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Overconfidence and Delegated Portfolio Management
Palomino, Frédéric; Sadrieh, Abdolkarim - C.E.P.R. Discussion Papers - 2004
Following extensive empirical evidence about ‘market anomalies’ and overconfidence, the analysis of financial markets … overconfidence. …
Persistent link: https://www.econbiz.de/10005497969
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Risk tolerance and entrepreneurship
Hvide, Hans K; Panos, Georgios - C.E.P.R. Discussion Papers - 2013
A tradition from Knight (1921) argues that more risk tolerant individuals are more likely to become entrepreneurs, but perform worse. We test these predictions with two risk tolerance proxies: stock market participation and personal leverage. Using investment data for 400,000 individuals, we...
Persistent link: https://www.econbiz.de/10011083758
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Overconfidence and Trading Volume
Glaser, Markus; Weber, Martin - C.E.P.R. Discussion Papers - 2003
hypothesis by correlating individual overconfidence scores with several measures of trading volume of individual investors … was designed to measure various facets of overconfidence (miscalibration, the better than average effect, illusion of … performance trade more. Measures of miscalibration are, contrary to theory, unrelated to measures of trading volume. This result …
Persistent link: https://www.econbiz.de/10005656212
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Banker Compensation and Confirmation Bias
Sabourian, Hamid; Sibert, Anne - C.E.P.R. Discussion Papers - 2009
Confirmation bias refers to cognitive errors that bias one towards one's own prior beliefs. A vast empirical literature documents its existence and psychologists identify it as one of the most problematic aspects of human reasoning. In this paper, we present three related scenarios where...
Persistent link: https://www.econbiz.de/10005661569
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Groupthink: Collective Delusions in Organizations and Markets
Bénabou, Roland - C.E.P.R. Discussion Papers - 2009
I develop a model of (individually rational) collective reality denial in groups, organizations and markets. Whether participants' tendencies toward wishful thinking reinforce or dampen each other is shown to hinge on a simple and novel mechanism. When an agent can expect to benefit from other's...
Persistent link: https://www.econbiz.de/10005666620
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On the Trend Recognition and Forecasting Ability of Professional Traders
Glaser, Markus; Langer, Thomas; Weber, Martin - C.E.P.R. Discussion Papers - 2003
trend prediction: probability estimates and confidence intervals. Subjects observe stock price charts, which are … estimates for the trend. In addition, the subjects were asked to state confidence intervals for the development of the chart in … the future. We find that depending on the type of task either underconfidence (in probability estimates) or overconfidence …
Persistent link: https://www.econbiz.de/10005667085
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Behavioural Theories of the Business Cycle
Jaimovich, Nir; Rebelo, Sérgio - C.E.P.R. Discussion Papers - 2006
and overconfidence. The expectations of optimistic agents are biased toward good outcomes, while overconfident agents … overestimate the precision of the signals that they receive. Both expectation shocks and overconfidence can increase business …
Persistent link: https://www.econbiz.de/10005792149
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Information Acquisition and Portfolio Performance
Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2006
Rational investors perceive correctly the value of financial information. Investment in information is therefore rewarded with a higher Sharpe ratio. Overconfident investors overstate the quality of their own information, and thus attain a lower Sharpe ratio. We contrast the implications of the...
Persistent link: https://www.econbiz.de/10005123525
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Optimal Expectation
Brunnermeier, Markus K; Parker, Jonathan A - C.E.P.R. Discussion Papers - 2004
This Paper introduces a tractable, structural model of subjective beliefs. Forward-looking agents care about expected future utility flows, and hence have higher current felicity if they believe that better outcomes are more likely. On the other hand, biased expectations lead to poorer decisions...
Persistent link: https://www.econbiz.de/10005124341
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Self-Esteem, Shame and Personal Motivation
Dessí, Roberta; Zhao, Xiaojian - C.E.P.R. Discussion Papers - 2011
Evidence from psychology suggests that overconfidence is more important in North America than in Japan. The pattern is … the benefits of promoting initiative and new investments. Overconfidence and high sensitivity to shame emerge as …
Persistent link: https://www.econbiz.de/10009399711