Overconfidence in finance: overview and trends

Mário Pedro Ferreira*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

1 Citation (Scopus)
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Abstract

Overconfidence in financial markets is a controversial topic that has still much to offer. With heated controversy over its very existence and implications since its early days, research on this topic entered into a quiet period after 2008. Higher levels of financial complexity, market regulation and institutional participation alongside with algorithm trading and high frequency trading seem to be apparently driving psychological features away from final trading decisions. This however, does not mean that overconfidence should be neglected, as there are reasons to believe that this psychological bias evolved, became less visible, but is still playing a relevant role in trading decision making.
Original languageEnglish
Title of host publicationHandbook of investors' behavior during financial crises
EditorsFotini Economou, Konstantinos Gavriilidis, Greg N. Gregoriou, Vasileios Kallinterakis
PublisherElsevier Inc.
Pages101-112
Number of pages12
ISBN (Electronic)9780128112533
ISBN (Print)9780128112526
DOIs
Publication statusPublished - 1 Jan 2017

Keywords

  • Investor rationality
  • Market efficiency
  • Overconfidence
  • Price formation
  • Psychological bias

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