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Title: Overconfidence, risk aversion and individual financial decisions in experimental asset markets
Authors: Michailova, Julija
Mačiulis, Alminas
Tvaronavičienė, Manuela
Keywords: Overconfidence
Miscalibration
Risk aversion
Financial decisions
Economic experiments
Issue Date: 2017
Publisher: Routledge-Taylor & Francis
Citation: Michailova, J.; Mačiulis, A.; Tvaronavičienė, M. 2017. Overconfidence, risk aversion and individual financial decisions in experimental asset markets, Economic research-ekonomska istraživanja 30(1): 1119–1131
Series/Report no.: 30;1
Abstract: 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.
URI: http://dspace.vgtu.lt/handle/1/3693
ISSN: 1331-677X
Appears in Collections:Moksliniai straipsniai / Research articles

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