The dynamics of overconfidence: Evidence from stock market forecasters
Scholarly Editions
Overview
Overview
abstract
As a group, market forecasters are egregiously overconfident. In conformity to
the dynamic model of overconfidence of Gervais and Odean (2001), successful
forecasters become more overconfident. What’s more, more experienced
forecasters have “learned to be overconfident,” and hence are more susceptible to
this behavioral flaw than their less experienced peers. It is not just individuals
who are affected. Markets also become more overconfident when market returns
have been high.
