 Judgmental overconfidence: Three measures, one bias?Gerlinde Fellner-Röhling () and Sebastian Krügel Journal of Economic Psychology, 2012, vol. 33, issue 1, 142-154 Abstract: Overconfidence is used to explain various instances of detrimental decision making. In behavioral economic and finance models, it is usually captured by misperceiving the reliability of signals and results in overweighting private information. Empirical tests of these models often fail to find evidence for the predicted effects of overconfidence. These studies assume, however, that a specific type of overconfidence, i.e. “miscalibration,” captures the underlying trait. We challenge this assumption and borrow the psychological methodology of single-cue probability learning to obtain a direct measure for misperceiving signal reliability. Our findings indicate that the perception of signal precision and measures of miscalibration are unrelated. We thus conclude that in order to test the theoretical predictions of the overconfidence literature in economics and finance, one cannot rely on the well-established miscalibration bias. Keywords: Overconfidence; Miscalibration; Signal perception; Cognitive bias (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:1:p:142-154 DOI: 10.1016/j.joep.2011.07.008 Access Statistics for this article Journal of Economic Psychology is currently edited by G. Antonides and D. Read More articles in Journal of Economic Psychology from Elsevier |
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