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2013•Journal of International Finance and EconomicsOpen access

OVERCONFIDENCE IN INDIVIDUAL AND GROUP INVESTMENT DECISIONS

Alberto Shigueru Matsumoto, Jos� Fernandes, Paulo César Chagas, Nath�lia Oliveira

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Abstract

ABSTRACT This study analyzes group influence on investment decisions in an attempt to determine the correlation between two financial behavior tendencies: overconfidence and herding behavior. An experiment was carried out with 92 students from the Universidade Católica de Brasília. The results indicated that acting in a group tended to diminish overconfidence and that women presented more overconfidence than men, even though this effect was not highly significant. It was also verified that the performance of the two genders acting together was more rational than when they acted separately. Keywords Behavioral finance, Overconfidence, Herding behavior.

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ABSTRACT This study analyzes group influence on investment decisions in an attempt to determine the correlation between two financial behavior tendencies: overconfidence and herding behavior. An experiment was carried out with 92 students from the Universidade Católica de Brasília. The results indicated that acting in a group tended to diminish overconfidence and that women presented more overconfidence than men, even though this effect was not highly significant. It was also verified that the performance of the two genders acting together was more rational than when they acted separately. Keywords Behavioral finance, Overconfidence, Herding behavior.

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Available abstract

ABSTRACT This study analyzes group influence on investment decisions in an attempt to determine the correlation between two financial behavior tendencies: overconfidence and herding behavior. An experiment was carried out with 92 students from the Universidade Católica de Brasília. The results indicated that acting in a group tended to diminish overconfidence and that women presented more overconfidence than men, even though this effect was not highly significant. It was also verified that the performance of the two genders acting together was more rational than when they acted separately. Keywords Behavioral finance, Overconfidence, Herding behavior.

Key concepts: Overconfidence effect, Herding, Herd behavior, Psychology, Investment (military), Investment decisions, Social psychology, Positive correlation

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