Overconfidence effect bias

Purpose-The concept of donation crowdfunding has been drawing enormous attention as it connects donors worldwide in a shorter time at a relatively lower cost. This paper aims to integrate two unified theories, namely, behavioral finance and unified theory of acceptance and use of technology model, to investigate on the motivators and deterrents that influence prospective donors to adopt and use donation crowdfunding. The study also substantiates the significance of donors' behavioral biases through the moderating effect in the crowdfunding adoption process. Design/methodology/approach-The study used survey method for data collection and the data set was obtained from the sample of respondents belonging to India and Bangladesh. The proposed structural equation modeling is tested using SPSS 23.0 and AMOS 23.0. Findings-The study reveals that performance expectancy, effort expectancy, facilitating conditions and trust significantly enhance the intention to adopt donation crowdfunding. Also, biases including overconfidence bias, herding bias and regret aversion bias are found to have significant moderating effects on the relationship between the behavioral intention to adopt donation crowdfunding and use behavior. Practical implications-By investigating motivators and deterrents of the adoption of donation crowdfunding, the study renders lucrative insights for the donation crowdfunders in devising a donation fundraising campaign that motivates the prospective donors to provide financial contribution. Originality/value-The study establishes its novelty in explaining the adoption behavior of donation crowdfunding with behavioral bias moderators as a theoretical paradigm. Furthermore, the unified theory of acceptance and use of technology model is extended by introducing, the variable "trust," while studying the adoption behavior of donation crowdfunding.

Behavioral Finance merupakan sebuah teori yang menguji kondisi psikis seorang investor terhadap keputusan yang akan diambil dalam kegiatan investasinya, dengan meningkatnya kegiatan investasi yang terjadi, perlu diadakannya analisis tentang pengaruh psikis seseorang terhadap kegiatan investasinya. Penelitian ini berfokus kepada kondisi psikis seperti overconfidence dan faktor demografis terhadap keputusan investasi seorang investor untuk melihat apakah variabel-variabel ini membantu seseorang atau tidak membantu terhadap pengambilan keputusan investasi investor di Universitas Matana. Penelitian ini menggunakan metode analisis regresi linear berganda untuk menentukan masingmasing variabel yang membantu dan tidak membantu, dibantu dengan menggunakan uji t sebagai pembantu hipotesis, pengambilan data dilakukan dengan menyebarkan kuesioner kepada seluruh mahasiswa/i Universitas Matana Gading Serpong dan didapatkan sebanyak 82 responden yang memenuhi kriteria, proses sampel menggunakan n...

Despite the success of behavioral finance, the question of whether behavioral biases persist in the face of expertise is an oft-expressed concern. It becomes pertinent to explore if investor sophistication is associated with behavioral biases, as traders gain sophistication with experience and knowledge. The current study explores this relationship by proposing a new conceptualization of investors’ sophistication via the processes of learning and competition. The study empirically explores if herding and overconfidence biases are related to learning and competition, and thus, with investors’ sophistication via these aspects. Using data from equity investors from India (n = 257), the study employs ANOVA and multiple regression analysis through indicator function to form dummy variables for different categories. The results of the study conclude that diversification is significantly related to both the biases using ANOVA (F(3,253) = 3.081; p < 0.05) as well as multiple regression (...

In this study we investigate whether investors are prone to take risks, both in terms of how they rate their risk propensity and their behavior in choosing between options with different risk levels, and whether they display overconfidence and underdog bias. We also investigate the relationships among underdog bias, overconfidence and risk propensity. The results indicate overconfidence levels similar to that in other populations and do not reveal underdog bias or high levels of risk propensity. We found support for a negative predictive relationship between underdog bias and overconfidence.

Despite the success of behavioral finance, the question of whether behavioral biases persist in the face of expertise is an oft-expressed concern. It becomes pertinent to explore if investor sophistication is associated with behavioral biases, as traders gain sophistication with experience and knowledge. The current study explores this relationship by proposing a new conceptualization of investors’ sophistication via the processes of learning and competition. The study empirically explores if herding and overconfidence biases are related to learning and competition, and thus, with investors’ sophistication via these aspects. Using data from equity investors from India (n = 257), the study employs ANOVA and multiple regression analysis through indicator function to form dummy variables for different categories. The results of the study conclude that diversification is significantly related to both the biases using ANOVA (F(3,253) = 3.081; p < 0.05) as well as multiple regression (...

This paper uses a field survey to investigate the quality of individuals' beliefs of relative performance in tournaments. We consider two field settings, poker and chess, which differ in the degree to which luck is a factor and also in the information that players have about the ability of the competition. We find that poker players' forecasts of relative performance are random guesses with an overestimation bias. Chess players also overestimate their relative performance but make informed guesses. We find support for the "unskilled and unaware hypothesis" in chess: highskilled chess players make better forecasts than low-skilled chess players. Finally, we find that chess players' forecasts of relative performance are not efficient.

