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On the Measurement of Overconfidence: An Experimental Study

Author

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  • Markus Spiwoks

    (Ostfalia University of Applied Sciences, Faculty of Business, Siegfried-Ehlers-Str. 1, 38440 Wolfsburg, Germany)

  • Kilian Bizer

    (Georg August University Göttingen, Faculty of Economic Sciences, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany)

Abstract

This study addresses two methods commonly used to measure overconfidence and examines their reliability. It is shown that traditional methods of assessing subjective certainty concerning a given forecast can contribute to a systematic overestimation of overconfidence. It also becomes apparent that a common approach measuring relative overconfidence can cause a distortion of scientific results. This is particularly valid for study groups in which female and male participants are not equally represented.

Suggested Citation

  • Markus Spiwoks & Kilian Bizer, 2018. "On the Measurement of Overconfidence: An Experimental Study," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(1), pages 30-37, 01-2018.
    • Handle: RePEc:arp:ijefrr:2018:p:30-37
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Behavioral finance; Experiments; Overconfidence; Stock price forecasts; Gender studies.;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other

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