Overconfidence in Investment Decisions: An Experimental Approach

Dennis Alexis Valin Dittrich (), Werner Güth () and Boris Maciejovsky

Discussion Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We experimentally test overconfidence in investment decisions by offering partic- ipants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky as- set, 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)
New Economics Papers: this item is included in nep-exp
View list of references View citations in EconPapers

Downloads: (external link)
ftp://papers.mpiew-jena.mpg.de/esi/discussionpapers/2001-03.pdf (application/pdf)

Related works:
Working Paper: Overconfidence in Investment Decisions: An Experimental Approach (2001)
Journal Article: Overconfidence in investment decisions: An experimental approach (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Discussion Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group
Contact information at EDIRC.
Series data maintained by Karin Richter ().