A Corporate Bias Against Investment? One of the puzzles of the sluggish global economy today is why companies aren’t investing more. They certainly seem to have good reasons to: corporate coffers are full, interest rates are low, and a slack economy inevitably offers bargains. Yet many companies seem to be holding back.
A number of factors are doubtless involved, ranging from market volatility to fears of a double-dip recession to uncertainty about economic policy. One factor that might go unnoticed, however, is the surprisingly strong role of decision biases in the investment decision-making process—a role that revealed itself in a recent McKinsey Global Survey.