Business, Management and Accounting
6 years ago

Overconfidence in Financial Decisions Linked to Unrealistic Optimism and Cognitive Biases.

DJA : Diponegoro Journal of Management
ILLUSION OF CONTROL, BETTER-THEN-AVERAGE, MISCALIBRATION, DESIRABILITY BIAS AND UNREALISTIC OPTIMISM AGAINST OVERCONFIDENCE BEHAVIOR (Case Studies on Semarang Investor in Financial Decision Making)
Carissa Kusuma, Erman Denny Arfianto

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Investors in Semarang tend to be overconfident in their financial decisions due to biases like illusion of control, better-than-average thinking, miscalibration, and desirability bias. These biases make them too confident in their abilities and ignore important information. A study with 150 investors found that these biases have a positive impact on overconfidence, except for unrealistic optimism, which has a negative impact.