Overconfidence in Investment Decisions:An Experimental Approach

We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices.Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence increases (i) with the absolutedeviation from optimal choices, (ii) with task complexity, and (iii) decreases withuncertainty as indicated by the difference between willingness to pay and to accept.

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Year of publication:	2001
Authors:	Dittrich, Dennis ; Güth, Werner ; Maciejovsky, Boris
Institutions:	Max-Planck-Institut für Ökonomik <Jena> / Abteilung Strategische Interaktion
Subject:	Portfolio Selection \| Anlageverhalten \| Entscheidung bei Risiko \| decision \| Experimentelle Wirtschaftsforschung \| experiment

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Extent:	232448 bytes 21 p. application/pdf
Series:	Max-Planck-Institut für Ökonomik - Papers on Strategic Interaction Discussion Paper ; 0103 (2002) The European Journal of Finance, 11 (6) 2005, 471-491
Type of publication:	Book / Working Paper
Language:	English
Classification:	C91 - Laboratory, Individual Behavior ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; G11 - Portfolio Choice ; Forecast, decision making ; Financial theory ; Employment of capital, capital investment planning and estimate of investment profitability ; Simulation methods ; Individual Working Papers, Preprints ; Individual Articles ; No country specification
Source:	USB Cologne (business full texts)

Persistent link: https://www.econbiz.de/10005867326