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Overconfidence and excess entry: a comparison between students and managers

  • A. Felipe Rodrigues

    ()

    (Federal University of Santa Catarina)

  • Newton Da Costa

    ()

    (Federal University of Santa Catarina)

  • Sergio Da Silva

    ()

    (Federal University of Santa Catarina)

Overconfidence can lead to excessive business entry. Here we replicate the pioneer experiment finding this nexus (Camerer and Lovallo 1999) and extend it in two major directions: (1) to consider managers as well as student subjects and (2) to explicitly take into account selected characteristics of the manager subjects. We find that managers are more prone to the nexus overconfidence-excess entry than students are. In particular, we find that left-handed, married, and emotionally aroused managers are more prone to excess entry.

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File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I3-P229.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 31 (2011)
Issue (Month): 3 ()
Pages: 2549-2557

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Handle: RePEc:ebl:ecbull:eb-11-00515
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  1. Da Silva, Sergio & Baldo, Dinorá & Matsushita, Raul, 2009. "Biological correlates of the Allais paradox," MPRA Paper 18938, University Library of Munich, Germany.
  2. Moreira, Bruno & Matsushita, Raul & Da Silva, Sergio, 2010. "Risk seeking behavior of preschool children in a gambling task," Journal of Economic Psychology, Elsevier, vol. 31(5), pages 794-801, October.
  3. De Long, J. Bradford & Shleifer, Andrei & Summers, Lawrence H. & Waldmann, Robert J., 1991. "The Survival of Noise Traders in Financial Markets," Scholarly Articles 3725470, Harvard University Department of Economics.
  4. Werner F. M. De Bondt & Richard H. Thaler, 1994. "Financial Decision-Making in Markets and Firms: A Behavioral Perspective," NBER Working Papers 4777, National Bureau of Economic Research, Inc.
  5. De Long, J Bradford & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1990. "Noise Trader Risk in Financial Markets," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 703-38, August.
  6. Marcia L. Zindel & Emilio Menezes & Raul Matsushita & Sergio Da Silva, 2010. "Biological characteristics modulating investor overconfidence," Economics Bulletin, AccessEcon, vol. 30(2), pages 1496-1508.
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