Submitted by Flavio Soriano (flavio.soriano@hotmail.com) on 2015-03-07T17:18:58Z No. of bitstreams: 1 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano.pdf: 1280021 bytes, checksum: 3d8e4c16ffd1a93c2e17526cdf8e8c77 (MD5) / Rejected by Luana Rodrigues (luana.rodrigues@fgv.br), reason: Bom dia Flávio, Por gentileza, altere o campo "knowledge field" para : INTERNACIONALIZAÇÃO DE EMPRESAS, pois este item deve ser o mesmo escrito na ata. Obrigada. Atenciosamente, Luana de Assis Rodrigues Cursos de Pós-Graduação – Post Graduate Program (55 11) 3799-3492 SRA - Secretaria de Registros Acadêmicos on 2015-03-09T15:00:41Z (GMT) / Submitted by Flavio Soriano (flavio.soriano@hotmail.com) on 2015-03-09T18:10:25Z No. of bitstreams: 2 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) / Approved for entry into archive by Luana Rodrigues (luana.rodrigues@fgv.br) on 2015-03-09T18:12:06Z (GMT) No. of bitstreams: 2 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) / Made available in DSpace on 2015-03-10T12:02:33Z (GMT). No. of bitstreams: 2 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) 2015_MPGI_Overconfidence and Confirmation Bias_Flavio Soriano_Sent.pdf: 1280074 bytes, checksum: 7d0b0052de90114e6e1a756adb5d1c06 (MD5) Previous issue date: 2015-02-19 / Decision makers often use ‘rules of thumb’, or heuristics, to help them handling decision situations (Kahneman and Tversky, 1979b). Those cognitive shortcuts are taken by the brain to cope with complexity and time limitation of decisions, by reducing the burden of information processing (Hodgkinson et al, 1999; Newell and Simon, 1972). Although crucial for decision-making, heuristics come at the cost of occasionally sending us off course, that is, make us fall into judgment traps (Tversky and Kahneman, 1974). Over fifty years of psychological research has shown that heuristics can lead to systematic errors, or biases, in decision-making. This study focuses on two particularly impactful biases to decision-making – the overconfidence and confirmation biases. A specific group – top management school students and recent graduates - were subject to classic experiments to measure their level of susceptibility to those biases. This population is bound to take decision positions at companies, and eventually make decisions that will impact not only their companies but society at large. The results show that this population is strongly biased by overconfidence, but less so to the confirmation bias. No significant relationship between the level of susceptibility to the overconfidence and to the confirmation bias was found. / Tomadores de decisão muitas vezes usam 'regras gerais', ou heurística, para ajudá-los a lidar com situações de tomada de decisão (Kahneman e Tversky, 1979b). Esses atalhos cognitivos são tomados pelo cérebro para lidar com a complexidade e pressão de tempo da tomada de decisão, reduzindo assim a carga de processamento de informação (Hodgkinson et al , 1999; Newell e Simon , 1972). Embora fundamental para a tomada de decisões, a heurística tem o custo de, ocasionalmente, nos tirar do curso, isto é, fazer-nos cair em armadilhas de julgamento (Tversky e Kahneman, 1974). Mais de 50 anos de pesquisa em psicologia tem mostrado que a heurística pode levar a erros sistemáticos, ou vieses, na tomada de decisão. Este estudo se concentra em dois vieses particularmente impactantes para a tomada de decisão - o excesso de confiança e o viés de confirmação. Um grupo específico – estudantes de administração e recém-formados de escolas de negócio internacionalmente renomadas – foi submetido a experimentos clássicos para medir seu nível de suscetibilidade a esses dois vieses. Esta população tende a assumir posições de decisão nas empresas, e, eventualmente, tomar decisões que terão impacto não só nas suas empresas, mas na sociedade em geral. Os resultados mostram que essa população é fortemente influenciada por excesso de confiança, mas nem tanto pelo viés de confirmação. Nenhuma relação significativa entre o excesso de confiança e a suscetibilidade ao viés de confirmação foi encontrada.

