Title: Confirmation bias and de-biasing mechanisms in financial decision making

Authors: Phaik Nie Chin

Addresses: Graduate School of Business, Universiti Sains Malaysia, 11700 Gelugor, Pulau Pinang, Malaysia

Abstract: This study examined the relationship between confirmation bias and overconfidence bias, as well as the effectiveness of contradicting reason and feedback mechanisms in mitigating overconfidence bias among individuals. A total of 174 participants were recruited for 13 experimental sessions. The degree of overconfidence bias, including: 1) trading volume and price prediction error, was assessed using a simple trading mechanism; 2) an overconfidence score was collected through a questionnaire during laboratory experiments. The findings indicate that individuals exhibiting confirmation bias tend to have higher overconfidence scores and price prediction errors compared to those without such bias. Moreover, the results from the solution mechanisms indicate that feedback mechanisms are more successful in reducing overconfidence bias in individuals. The study offers valuable insights to companies, policymakers, and individuals, emphasising the significance of confirmation bias and providing guidance on how to enhance performance through de-biasing mechanisms.

Keywords: confirmation bias; overconfidence; miscalibration; financial decision making; price prediction error; trading volume.

DOI: 10.1504/IJSOM.2026.155902

International Journal of Services and Operations Management, 2026 Vol.54 No.4, pp.423 - 443

Accepted: 13 Jun 2024
Published online: 26 Aug 2026 *

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