Overconfidence

Many studies have shown that overconfidence can explain the irrational behavior of investors in financial markets. However, overconfidence is a psychological aspect that is difficult to measure. Many aspects are considered, when choosing a measurement way. In this work, the two most common ways of measuring overconfidence will be compared: through two-set questions, and through the elicitation of confidence intervals. Some other unconventional methods are also presented. In the last section of this book, the criticism of the most common ways is discussed.