Highest and best use and Hindsight bias: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Incorporate market participants within the body of the page.)
 
imported>Doug Williamson
(Create page. Sources: The Treasurer, April 2020, p08, Investopedia https://www.investopedia.com/terms/h/hindsight-bias.asp)
 
Line 1: Line 1:
''Financial reporting - fair value''.
''Self management and accountability - working effectively with others - cognitive bias''.


IFRS 13 Fair Value Measurement defines 'highest and best use' in relation to establishing fair values for non-financial assets and liabilities.
Hindsight bias is the systematic tendency to retrospectively characterise events as more foreseeable than they actually are.


In this context the measurement of the 'highest and best use' by market participants of the asset being valued takes into account the use of the asset that is:
This leads to individuals overestimating their ability to forecast future events.
*Physically possible
*Legally permissible and
*Financially feasible.


It is an important failing in poor risk management decisions, and poor investment decisions.




==See also==
== See also ==
*[[IFRS 13]]
* [[Behavioural economics]]
*[[Fair value]]
* [[Cognitive bias]]
*[[Market participant]]
* [[Dunning-Kruger effect]]
* [[Objectivity]]
* [[Optimism bias]]
* [[Risk management]]
* [[Self-investment bias]]
* [[Self management and accountability]]
* [[Working effectively with others]]
 
[[Category:Self_management_and_accountability]]
[[Category:Working_effectively_with_others]]
[[Category:Investment]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]

Revision as of 14:27, 18 April 2020

Self management and accountability - working effectively with others - cognitive bias.

Hindsight bias is the systematic tendency to retrospectively characterise events as more foreseeable than they actually are.

This leads to individuals overestimating their ability to forecast future events.

It is an important failing in poor risk management decisions, and poor investment decisions.


See also