is certain his lending app will succeed. He ignores three customer surveys showing low willingness to pay, and he cites only the two early users who praised it. He also assumes that his team can build the product in half the time analogous projects took. Which combination of cognitive biases best explains his behaviour?

Confirmation bias and planning fallacy. Arvind selectively uses evidence that supports his belief while ignoring contrary surveys, and he underestimates development time compared with similar projects. The other pairs, such as loss aversion or hindsight bias, are not shown by the facts given.

  1. AConfirmation bias and planning fallacyCorrect
  2. BLoss aversion and anchoring on a competitor's price
  3. CHindsight bias and the bandwagon effect
  4. DStatus quo bias and framing effect

Explanation

Citing only supportive users while dismissing contrary surveys is confirmation bias. Underestimating the time needed despite evidence from similar projects is the planning fallacy. The other pairs do not match the described facts, as there is no price anchor, past-outcome distortion or herd following.

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