The patterns of prediction, trade, and transfer of wealth from overconfident investors in the capital market: a case study in an experimental setting Online publication date: Fri, 20-Jan-2012
by Mahatma Kufepaksi
International Journal of Behavioural Accounting and Finance (IJBAF), Vol. 2, No. 3/4, 2011
Abstract: Previous research demonstrates that investors classified as overconfident tend to make more prediction errors and trade at higher volumes than rational investors in the capital market, with the outcome of suffering greater trading losses. The current experimental research is presented here with the aim of further exploring these issues. According to its methodology, participants are classified into three groups based on their score of overconfidence: moderate, more overconfident, and less overconfident investors. The results of the current study demonstrate that the more overconfident investors committed more frequent prediction errors and traded in higher volumes in all markets than the less overconfident ones; and further, that this led to losses, except when the majority of all market players suffered from overconfidence due to bad news.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Behavioural Accounting and Finance (IJBAF):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook