Dunning-Kruger effect and Dynamic discounting: Difference between pages

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''Behavioural economics''.
A form of early payment discounting in which the amount of the discount (for early payment) is determined by a negotiation or auction.  


The Dunning-Kruger effect is generally reported as an irrational tendency among certain incompetent individuals systematically to ''overestimate'' their true level of competence.
Dynamic discounting is usually facilitated by an intermediary.  


In simple terms, this aspect of the Dunning-Kruger effect is the reverse of the [[Impostor syndrome]].


A possible explanation for the Dunning-Kruger effect is that the skills we need to assess our level of competence in a given task correctly, are exactly the same skills that we need to perform the task itself.  Those lacking in the task 'performance' skills would then, necessarily, lack the 'competence assessment' skills as well.
The timing of the payment may also be 'dynamic' or negotiable: the earlier the payment, the greater the early payment discount.


The Dunning-Kruger effect can however be 'cured', with even a relatively moderate amount of appropriate training.


==See also==
*[[Factoring]]
*[[Invoice discounting]]
*[[Supply chain finance]]
*[[Market-based approaches to cash management and liquidity]]


Such tendencies to assess evidence incorrectly are known collectively as 'cognitive biases'. Affinity bias is another example.
[[Category:The_business_context]]
 
 
The Dunning-Kruger effect is strictly defined more broadly, to ''include'' the Impostor syndrome (underconfidence of skilled people) as well as the effect described above (overconfidence of the unskilled).
 
 
== See also ==
* [[Affinity bias]]
* [[Behavioural economics]]
* [[Cognitive bias]]
* [[Emotional intelligence]]
* [[Impostor syndrome]]
 
[[Category:Working_effectively_with_others]]
[[Category:Corporate_finance]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 10:54, 4 December 2019

A form of early payment discounting in which the amount of the discount (for early payment) is determined by a negotiation or auction.

Dynamic discounting is usually facilitated by an intermediary.


The timing of the payment may also be 'dynamic' or negotiable: the earlier the payment, the greater the early payment discount.


See also

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