Is the extraversion of French retail investors linked to their overconfidence bias?:

: an exploratory study on the overconfidence levels of French retail investors

Abstract

This dissertation examines the extraversion and overconfidence concepts and does an in-depth exploration of the psychological mechanisms that explain the connection between the two factors. Using a cross-section sample of primary data collected from 104 French retail investors between December 2023 and January 2024, we explore the extraversion and overconfidence levels of French retail investors and use Spearman’s rank-correlation coefficient test to measure the correlation between the two. Findings suggest that although French retail investors display low levels of overconfidence, their extraversion is positively and significantly correlated to the overconfidence bias, especially when they are highly educated or have less than 2 years of experience. This implies that French retail investors could measure their extraversion levels to gauge whether they are prone to being overconfident during decision making and adjust their decision-making accordingly. The results also imply that French regulators should target highly educated and inexperienced investors as they tend to be more prone to becoming overconfident. This thesis covers a population and a culture type that had yet to be studied in this form.

Date of Award	29 Oct 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Mário Ferreira (Supervisor)