Behavioural Finance

Overconfidence Bias

Definition

What is Overconfidence Bias?

The tendency to overestimate one's knowledge, forecasting ability, or control.

Example in practice

A trader takes oversized positions after a few successful trades.

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The tendency to feel losses more strongly than equivalent gains.

The tendency to seek or interpret information that supports an existing belief.

The tendency to rely too heavily on an initial number or reference point.

Incorporating environmental, social, and governance factors into investment analysis or ownership.

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