The COVID-19 Pandemic and Overconfidence Bias: The Case of Cyclical and Defensive Sectors

This research paper analyses the impact of COVID-19 to investigate overconfidence bias in 12 cyclical and defensive sectors pre- during periods using daily data from 1 January 2015 31 December 2020. The results VAR show that pre phase is more prevalent all sectors; particular, MEDIA, METAL REALTY have highly significant coefficients . In sectors, outcomes are not as strong we expected, except for SERVICES. During period, investor shifted their focus COVID-19-related opportunities, leading a surge IT PHARMA sectors. both phases, METAL, MEDIA exhibit overconfidence-driven stock trading behaviour. ENERGY only sector phases does witness bias.