Quotation Fellner, Gerlinde, Krügel, Sebastian. 2012. Judmental overconfidence: three measures, one bias?. Journal of Economic Psychology 33 (1): 142-154.


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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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Economic Psychology
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-D, WH-B
Language English
Title Judmental overconfidence: three measures, one bias?
Volume 33
Number 1
Year 2012
Page from 142
Page to 154
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S016748701100105X

Associations

People
Fellner, Gerlinde (Former researcher)
External
Krügel, Sebastian (Max Planck Institute of Economics, Germany)
Organization
Institute for Economic Policy and Industrial Economics IN (Details)
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