Price Dynamics and Trader Overconfidence

Steffen Ahrens, Ciril Bosch-Rosa and Rasmus Roulund
Additional contact information
Ciril Bosch-Rosa: TU Berlin
Rasmus Roulund: Danmarks Nationalbank

No 161, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Overconfidence is one of the most important biases in financial markets and commonly associated with excessive trading and asset market bubbles. So far, most of the finance literature takes overconfidence as a given, \"static\" personality trait. In this paper we introduce a novel experimental design which allows us to track different measures of overconfidence during an asset market bubble. The results show that overconfidence co-moves with asset prices and points towards a feedback loop in which overconfidence adds fuel to the flame of existing bubbles.

Keywords: overconfidence; experiment; asset markets (search for similar items in EconPapers)
JEL-codes: C91 D84 G11 G41 (search for similar items in EconPapers)
Date: 2019-06-26
New Economics Papers: this item is included in nep-exp and nep-mst
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://rationality-and-competition.de/wp-content/ ... ussion_paper/161.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:161

Access Statistics for this paper

More papers in Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition
Bibliographic data for series maintained by Viviana Lalli ().