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Dessi, Roberta
and Zhao, Xiaojian
(2018)
Overconfidence, Stability and Investments.
Journal of Economic Behavior and Organization (n°145).
pp. 474-494.
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Abstract
The available evidence from numerous studies suggests that overconfidence varies significantly across countries. We develop a model that endogenizes these differences and examines their economic consequences. A crucial determinant of difierences in overconfidence is the degree of expected stability of the environment, with greater changefulness giving rise to more overconfident beliefs. When stability is endogenized, multiple equilibria can emerge, \dynamism" and overconfidence reinforcing each other in one case, stability and realistic self-assessment in another. Evidence from 38 countries is consistent with this relationship. Finally, our model also sheds some light on differences in overconfidence within countries, as well as exploring the interaction between overconfidence and sensitivity to shame.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | January 2018 |
| Refereed: | Yes |
| Uncontrolled Keywords: | Self-confidence, investment, cultural differences, cultural transmission, shame |
| JEL Classification: | D03 - Behavioral Economics; Underlying Principles D83 - Search; Learning; Information and Knowledge; Communication; Belief Z1 - Cultural Economics; Economic Sociology; Economic Anthropology |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 17 May 2018 09:53 |
| Last Modified: | 18 Apr 2024 11:33 |
| OAI Identifier: | oai:tse-fr.eu:32252 |
| URI: | https://publications.ut-capitole.fr/id/eprint/25776 |
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Overconfidence, Stability and Investments. (deposited 21 Sep 2015 13:08)
- Overconfidence, Stability and Investments. (deposited 17 May 2018 09:53) [Currently Displayed]
