The Impact of Experience on Risk Taking,Overconfidence, and Herding of Fund Managers:Complementary Survey Evidence

Empirical research has shown that inexperienced fund managers yield significantly higherreturns than their more experienced colleagues. If the portfolios of inexperienced are not morerisky, this result would contradict the hypothesis of market efficiency. Therefore, it is animportant question whether inexperienced fund managers tend to taker higher risks. Higherrisk taking may be explained by a higher degree of overconfidence, less herding behavior, or alower degree of risk aversion. Since the results concerning the relationship betweenexperience and risk taking in previous studies are rather contradictory we providecomplementary survey evidence of 117 German fund managers which can improve ourunderstanding in this field.[...]