Article

Overconfidence, Stability and Investments

Roberta Dessi et Xiaojian Zhao

Résumé

The available evidence from numerous studies suggests that overconfidence varies significantly across countries. We develop a model that endogenizes these differences and examines their economic consequences. A crucial determinant of difierences in overconfidence is the degree of expected stability of the environment, with greater changefulness giving rise to more overconfident beliefs. When stability is endogenized, multiple equilibria can emerge, \dynamism" and overconfidence reinforcing each other in one case, stability and realistic self-assessment in another. Evidence from 38 countries is consistent with this relationship. Finally, our model also sheds some light on differences in overconfidence within countries, as well as exploring the interaction between overconfidence and sensitivity to shame.

Mots-clés

Self-confidence; investment; cultural differences; cultural transmission; shame;

Codes JEL

  • D03: Behavioral Microeconomics • Underlying Principles
  • D83: Search • Learning • Information and Knowledge • Communication • Belief
  • Z1: Cultural Economics • Economic Sociology • Economic Anthropology

Remplace

Roberta Dessi et Xiaojian Zhao, « Over-Confidence, Shame and Investments », TSE Working Paper, n° 14-516, août 2014.

Roberta Dessi et Xiaojian Zhao, « Overconfidence, Stability and Investments », TSE Working Paper, n° 15-580, mai 2015, révision septembre 2017.

Référence

Roberta Dessi et Xiaojian Zhao, « Overconfidence, Stability and Investments », Journal of Economic Behavior and Organization, n° 145, janvier 2018, p. 474–494.

Publié dans

Journal of Economic Behavior and Organization, n° 145, janvier 2018, p. 474–494