Unraveling the mystery: exploring managers' attraction to excessive markets and investigating behavioral biases in market entry decisions

Purpose The purpose of this study is to address why managers enter the excessive market. A comparison of the facts and perceptions of entrants relative to success in the market shows that many entrants are confident about the viability of their businesses and enter the market. Accordingly, the authors simulate market entry decisions to detect behavioral biases. Design/methodology/approach The authors adapted the entry decisions simulation method, which is supported by the theoretical foundations of signal detection theory (SDT) and signaling theory. The simulation model is implemented on the Anaconda platform and written in Python 3. Findings The results of this study suggest that overestimation relates to excess market entry. Also, the proportion of excess entry under difficult conditions is always higher than under easy conditions. Practical implications This research helps managers and firms think about their and their competitors' abilities and evaluate them before entering the market. Policymakers and practitioners can also design programs such as experiential learning to help entrants assess their skills. Originality/value So far, no research has investigated the role of overconfidence under different market conditions. Accordingly, this study contributes to the current market entry literature by disentangling the debate between absolute and relative confidence and by considering the role of task difficulty.