Overconfidence in Investment Decisions: An Experimental Approach

Dittrich, Dennis A. V.; Güth, Werner; Maciejovsky, Boris

doi:10.2139/ssrn.296246

Cited by 14 publications

(10 citation statements)

References 57 publications

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“…This finding is upheld by Shiller (1997) who expresses that overconfident investors will abandon the margin of error they should focus on. Dittrich et al (2001) states that overconfident investors are likely to possess a lower accuracy of investment decisions.…”

Section: Overconfidencementioning

confidence: 99%

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Behavioral Factors Analysis in Investment Decision-Making

Dumohar¹,

Aryotejo²,

Djohan³

et al. 2022

Perwira

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This study focuses in investigating behavioral factors that affect individual investment decision who actively trading in Indonesia stocks exchange. The paper emphasizes in less developed financial markets (Indonesia) to occupy literature gap. Seven (7) human financial behavior which categorized as heuristic biases are measured by numerous questions under online questionnaire, to examine the relationship between trait anxiety, overconfidence, trait anger, self-monitoring, herding factor, anchoring/adjustment, and availability bias with investment decision. To test the hypothesis, sample of 168 Indonesian Stocks Exchange investors are analyzed using statistical methods of regression and correlation analysis. Relationship of financial behavior biases and investment decision is analyzed on the research. The result indicates that overconfidence and self-monitoring are related with investment decision while trait anger, trait anxiety, herding effect and availability bias, and anchoring and adjustment are not related.

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Section: Overconfidencementioning

confidence: 99%

“…This result contradicts Rahman and Gan's (2018) finding that overconfidence has no impact on investment decision-making. In addition, according to research conducted by Dittrich et al (2001), the more overconfident investors are, the lower the margin of error they can commit to.…”

Section: Regression Analysismentioning

confidence: 99%

Behavioral Factors Analysis in Investment Decision-Making

Dumohar¹,

Aryotejo²,

Djohan³

et al. 2022

Perwira

View full text Add to dashboard Cite

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“…Many behavioural biases in which investors indulge at the time of investment have been recognized as significant in providing a better understanding of individual investors' behaviour (Kumar & Goyal, 2016). Most of the investors' behaviours influenced by overconfidence (Dittrich, Güth, & Maciejovsky, 2005;Statman, Thorley & Vorkink, 2006) and confirmation biases (Kosnik, 2008).…”

Section: Rationality Of Investors' Behaviour Remained At the Centre O...mentioning

confidence: 99%

The Influence of behavioural biases on Investment Decision Making: A Moderating Role of Religiosity among Pakistani Investors

Waseem-Ul-Hameed

Sabir

Razzaq³

et al. 2018

IJMRES

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This research study evaluated the extent to which psychological factors (overconfidence, confirmation bias) effect on investor’s decision-making process. The ultimate objective of the current study is to investigate the effect of psychological factors on investor investment decision making. To achieve this objective, this study used quantitative approach and cross-sectional research design. Survey was used to collect the data. Questionnaires were distributed among the individual investors and brokers of stock exchange in Pakistan. Smart PLS 3 was used to analyse the data. It was found that overconfidence and confirmation bias have significant effect on investors investment decision making. Moreover, it is found that religiosity has moderating effect between the psychological factors and investors’ investment decision making. Majorly, the current study contributed by investigating the moderating role of religiosity between psychological factors and investor investment decision making.

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“…One of the heuristics that this study is taking into consideration is overconfidence. It is defined as "the persistent overvaluation of the own investment decision" (Dittrich, Güth & Maciejovsky, 2005). The overconfidence bias creates an assumption that someone is better because of over-reliance in self-skills and assigning less weightage to other information; thus, it has a negative effect on decisions.…”

Section: Introductionmentioning

confidence: 99%

Impact of Overconfidence on Investor’s Investment Decision: Moderating Role of Risk Perception and Religiosity-A Survey of Pakistan Stock Exchange

et al. 2019

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The principal objective of the study is to find out the impact of overconfidence on investor’s investment decisions and to know whether risk perception and religiosity moderately affect the relationship between the overconfidence and investor’s investment decision. Data is collected through a well-structured questionnaire. Systematic sampling is used, and the sample size is 156. Statistical results indicate a significant impact of overconfidence on investor’s investment decisions. For the moderating part of the model, however, there is no empirical evidence of religiosity and risk perception as a moderating effect. Thus, the study depicts that there is an impact of overconfidence on investor’s investment decisions, but there is no moderating impact of religiosity & risk perception. The review is useful for the brokers, investors in making decisions regarding the buying and selling of stocks, and also for entrepreneurs. This study is also exclusive and has greater importance as the role of religiosity and risk perception does not imply together before in the Pakistani stock market. The current research is also constructive for the scholars to further study the impact in a different context with further modified variables.

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Overconfidence in Investment Decisions: An Experimental Approach

Cited by 14 publications

References 57 publications

Behavioral Factors Analysis in Investment Decision-Making

Behavioral Factors Analysis in Investment Decision-Making

The Influence of behavioural biases on Investment Decision Making: A Moderating Role of Religiosity among Pakistani Investors

Impact of Overconfidence on Investor’s Investment Decision: Moderating Role of Risk Perception and Religiosity-A Survey of Pakistan Stock Exchange

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