An Experimental Test of the Impact of Overconfidence and Gender on Trading Activity
Posted: 18 Aug 2009
Date Written: July 2009
We perform an asset market experiment in order to investigate whether overconfidence induces trading. We investigate three manifestations of overconfidence: calibration-based overconfidence, the better-than-average effect and illusion of control. Novelly, the measure employed for calibration-based overconfidence is task-specific in that it is designed to influence behavior. We find that calibration-based overconfidence does engender additional trade, though the better-than-average also appears to play a role. This is true both at the level of the individual and also at the level of the market. There is little evidence that gender influences trading activity.
JEL Classification: G10, G11, G12, G14
Suggested Citation: Suggested Citation