Expert knowledge, moods, and traits:: a study on overconfidence and stock prediction accuracy
Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
In this study, students of finance (SoF’s), (N3 =32) and lay-people (N3 =40) provided 30-day forecasts for 20 stocks on April 4th 2004 and estimated the size of their own errors as well as the mean errors for their own and the other group. Both groups predicted that the errors made by professionals would be only half the size of the errors made by lay-people. In reality, the errors of both groups were about the size predicted for the lay-people. Participants also estimated their ability to pick the best performing stock out of a pair of two. Both groups proved to be overconfident in their ability to predict the best performing stock, whereas the results of neither group differed significantly from chance (50%). Students of finance reported having used skill-based cues more than did the lay-people in making their predictions. Lay–people mainly used chance and intuition to make their predictions. Participants stating positive moods and viewing themselves as thinkers rather than doers, showed better results in both the prediction and the stock-picking task.
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IdentifiersURN: urn:nbn:se:su:diva-5099OAI: oai:DiVA.org:su-5099DiVA: diva2:194827