Knowledge Tree
Relations (1)
related 2.00 — strongly supporting 3 facts
Overconfidence bias is linked to risk because it leads individuals to underestimate potential dangers while attempting to predict market outcomes [1]. This relationship is further supported by academic research exploring how overconfidence affects an entrepreneur's perception of risk [2] and the frequent co-study of these concepts in cognitive bias and personality trait research [3].
Facts (3)
Sources
Understanding the Human Side of Money: Behavioral Finance Basics thewealthguardians.com 1 fact
claimOverconfidence in financial decision-making involves the belief that one can predict market outcomes or 'beat the system,' which can lead to taking on more risk than intended.
The Impact of Cognitive Biases on Professionals' Decision-Making frontiersin.org 1 fact
measurementFraming effect and overconfidence were the most common cognitive biases studied (N = 5 each), while tolerance to risk or ambiguity was the most common personality trait studied (N = 5).
An Exploratory Study of the Wealthy's Investment Beliefs ... financialplanningassociation.org 1 fact
referenceM. Lurtz published 'How Overconfidence Can Aid Entrepreneurs and the Challenges of Advising Those Who Can’t See the Risk They Are Taking' on the Nerd’s Eye View blog on December 9, 2020.