Judgemental Overconfidence, Self-Monitoring, and Trading Performance in an Experimental Financial Market
Top Cited Papers
- 1 April 2005
- journal article
- Published by Oxford University Press (OUP) in The Review of Economic Studies
- Vol. 72 (2), 287-312
- https://doi.org/10.1111/j.1467-937x.2005.00333.x
Abstract
We measure the degree of overconfidence in judgement (in the form of miscalibration, i.e. the tendency to overestimate the precision of one's information) and self-monitoring (a form of attentiveness to social cues) of 245 participants and also observe their behaviour in an experimental financial market under asymmetric information. Miscalibrated traders, underestimating the conditional uncertainty about the asset value, are expected to be especially vulnerable to the winner's curse. High self-monitors are expected to behave strategically and achieve superior results. Our empirical results show that miscalibration reduces and self-monitoring enhances trading performance. The effect of the psychological variables is strong for men but non-existent for women.Keywords
This publication has 36 references indexed in Scilit:
- The Psychology of Financial Decision-Making: Applications to Trading, Dealing, and Investment AnalysisJournal of Psychology and Financial Markets, 2001
- Overconfidence: It Depends on How, What, and Whom You AskOrganizational Behavior and Human Decision Processes, 1999
- First impressions matter: A model of confirmatory biasThe Quarterly Journal of Economics, 1999
- Aggressiveness and survival of overconfident tradersJournal of Financial Markets, 1998
- Duopoly Strategies Programmed by Experienced PlayersEconometrica, 1997
- Professional Traders as Intuitive BayesiansOrganizational Behavior and Human Decision Processes, 1995
- Modeling cognitive adaptation: A longitudinal investigation of the impact of individual differences and coping on college adjustment and performance.Journal of Personality and Social Psychology, 1992
- Group Size Effects in Public Goods Provision: The Voluntary Contributions MechanismThe Quarterly Journal of Economics, 1988
- Illusion and well-being: A social psychological perspective on mental health.Psychological Bulletin, 1988
- Appeals to image and claims about quality: Understanding the psychology of advertising.Journal of Personality and Social Psychology, 1985