Subjective bias in managerial forecasting expectations in the context of the effectiveness of strategic decisions of an enterprise

Abstract

The article examines the phenomenon of subjective bias in managerial expectations as a systemic factor in the deterioration of strategic decision quality in enterprises. Despite the widespread assumption in classical economic theory that managers act as fully rational decision-making agents, empirical research consistently demonstrates that real managerial forecasts deviate systematically from objective benchmarks. These deviations are not random errors but exhibit a predictable and reproducible character, which allows them to be treated as a structural element of managerial behavior rather than an exception to it. It is established that managers deviate from rational benchmarks in the process of forecasting enterprise performance outcomes under the influence of four key cognitive mechanisms, namely overoptimism, planning fallacy, confirmation bias, and loss aversion. Each of these mechanisms has its own nature and distinct channels of influence on managerial decisions, yet in practice they operate simultaneously and mutually reinforce one another, generating stable patterns of biased decision-making across different organizational contexts. These deviations are predictable, measurable, and closely linked to specific managerial failures including overinvestment, chronic budget overruns, neglect of market signals, and delayed exit from underperforming projects. The influence of bias is structured through three levels – resource allocation, responsiveness to market signals, and organizational learning – which makes the problem particularly significant from the perspective of long-term enterprise competitiveness. Based on the synthesis of international empirical research, the article proposes a theoretical model of expectation bias formation and substantiates practical mechanisms for its correction within enterprise management systems. The study demonstrates that implementing behavioral economics tools (pre-mortem analysis, reference class forecasting, and behavioral KPI dashboards) can substantially improve the accuracy of managerial forecasts and the effectiveness of strategic decisions. The findings have both theoretical significance for the development of the behavioral theory of the firm and direct practical value for enterprise managers, management consultants, and designers of corporate decision-making systems.