Overconfidence Bias and Investment Decision
Keywords:
overconfidence, excessive trading hypothesis, investment decision, JEL Classification: G02, G11Abstract
This study was conducted to examine the excessive trading hypothesis; high overconfidence investors exhibit high investments, show excessive and aggressive trading behavior due to high overconfidence as compare to low overconfidence investors. Data for the research is collected from the students of finance who have taken the courses of finance and investments but still they have just theoretical knowledge and they have not make investments in stock market. Independent samples t-test is used for the analysis and testing the hypothesis. Results of the study shows that high overconfident investors makes aggressive and excessive trading as compare to low overconfidence investors, further more there is almost no impact of any bad news on the investing behavior of the overconfidence investors but results of the study shows that there is significant impact of bad news on the investment behavior of low overconfident investors.
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