BAKGRUND: Kryptovalutor saknar de makroekonomiska faktorer som ligger till grund för prissättningen av vanliga valutor. Istället visar forskning att spekulativ handel och trendsökande handlare är vanligt förekommande och att det bidrar till ökad volatilitet på marknaden. Forskning visar också att overconfidence och confirmation bias bidrar med såväl ökad volatilitet som påverkan på investeringars resultat. Kunskapen om psykologiska bias och hanteringen av dem kan få stora konsekvenser på resultatet men hur privata kryptoinvesterare ser på dem är fortfarande ett outforskat ämne. SYFTE: Syftet med uppsatsen är att undersöka och analysera hur väl privatsparare på kryptovalutamarknaden känner till overconfidence och confirmation bias, vilka erfarenheter de har och vilka åtgärder de gör för att hantera dessa bias. GENOMFÖRANDE: Studien har genomförts genom kvalitativa intervjuer med åtta privata kryptoinvesterare. Intervjuerna har utgått från en intervjumall konstruerad för att på djupet kunna ta del av respondenternas kunskaper och erfarenheter. Intervjun har även inkluderat ett test för overconfidence för att möjliggöra för respondenternas egna reflektioner kring sin egen eventuella overconfidence.   SLUTSATS: Studien visar att den teoretiska kunskapen om overconfidence och confirmation bias är låg men att den erfarenhetsbaserade kunskapen är hög. Vad gäller hanteringen av risk och psykologiska bias ligger inte respondenternas strategier i linje med forskningen men marknadens säregna egenskaper möjliggör för ekonomisk vinning i utnyttjandet av andra investerares bias.

This dissertation analyzes rewards and motivations of self-employment. In light of recent research contributions of Barton Hamilton (2000), which find entrepreneurship not as financially rewarding as wage work, my dissertation attempts to both verify and explain this claim. The first essay proposes a theoretical model of evolution of erroneous earnings expectations on part of a nascent entrepreneur. Inability to observe, survey, and take into account all of the returns to entrepreneurship prior to business entry creates a biased set of beliefs on part of the potential entrants. Using Bayesian learning, a nascent entrepreneur starting out with correct perception of profit distribution arrives at erroneous beliefs by incorporating limited information collected from existing businesses. An observed distribution of surviving businesses would exhibit higher earnings because of previous, unobserved, business failure entrepreneur get an overly positive view of her profit potential. Hence, the chapter offers a unique method of modeling overconfidence. The second essay undertakes dynamic empirical comparison of earnings received by business owners and their wage counterparts. Using Survey of Income and Program Participation (SIPP) I examine both short and long run returns to entrepreneurship comparing theses rewards to wage earners returns. I pay particular attention to transitions into and out of business ownership. I estimate entire earnings distribution. To characterize dynamic aspect of changes to individuals’ earnings I split the income distribution into five income quintiles and follow survey participants over the period of seven years. I find that period-to-period transitions to be Markovian. I find business tenure to be short, business ownership is costly in the short and rewarding in the long run. The third essay considered different reporting schemes applied to the self-employed. It is another empirical investigation of entrepreneurial earning uses Panel Study of Income Dynamics (PSID). I find entrepreneurs while reporting lower than wage workers earnings enjoy significant consumption premiums. I observe evidence of income underreporting by entrepreneurs. This finding suggests a need for better earning comparison metrics and proposes to use consumption rather than income metrics for future comparisons.

京都大学 / 0048 / 新制・課程博士 / 博士(経済学) / 甲第20868号 / 経博第563号 / 新制||経||283(附属図書館) / 京都大学大学院経済学研究科経済学専攻 / (主査)教授 西山 慶彦, 准教授 山田 憲, 准教授 高野 久紀 / 学位規則第4条第1項該当 / Doctor of Economics / Kyoto University / DGAM

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Background – This study discusses gender-based differences in investment behaviour and its economic consequences. Despite significant advancements in gender equality, inequalities such as the gender wealth gap exist. This paper explores the difference in investment behaviour and factors that influence said behaviour. These behavioural factors include risk, overconfidence, financial literacy, as well as hindrances based on bias and stereotypes. Financial advisory as a tool can aid in bridging the gap between men and women when it comes to risk assessment, confidence levels, and hindrances. This paper argues that patience, a traditionally feminine virtue, is a key factor in rational investing and encourages breaking gender-based stereotypes within finance to bridge the gender-based investment gap.   Purpose – This paper aims to investigate gender-based differences in investment behaviour to explain the investment gap. By combining several sources, this paper seeks to understand the foundations of investment behaviour and identify tactics to address wealth disparity. The research gap the report aims to address is the lack of a comprehensive understanding of the multifaceted issue of investment behaviour. Overall, the paper seeks to identify gender-based investment differences and investigate the factors behind the cycle of wealth inequality.   Method – A mixed-methods approach is used, which includes two sources of quantitative data. These consist of a survey and secondary data, where the survey is founded on semi-structural interviews. For the survey, a convenience sample is used, and descriptive statistics, t-tests, and univariate ANOVA make up data analysis.   Conclusion – This thesis highlights the casual acceptance of investment behaviour between genders and the adverse effects of the existing disparities in investments. The statistical tests, interviews, and secondary data show that women tend to view investments differently than men, start long-term investments earlier, and exhibit patience in their investment style. However, women lack confidence and willingness to try, which can be overcome with tools such as education and financial advisory.

