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We develop a model in which an overconfident agent learns about groups in society from observations of his and others' successes. In our model, both the agent's information and his beliefs are multi-dimensional, allowing us to study interactions between different views. Overall, society always...
Persistent link: https://www.econbiz.de/10014578270
In this study, we examine how information provision affects the degree of overconfidence using an online experiment. The 4,210 experimental participants engaged in stock market prediction exercises were asked to evaluate their absolute and relative performance. We conducted a randomized...
Persistent link: https://www.econbiz.de/10012847379
Overconfident behavior, the excessive willingness to bet on one’s performance, may be driven by optimistic beliefs and/or ambiguity attitudes. Separating these factors is key for understanding and correcting overconfident behavior, as they may call for different corrective actions. We present...
Persistent link: https://www.econbiz.de/10014350225
-optimal even from an ex-ante perspective. We then show that these investors also exhibit stronger investment biases, namely, the … extrapolation. Our study is the first to relate several well-known investment biases with a real ex-ante sub-optimal trading …
Persistent link: https://www.econbiz.de/10012120317
We conduct field experiments with retail investors recruited from a social trading platform. In our main experiment, we first elicit beliefs about the returns to active investing. We then generate exogenous variation in beliefs by providing treated respondents with information about index funds...
Persistent link: https://www.econbiz.de/10013536190
implement, and captures respondents' excess confidence in their own judgment. Our results show that, in line with theoretical … predictions, an excessive degree of confidence in one's judgment is correlated with lower portfolio diversification, larger stock …
Persistent link: https://www.econbiz.de/10012648019
representative sample. Consistent with theoretical predictions, our findings indicate that excessive confidence in one's judgment is …
Persistent link: https://www.econbiz.de/10015075012
We explore theoretically and experimentally whether information design can be used by trustees as a signaling device to boost trusting acts in once-off interactions. In our main setting, a trustee partially or fully decides a binary payoff allocation and designs an information structure, then a...
Persistent link: https://www.econbiz.de/10013233915
We empirically assess whether hindsight bias has consequences on how citizens evaluate their political actors. Using an incentivized elicitation technique, we demonstrate that people systematically misremember their past policy preferences regarding how to best fight the Covid-19 pandemic. At...
Persistent link: https://www.econbiz.de/10013205089
We provide a preference-based rationale for endogenous overconfidence. Horizon-dependent risk aversion, combined with a possibility to forget, can generate overconfidence and excessive risk taking in equilibrium. An "anxiety prone" agent, who is more risk-averse to imminent than to distant...
Persistent link: https://www.econbiz.de/10010482950