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Overconfidence and Self-Serving Bias

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The Financial Consequences of Behavioural Biases

Abstract

Overconfidence is manifested by the overestimation or exaggeration of one’s ability to perform a particular task successfully. It may take one of three forms: (i) overestimation of one’s actual performance, (ii) overplacement of one’s performance relative to others and (iii) excessive confidence in own beliefs. People are prone to self-serving bias (also referred to as self-serving attribution bias) when they attribute positive events to their own character (internal attribution) and negative events to external factors (external attribution). Self-serving bias is common and observable in our day-to-day environment, it can be detected easily, and it feeds on financial crises as it provides a fertile ground for factors to which people can attribute their failure. Overconfidence is linked to self-serving bias.

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Authors and Affiliations

  1. School of Economics, Finance and Marketing, RMIT, Melbourne, VIC, Australia

    Imad A. Moosa

  2. School of Commerce, UNISA, Adelaide, SA, Australia

    Vikash Ramiah

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  1. Imad A. Moosa
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  2. Vikash Ramiah
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Correspondence to Imad A. Moosa .

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Moosa, I.A., Ramiah, V. (2017). Overconfidence and Self-Serving Bias. In: The Financial Consequences of Behavioural Biases. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-69389-7_3

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  • DOI: https://doi.org/10.1007/978-3-319-69389-7_3

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-69388-0

  • Online ISBN: 978-3-319-69389-7

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