Extreme feedback impacts investor overconfidence in stock markets, study finds.
The study looked at how people's confidence in buying and selling stocks changes when they get feedback that either supports or goes against their decisions. They found that when people get feedback that strongly contradicts their choices, their confidence drops a lot. But when they get supportive feedback, their confidence goes up. The researchers also discovered that when people get strong feedback, they tend to disagree more with each other. Additionally, methods used to measure confidence in predicting outcomes often show higher confidence levels than what people actually feel.