The concept of behavioural finance has taken more ground concerning the traditional finance paradigm during the last decade. A vital part of the behavioural finance theorem is the subject of behavioural biases and the mistakes these biases have on private stock investors. The authors of this study focused on the bias of overconfidence due to numerous studies indicating the consequences overconfidence has on society and more specifically private investors. The initial focus departed from what might help investors overcome the overconfidence bias. Additionally, the research claiming low financial literacy among young Swedish individuals further caught the authors attention. From this, it was therefore decided to investigate financial literacy's effect on overconfidence among young Swedish individuals to potentially help young individuals understand the risk of overconfidence and what might help reduce the emotional and increase the rational decisions made in investment environments.  With the usage of a questionnaire, we were able to collect quantitative data and thereafter perform three different regressions. The three regression was based on three different measurements of overconfidence; better-than-average effect, miscalibration, and trading frequency. The questions used in the questionnaire were heavily influenced by famous previous literature when it comes to measuring overconfidence and financial literacy. It was also decided to check for different demographic variables and their effect on overconfidence, more precisely previous experience, age, gender, and level of education.  From our study it was found that financial literacy has a negative effect on overconfidence, meaning that the more financially literate an individual is, the less prone to fall victim to overconfidence. More specifically, all three regressions showed this result, indicating a strong relationship. In addition, it was also found that the more experience an individual has the less inclined the individual is to display overconfident behaviour. Lastly, it was found that men tend to be more overconfident than women.  With this study, we are able to contribute to the behavioural view of finance by proving that overconfidence partially exists and that by becoming more financially literate individuals decreases the risk of being overconfident. By being aware of this, we contribute to a healthier investment environment. In addition, this study also contributes to the previous literature on partially overconfidence and financial literacy each on their own but more importantly the effect financial literacy has on overconfidence.

Titel: Mind the Gap: Generations at Risk Författare: Samuel Hansson och Fabian Stenseth Handledare: Zahida Sarwary  Bakgrund: Efter en tid av positiv avkastning har förändringar i omvärlden lett till ökad inflation. Investerare från Generation Z upplever sin första tid på börsen i en ekonomisk oro, medan Generation X upplever det igen efter finanskraschen 2008. Dessa generationers riskbenägenhet vid finansiella beslut har inte kunnat kartläggas i modern tid, och därmed har en kunskapslucka identifieras.     Syfte: Studien ämnar undersöka och kategorisera riskbenägenhet utifrån börspsykologiska faktorer mellan Generation X (personer födda 1965–1980) och Generation Z (personer födda 1997–2012), där investerarna har en eftergymnasial utbildning inom ekonomi.  Metod: Studien har tillämpat en kvantitativ metod, bestående av en deduktiv ansats. Empiriska data har utförts via en enkätundersökning och ett slumpmässigt urval. Empirin bestod av 105 användbara svar, varav 46 svar från Generation X och 59 svar från Generation Z. Empiriska data analyserades utifrån deskriptiv statistik, t-tester, korrelationsmatris, samt multipel linjär regressionsanalys.  Resultat: Analysen redovisade en signifikant positiv samvariation mellan generationerna vid olika börspsykologiska faktorer, där mental accounting påverkade Generation X och överkonfidens påverkade Generation Z.  Slutsats: Studiens resultat påvisade en positiv signifikant samvariation för Generation Z gällande överkonfidens, vilket innebär att högre överkonfidens leder till en högre riskbenägenhet. För Generation X påvisades en positiv signifikant samvariation för mental accounting, vilket leder till en högre riskbenägenhet.  Nyckelord: Behavioral finance, investment, mental accounting, herding bias, overconfidence, financial literacy, cognitive reflection ability / Title: Mind the Gap: Generations at Risk Authors: Samuel Hansson and Fabian Stenseth Supervisor: Zahida Sarwary  Background: After a period of positive returns, changes in the environment have led to increased inflation. Investors from Generation Z are experiencing their first time in the stock market during economic uncertainty, while Generation X is experiencing it again after the 2008 financial crisis. The risk propensity of these generations in financial decision-making has not been adequately studied in modern times, creating a gap in knowledge. Purpose: The study aims to examine and categorize risk propensity based on behavioral finance factors between Generation X (individuals born between 1965 and 1980) and Generation Z (individuals born between 1997 and 2012), with investors having a post-secondary education in finance and economics. Methodology: The study applied a quantitative method with a deductive approach. Empirical data was collected through a survey and random sampling, resulting in 105 usable responses of which 46 respondents from Generation X and 59 respondents from Generation Z. The empirical data was analyzed using descriptive statistics, t-tests, correlation matrices, and multiple linear regression analysis. Results: The analysis revealed a significant positive association between the generations in various behavioral finance factors, with the risk propensity being affected by mental accounting for Generation X and overconfidence for Generation Z. Conclusion: The study's results demonstrated a significant positive association for Generation Z regarding overconfidence, indicating that higher overconfidence leads to a greater risk propensity. For Generation X, a significant positive association was found for mental accounting, which also leads to a higher risk propensity. Key words: Behavioral finance, investment, mental accounting, herding bias, overconfidence, financial literacy, cognitive reflection ability

