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Thoughts on quantifying overconfidence in economic experiments

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  • Michailova, Julija
  • Katter, Joana K. Q.

Abstract

This article illustrates the difficulties in quantifying overconfidence in experimental finance and outlines a procedure for the development of a reliable overconfidence measurement instrument. Following the suggested two-stage procedure a sample measure of overconfidence is developed. First a pilot test is conducted to divide the initial fifty items into three difficulty levels: hard, moderate and easy questions. A final test was compiled of six questions of each difficulty levels. In the second phase a replicability check was run with the final instrument.

Suggested Citation

  • Michailova, Julija & Katter, Joana K. Q., 2013. "Thoughts on quantifying overconfidence in economic experiments," MPRA Paper 53112, University Library of Munich, Germany, revised Jan 2014.
    • Handle: RePEc:pra:mprapa:53112
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    References listed on IDEAS

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    1. Viktorija Ilieva & Thomas Brudermann & Ljubomir Drakulevski, 2018. "“Yes, we know!” (Over)confidence in general knowledge among Austrian entrepreneurs," PLOS ONE, Public Library of Science, vol. 13(5), pages 1-15, May.
    2. Michailova, Julija, 2010. "Overconfidence, risk aversion and (economic) behavior of individual traders in experimental asset markets," MPRA Paper 26390, University Library of Munich, Germany.
    3. Devista Yoga Prasetyo & Priyo Hari Adi & Theresia Woro Damayanti, 2020. "Overconfidence, Gender and Tax Compliance - the Indonesian Evidence," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(4), pages 135-143.

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    More about this item

    Keywords

    miscalibration; overconfidence; overconfidence quantification; instrument development; experimental finance; economic experiments.;
    All these keywords.

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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