How overconfidence can lead to poor investment decisions?
Author Details: Dr. Reshmi A. Rajan, Associate Professor, Department of Commerce, Kumaraguru College of Liberal Arts & Science, Coimbatore. E-mail Id: reshmi.nov30@gmail.com Introduction to Overconfidence in Investing Overconfidence is a common cognitive bias that can lead to poor investment decisions. It refers to the tendency of investors to overestimate their knowledge, skills, and abilities when making investment decisions. Investors who are overconfident often believe that they can beat the market or outperform other investors consistently. Overconfidence can manifest in various ways in the context of investing. For example, overconfident investors may engage in excessive trading or take on more risks than necessary. They may also ignore the importance of diversification or fail to recognize the limits of their knowledge and expertise. Overconfidence can have a significant impact on investment decisions, often leading to suboptimal outcomes. One of the most...
