Judgmental overconfidence and trading activity

How do judgmental overconfidence and overoptimism shape innovative activity?

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism ...

Overconfidence and Trading Volume

Theoretical models predict that overconfident investors will trade more than rational investors. We directly test this hypothesis by correlating individual overconfidence scores with several measures of trading volume of individual investors (number of trades, turnover). Approximately 3000 online broker investors were asked to answer an internet questionnaire which was designed to measure vario...

Ambiguity vs risk: An experimental study of overconfidence, gender and trading activity

In this paper, we investigate the effect of overconfidence and gender on trading activity in experimental asset markets under a symmetric information setting. We measure the degree of overconfidence in three forms—miscalibration, a better-than-average effect, and the illusion of control, and design two treatments (Ambiguity and Risk) that differ by the prior information available about the dist...

Judgmental Sampling

Distribution of Trading Activity

There has been a wide debate on whether democracy actually has an effect on economic outcomes, and especially on international trade. With a new estimation strategy, we analyze this relationship taking a look at the distribution of countries’ trading activity. Using a panel quantile estimation framework from Powell (2014), we find a stronger relationship at the lower quantiles, especially for t...