Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208061 
Year of Publication: 
2019
Series/Report no.: 
Discussion Paper No. 161
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
Overconfidence is one of the most important biases in financial markets and commonly associated with excessive trading and asset market bubbles. So far, most of the finance literature takes overconfidence as a given, "static" personality trait. In this paper we introduce a novel experimental design which allows us to track different measures of overconfidence during an asset market bubble. The results show that overconfidence co-moves with asset prices and points towards a feedback loop in which overconfidence adds fuel to the flame of existing bubbles.
Subjects: 
overconfidence
experiment
asset markets
JEL: 
C91
D84
G11
G41
Document Type: 
Working Paper

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