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Confidence mediates how investment knowledge influences investing self-efficacy

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  • Forbes, James
  • Kara, S. Murat
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    Abstract

    A comprehensive investment literacy questionnaire surveyed potential sources (viz., knowledge, confidence) of investing self-efficacy in a large sample of working adults. As expected, the effect of investment knowledge on belief in one's future capability of orchestrating a plan to achieve investment goals was mediated by confidence. Overall, employees' applied investment knowledge accuracy was low: 57%. In general, investment knowledge was reliably related to confidence. However, confidence and investment knowledge accuracy were completely independent for 9 of 21 items, implying an inability to inhibit poor investment decisions or an inability to exploit investment opportunities. A policy of required investment training could be implemented so as to not impede individuals' freedom of choice, which would likely help the truly uninformed to become more informed and ultimately successful investors.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Psychology.

    Volume (Year): 31 (2010)
    Issue (Month): 3 (June)
    Pages: 435-443

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    Handle: RePEc:eee:joepsy:v:31:y:2010:i:3:p:435-443

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    Web page: http://www.elsevier.com/locate/joep

    Related research

    Keywords: Knowledge Confidence Investing self-efficacy Investor education;

    References

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    14. repec:reg:wpaper:320 is not listed on IDEAS
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    Cited by:
    1. Abreu, Margarida & Mendes, Victor, 2012. "Information, overconfidence and trading: Do the sources of information matter?," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 868-881.
    2. Muehlfeld, Katrin & Weitzel, Utz & van Witteloostuijn, Arjen, 2013. "Fight or freeze? Individual differences in investors’ motivational systems and trading in experimental asset markets," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 195-209.

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