This thesis aims to understand the risks faced by organizations operating in Northern Sweden when making decisions about digitalization. Through empirical analysis and discussion, the study investigates the influence of hindsight bias on risk perception and the decision-making process. The findings indicate that there is an arguable elevated level of hindsight bias is observed among all participants, with varying intentions behind this bias. One specific case highlights the influence of external decision-makers and the implications of their expertise. While an organization is acting in good faith by seeking advice from individuals of expertise as external decision-makers, who prioritize utility-maximizing choices, it exposes the organization to potential non-perceivable risks. The study reveals that individuals tend to overlook the risks associated with digitalization until they face tangible implications. However, the perception of risks is not artificially altered by expertise level, but rather triggered by occurrences. Moreover, the study identifies a pattern of elevated levels of hindsight bias, primarily in terms of foreseeability, coupled with a motivation for self-esteem. This pattern emphasizes the lack of communication regarding digitalization risks, which contributes to overconfidence and myopia in the decision-making process. The empirical analysis supports the notion that positive perceptions of digitalization and a failure to acknowledge possible implications result in individuals overseeing risks. Consequently, organizations in Northern Sweden run the risk of overconfidence and oversight if they fail to question the basis of their digitalization decisions or the motives and biases of their employees involved in the decision-making process.  In conclusion, this thesis reveals that the risks faced by organizations operating in Northern Sweden when making decisions about digitalization include a failure to perceive digitalization risks due to preconceived positive perceptions, which affects both employees and decision-makers, concluded from a two-perspective investigation. This behavior puts organizations at risk of overconfidence, particularly in the context of hindsight bias. Finally, the study responds to a research question inquired by past research and confirms that overconfidence reduces the availability of risks in the case of Northern Sweden.

This dissertation consists of two chapters. The first chapter examines the valuation effect of the Q-hypothesis of mergers and acquisitions. The Q-hypothesis of mergers and acquisitions proposes that takeovers of low-Q targets by high-Q acquirers should be value creating as acquirers redeploy the targets' assets. I revisit the valuation effects of mergers and acquisitions by considering the potential costs of asset reallocation, impact from misvaluation, and the size of the reallocated assets. By examining the combined announcement returns and changes in operating performance, I find evidence consistent with both the benefits and costs of asset reallocation in the full sample of M&As from 1989 to 2010. Controlling for impact for market misvaluation in the proxy of Q, I find that the relation between value creation and the Q-difference is an inverse U-shape. This is direct evidence in support of the Q-hypothesis of M&As using firm-level data from after 1990. The results are not driven by the acquirer's corporate governance structure and the difference in industry. The second chapter investigates investigate the effect of CEO overconfidence on learning from the market in completing the announced mergers and acquisitions (M&As). Overconfident CEOs overestimate their ability to create value and believe that the market incorrectly values the firm. Therefore, they will be less likely to revise their M&A announcement according to unfavorable market reaction. I construct a proxy for CEO overconfidence based on the CEO's decisions on exercising options similar to Malmendier and Tate (2005, 2008). Controlling for the corporate governance structure of the firm, I find that an overconfident CEO is more likely to complete a bid despite unfavorable market feedback. I do not find my results are driven by alternative interpretations including managerial quality and private information. / Ph. D.