Simultaneous Over- and Underconfidence: Evidence from Experimental Asset Markets

Posted: 31 Jul 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

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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

Suggested Citation

Kirchler, Erich and Maciejovsky, Boris, Simultaneous Over- and Underconfidence: Evidence from Experimental Asset Markets. Journal of Risk and Uncertainty, Vol. 25, No. 1, pp. 65-85, 2002, Available at SSRN: https://ssrn.com/abstract=311824

Erich Kirchler

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
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 )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany
+49 3641 686626 (Phone)
+49 3641 686623 (Fax)

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