ABSTRACT:
This chapter looks at some evidence about the accuracy – or rather the inaccuracy – of managers’ perceptions. With few exceptions, academic theorists assume that managers perceive accurately. Some theorists, mainly economists, even assume that managers have precisely correct expectations about future events. But managers often perceive inaccurately. They often make perception errors when they are dealing with phenomena that they run into daily in their jobs; they make larger errors and make them more often when they encounter novel phenomena. Yet academics often base studies on managers’ perceptions of phenomena that are unfamiliar to the managers and do not fit into their daily experiences. As a result, academics are generating noisy data that have very different meanings for managers than for academics.
