A Study of Overconfidence Bias on Investment Decision with Respect to Behavioral Finance

Abstract

This study explores how overconfidence bias influences investment decisions within the framework of behavioral finance. Overconfidence often leads investors to trade excessively, misjudge market risks, and overestimate their decision-making capabilities. By employing statistical tools such as ANOVA and regression analysis, this research explores the influence of demographic factors on overconfidence and its impact on trading frequency, risk tolerance, and portfolio performance. Findings reveal significant relationships and highlight the need for mitigation strategies. This research enhances the understanding of cognitive biases in financial markets.