This research examines how overconfidence and heuristic biases can influence executive judgment within the context of private equity. It takes an interdisciplinary approach, drawing on strategic management, psychology, and organizational behavior to understand managerial decision-making. The study forms conjectures and proposes recommendations for good practice in private equity decision-making, as well as ideas for further research.

1. Melvin Chen
Private Equity Psychology
Great executive judgment is arguably the most important factor for success
in the deal-orientated world of private equity. However, overconfidence
and other heuristic biases affect decision-making in complex ways that vary
strongly with context. This research examines the role of overconfidence
and heuristic biases in influencing executive judgments within the context
of the private equity industry. An interdisciplinary approach is taken to the
widely researched yet disparate topic of managerial decision-making, whilst
paying specific attention to private equity. Knowledge from strategic
management, psychology and organizational behaviour are evaluated to
form a series of conjectures. Recommendations for good practice in private
equity decision-making are proposed along with further research
possibilities.
Melvin Chen is Managing Partner at StarLake Capital,
an Asia focused private equity advisory and
investment firm. Born in China, he graduated top of
his class with an M.Eng at Oxford University where he
was also a triple Blues athlete in Amateur Boxing,
Dancesport and Badminton. He is a member of
Mensa International and enjoys traveling and charity
978-3-659-86861-0
PrivateEquityPsychologyChen