Are individual stock investors overconfident? Evidence from an emerging market

This paper investigates overconfidence among individual stock investors. We focus on Turkey in order to use a unique nationwide dataset and study how common overconfidence is, what factors affect overconfidence and how overconfidence relates to investor return performance. Our findings show that overconfident behavior is common among individual stock investors. Male, younger investors, investors with a lower portfolio value, and investors in low income and low education regions exhibit more overconfident behavior. Moreover, we find that overconfidence has a negative effect on portfolio wealth. To the best of our knowledge, our study is one of the few studies in the literature and the first in Turkey focusing on nationwide data to analyze overconfidence. We extend the findings of the behavioral finance literature to the Turkish market based on this dataset. © 2015 Elsevier B.V. All rights reserved.