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Financial professionals' overconfidence:Is it experience, function, or attitude?

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  • Gloede, Oliver
  • Menkhoff, Lukas

Abstract

This paper examines financial professionals' overconfidence in their forecasting performance. We compare individuals' self-rating of performance with the true performance, both measured relative to the same peer group. The forecasters in our sample show overconfidence on average, although to a moderate degree, including many cases of underconfidence. In analyzing this, we find that working experience is accompanied by less overconfidence. Function is also related to less overconfidence, such as being a fund manager and using fundamental analysis. The same effect is found for the attitude to herd, whereas recent success appears with more overconfident professionals.

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File URL: http://diskussionspapiere.wiwi.uni-hannover.de/pdf_bib/dp-428.pdf
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Bibliographic Info

Paper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-428.

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Length: 45 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:han:dpaper:dp-428

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Keywords: overconfidence; self-rating; forecasting; foreign exchange; better-than-average; experience; performance;

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