Simultaneous Over- and Underconfidence: Evidence from Experimental Asset Markets
Humboldt-University of Berlin Dept. of Economics Working Paper No. 185
24 Pages Posted: 19 Mar 2002
Date Written: September 2001
In this paper we investigate individual overconfidence within the context of an experimental asset market. Overall, 72 participants traded one risky asset on six markets of 12 participants each. Our results indicate that participants are not generally prone to overconfidence. A comparison of two different measures of overconfidence, (i) subjective confidence intervals and (ii) differences between objective accuracy and subjective certainty, lead to a different classification of behavior in our data-set. We observe well-calibration as well as over- and underconfidence.
Keywords: Overconfidence, Behavioral finance, Investment decisions, Experimental economics, Decision making
JEL Classification: C90, D40, D81, G10
Suggested Citation: Suggested Citation