In this study, we test whether the overconfidence bias explains several stylized market anomalous, including a short-term continuation (momentum), a long-term reversal in stock returns, high levels of trading volume and excessive volatility. Using data of French stocks market, we find empirical evidence in support of overconfidence hypothesis. First, based on a restricted VAR framework, we show that overconfident investors overreact to private information and underreact to public information. Second, by performing Granger-causality tests of stock returns and trading volume, we find that overconfident investors trade more aggressively in periods subsequent to market gains. Third, based on a two GARCH specifications, we show that self attribution bias, conditioned by right forecasts, increases investors overconfidence and trading volume. Fourth, the analysis of the relation between return volatility and trading volume shows that the excessive trading of overconfident investors makes a...

In this study researcher analysed post Covid-19 influence of Overconfidence bias effect on investment decisions of Pakistani stock investors. Post Covid-19 Financial markets all over the World markets have changed and it affected investor decision making in number of ways. Conventional investments like keeping money in Banks, buying Fix term deposit, buying Prize bonds or gold bars is now outdated in current scenario. Investor now invests more wisely than before Covid-19 they prefer to encash those stock markets which sinked during Covid-19 pandemic and try to capitalize the opportunity of higher returns now when these markets are gaining momentum again. Pakistani stock market is one of those gaining momentum market where now only local but foreign investors are investing and buying shares due to overconfidence bias effect and it has raised the KSE-100 index from 33000 to 42023 from March to September-2020. Researcher made an attempt to address post Covid-19 influence of overconfidence effect bias on investment decision of Pakistani stock investors by taking Overconfidence effect bias along with its sub variables as an independent variable and investment decision of these investors as dependent variable and evaluated the impact of both variables pre and post Covid-19 Pakistan stock market performance. Researcher used stratified random sampling technique by dividing Pakistan Stock Exchange (PSX) in three strata's: Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE). The study is quantitative in nature so questionnaire survey technique was employed for data collection from PSX individual investors of KSE, LSE and ISE. Theory of Overconfidence is backing this study in behaviour finance and has served the base for researcher. Researcher used descriptive statistics, rank correlation and its analysis, association method and applied logistic regression model. Findings of this study suggest that Post Covid-19 pandemic influence of Overconfidence effect bias have positive impact on individual investors' decisions at PSX.

Despite the success of behavioral finance, the question of whether behavioral biases persist in the face of expertise is an oft-expressed concern. It becomes pertinent to explore if investor sophistication is associated with behavioral biases, as traders gain sophistication with experience and knowledge. The current study explores this relationship by proposing a new conceptualization of investors’ sophistication via the processes of learning and competition. The study empirically explores if herding and overconfidence biases are related to learning and competition, and thus, with investors’ sophistication via these aspects. Using data from equity investors from India (n = 257), the study employs ANOVA and multiple regression analysis through indicator function to form dummy variables for different categories. The results of the study conclude that diversification is significantly related to both the biases using ANOVA (F(3,253) = 3.081; p < 0.05) as well as multiple regression (...

Generation) Y) is) a) generation) that) has) a) unique,) have) different) behavior) with) the) previous) generation) and) considerably) larger) than) Generation) X.)) In) the) case) of) investments,) during) the) next) five) to) ten) years) generation) Y) potential) to) become) the) biggest) investor) in) the) capital) market,) and) who) can) understand) the) behavior) of) their) investment) will) benefit.) This) study) aims) to) determine) Overconfidence) investors) generation) Y.) Overconfidence) level) of) capital) market) investors) was) measured) using) Calibration)assessment)test.)Assessment)aimed)at)Generation)Y,)who)is)studying)at)the) University) and) has) become) an) investor) in) the) capital) market.) The) results) could) represent)how)overconfidence)level)of)generation)Y,)which)has)the)potential)to)become) the)largest)investor)in)the)total)population.)

There are lots of factors that investors need to take in consideration before investing. Although the importance of external factors is undeniable, in recent decade, experts started to realize the importance of internal factors in investing. This includes behavior and psychological factors. This analysis of internal factor is what we refer to as behavior finance. However, just how important behavior finance is, and how significant it is in investment decision? In this study, researcher aims to determine the impact of anchoring, herding bias, overconfidence, and ethical consideration towards investment decision. Questionnaires were distributed to 149 investors of different backgrounds to determine the impact of behavior finance towards investment decision. PLS-SEM was used to test the research hypotheses. Through this research, it is determined that behavior and psychological biases and tendencies do affect investment decision. It is important to understand behaviors in investing because these behavior biases and tendencies can potentially lead to loss. Understanding behavior finance means investors can avoid behavior biases and rectify mistakes.