Title: Quantifying overconfidence in experimental finance

Authors: Julija Michailova; Joana K.Q. Katter

Addresses: Helmut Schmidt University, University of the Federal Armed Forces Hamburg, Holstenhofweg 85, 22043 Hamburg, Germany ' York University, 309 Behavioural Science Bldg., 4700 Keele St., Toronto M3J 1P3, Canada

Abstract: This paper illustrates the difficulties in quantifying overconfidence in experimental finance and suggests a procedure for the development of a reliable overconfidence measurement instrument. Following the outlined two-stage procedure a sample measure of overconfidence is developed. First, a pilot test is conducted to divide the initial 50 items into three difficulty levels: hard, moderate and easy questions. In the second stage a final instrument with six questions of each difficulty level was compiled and tested. Reliability of the final instrument was assessed.

Keywords: miscalibration; overconfidence quantification; instrument development; experimental finance; economic experiments; overconfidence measurement.

DOI: 10.1504/IJBAF.2014.067629

International Journal of Behavioural Accounting and Finance, 2014 Vol.4 No.4, pp.351 - 367

Received: 12 Dec 2013
Accepted: 20 Oct 2014

Published online: 22 Feb 2015 *

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