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

See all articles by Erich Kirchler

Erich Kirchler

University of Vienna - Faculty of Psychology

Boris Maciejovsky

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2001

Abstract

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

Kirchler, Erich and Maciejovsky, Boris, Simultaneous Over- and Underconfidence: Evidence from Experimental Asset Markets (September 2001). Humboldt-University of Berlin Dept. of Economics Working Paper No. 185, Available at SSRN: https://ssrn.com/abstract=303387 or http://dx.doi.org/10.2139/ssrn.303387

Erich Kirchler

University of Vienna - Faculty of Psychology ( email )

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Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

Boris Maciejovsky (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

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D-07745 Jena, 07745
Germany
+49 3641 686626 (Phone)
+49 3641 686623 (Fax)

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