Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76012
Authors: 
Fellner, Gerlinde
Güth, Werner
Maciejovsky, Boris
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 621
Abstract: 
Overall, 72 subjects invest their endowment in four risky assets. Each com-bination of assets yields the same expected return and variance of returns. Illusion of expertise prevails when one prefers nevertheless the self-selected portfolio. After being randomly assigned to groups of four subjects are asked to elect their expert based on responses to a prior decision task. Using the random price mecha-nism reveals that 64% of the subjects prefer their own portfolio over the average group portfolio or the expert's port-folio. Illusion of expertise is shown to be stable individually, over alternatives, and for both eliciting methods, willingness to pay and to accept.
Subjects: 
investment decisions
portfolio selection
overconfidence
unrealistic optimism
illusion of control
endowment effect
Document Type: 
Working Paper

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