Financial professionals' overconfidence: Is it experience, job, or attitude?

Oliver Gloede () and Lukas Menkhoff ()

Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover from Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: This paper examines financial professionals' overconfidence in their forecasting performance. We are the first to compare individual financial professionals' self-ratings with their true forecasting performance. Data spans several years at monthly frequency. The forecasters in our sample do not provide feasible self-ratings compared to their true performance but show overconfidence on average. In analyzing this, we find an easing relation to experience. Job characteristics are also related to less overconfidence, such as being a fund manager and using fundamental analysis. The same effect is found for the attitude to herd, whereas recent forecasting success comes along with more overconfidence.

Keywords: overconfidence; self-rating; forecasting; foreign exchange; better-than-average; experience; performance (search for similar items in EconPapers)
JEL-codes: G1 D84 F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-for and nep-ifn
Date: 2009-08
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Persistent link: http://EconPapers.repec.org/RePEc:han:dpaper:dp-428

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