Overconfidence, risk aversion and individual financial decisions in experimental asset markets
Bibliographic Data
| ID | 15068019 |
|---|---|
| Authors | Julija Michailova (0000-0001-7872-1033, Kozminski University, corresponding author), Alminas Mačiulis (Office of the Government of the Republic of Lithuania, Vilnius, Lithuania), Manuela Tvaronavičienė (0000-0002-9667-3730, Vilnius Gediminas Technical University) |
| Year | 2017 |
| Volume | 30 |
| Issue | 1 |
| Pages | 1119-1131 |
| Publication date | 2017-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economic Research-Ekonomska Istraživanja (JOURNAL) |
| Journal identifiers | ISSN: 1331-677X • E-ISSN: 1848-9664 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/1331677x.2017.1311234 |
| OpenAlex | W2123191794 |
| Language | EN |
| Citations received | 4 |
| References cited | 40 |
Prior experiments revealed that investors’ overconfidence can result in excessive trade and negative wealth effects. However, in most of these studies, informational asymmetries were part of the experimental design, and therefore no clear conclusion on whether the obtained results were driven by overconfidence or informational asymmetries could be made. The article addresses this issue by analysing individual financial decisions based on the study of Michailova and Schmidt, who ran an asset markets experiment with no informational asymmetries. Additionally, the study controls for differences in individual risk aversion. The data revealed that, in this setting, individual trading activity and performance were influenced by overconfidence only for female participants. Mistakes in future price forecasting, which were negatively correlated with overconfidence, partially accounted for this result. Risk aversion was uncorrelated with overconfidence and had no influence on experimental outcomes
Actuarial science · Behavioral economics · Econometrics · Economics · Expected utility hypothesis · Financial economics · Financial market · Loss aversion · Microeconomics · Overconfidence effect · Computer Science · Decision-Making and Behavioral Economics · Experimental Behavioral Economics Studies · Financial Markets and Investment Strategies · Psychology · Social Psychology · Finance
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| Citations per year | 0.67 |
|---|---|
| Citation span | 2020 - 2025 (6) |
| Highly cited | No |