Overconfidence in Investment Decisions: An Experimental Approach

Dennis Alexis Valin Dittrich (), Werner Gueth and Boris Maciejovsky
Authors registered in the RePEc Author Service: Werner Güth ()

No CESifo Working Paper No. 626, CESifo Working Paper Series from CESifo GmbH

Abstract: We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence increases (i) with the absolute deviation from optimal choices, (ii) with task complexity, and (iii) decreases with uncertainty as indicated by the difference between willingness to pay and to accept.

Keywords: risky decision making; behavioral finance; portfolio choice; experimental economics (search for similar items in EconPapers)
JEL-codes: C91 D81 G11 (search for similar items in EconPapers)
Date: Written 2001
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Related works:
Working Paper: Overconfidence in Investment Decisions: An Experimental Approach
Journal Article: Overconfidence in investment decisions: An experimental approach (2005)
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