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

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Author Info
Gloede, Oliver
Menkhoff, Lukas

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Abstract

This paper examines financial professionals' overconfidence in their forecasting performance. We are the first to compare individual financial professionals' self-ratings with their true forecasting performance. Data spans several years at monthly frequency. The forecasters in our sample do not provide feasible self-ratings compared to their true performance but show overconfidence on average. In analyzing this, we find an easing relation to experience. Job characteristics are 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 forecasting success comes along with more overconfidence.

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Publisher Info
Paper provided by Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover with number dp-428.

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Length: 27 pages
Date of creation: Aug 2009
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Handle: RePEc:han:dpaper:dp-428

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

Find related papers by JEL classification:
G1 - Financial Economics - - General Financial Markets
D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
F31 - International Economics - - International Finance - - - Foreign Exchange

This paper has been announced in the following NEP Reports:

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