Forecaster Overconfidence and Market Survey Performance

The Market for Overconfidence

A Test for Overconfidence with Market Data

Overconfidence refers to the exaggerated beliefs that one might have about his own personal abilities. This phenomenon seems to be pervasive and it could help explaining several economic paradoxes. Still the profession has failed to produce conclusive evidence about overconfident behavior using market data. Most of the evidence that shows that people are overconfident comes from either psycholo...

Information Acquisition, Overconfidence and Portfolio Performance∗

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 two models using a survey of customers of an Italian leading bank with portfolio data and measures of...

A Survey on Overconfidence, Insurance and Self-Assessment Training Programs∗

As argued by Werner DeBondt and Richard H. Thaler (1995): “Perhaps the most robust finding in the psychology of judgment is that people are overconfident.” This paper surveys part of the vast empirical and experimental literature on overconfidence. We find broad evidence that many subjects underestimate their health and driving risk, and that this often results in underinvestment in precautions...

Managerial Overconfidence , Agency Problems , Financing Decisions and Firm Performance