Overconfidence and anomalies in Chinese stock markets: a literature review

There are numerous anomalies in the financial markets, which is difficult to be explained by the traditional efficient market theory. Overconfidence theory, motivated by the psychological evidence, increasingly becomes popular for better understanding the stock markets. This study aims to comprehensively and thoroughly review the relevant literature which looks at the economic consequences of investor overconfidence, and analyze how the overconfidence theory consequently raises some financial markets anomalies.