Overconfidence effect
From Wikipedia, the free encyclopedia
The overconfidence effect refers to the human tendency to be more confident in one's behaviours, attributes and physical characteristics than one ought to be. In a recent survey, over 70% of respondents classified themselves as "better than average" drivers. Overconfidence is most likely after a series of "successes" and can lead to excessive risk taking. This is sometimes used to explain why most investors have too little diversification.
[edit] See also
- Social psychology
- List of cognitive biases
- False consensus effect
- Lake Wobegon effect
- Dunning-Kruger Syndrome
[edit] References
- Shefrin, H. (2002). Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing. Oxford University Press.
- Gilovich, T., Griffin D. & Kahneman, D. (Eds.). (2002). Heuristics and biases: The psychology of intuitive judgment. Cambridge, UK: Cambridge University Press. ISBN 0-521-79679-2
