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| Type | Bachelor's Thesis |
| Scope | Discipline-based scholarship |
| Title | Measuring Overconfidence in Financial Decision Making |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 54 |
| Date | 2019 |
| Abstract Text | It has become well-known by psychologists, economists, and people in general, that over- confidence is a psychological trait that has various effects on human beings and their behavior in all domains and sectors. The focus of this thesis lies on a somewhat neglected topic in the research area of overconfidence, namely the ways of measurement of the so-called overcon- fidence bias, which are further investigated, and the respective results compared. In the first part of this work, a definition of overconfi-dence and its effects will be provided. Next, some of the most relevant forms of overconfidence are listed. Then, a comparison between the measurement methods that use proxies as a base for their measurement of overconfidence is provided. In the third part of this thesis, the ways by which the inborn level of overconfidence is measured are listed. The two main methods are: measuring overconfidence using the interval produc-tion task and measuring overconfidence through choice questions. All measurement methods prove the existence of overconfidence. However, a different level of overconfidence is reached by the different measurement methods. Furthermore, different groups of investors tend to be more overconfident than others. Individual investors tend to be more overconfident than institutional investors and professional CEOs tend to be less overconfident than founder CEOs. In the last part of the thesis at hand, regularly published criticism on some of the most important methods like the choice question method and the interval production task, are mentioned. |
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