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The dynamics of overconfidence: Evidence from stock market forecasters

  • Deaves, Richard
  • Lüders, Erik
  • Schröder, Michael

As a group, market forecasters are egregiously overconfident. In conformity to the dynamic model of overconfidence of Gervais and Odean (2001), successful forecasters become more overconfident. What’s more, more experienced forecasters have “learned to be overconfident,” and hence are more susceptible to this behavioral flaw than their less experienced peers. It is not just individuals who are affected. Markets also become more overconfident when market returns have been high.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 75 (2010)
Issue (Month): 3 (September)
Pages: 402-412

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Handle: RePEc:eee:jeborg:v:75:y:2010:i:3:p:402-412
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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