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Great Expectations: Past Wages and Unemployment Durations

Böheim, René; Horvath, Gerard Thomas; Winter-Ebmer, Rudolf - C.E.P.R. Discussion Papers - 2010

profited from high firm rents in the past. We interpret our findings as evidence for overconfidence generated by imperfectly …

Persistent link: https://www.econbiz.de/10008611007

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

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

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

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

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

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

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 … calibration literature and model overconfidence as underestimation of the variance of signals. The results hold even when we …

Persistent link: https://www.econbiz.de/10005656212

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

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