Journal Article10.1108/13552550610679168
Overconfidence in new start‐up success probability judgement
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TL;DR: In this paper, the authors investigate the overconfidence effect on investor attitude towards new ventures investment valuation as a function of the investor involvement in estimating the venture's success probability, and conclude that investor overconfidence is a consequence of changes in risk attitude, not probability weighting.
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Abstract: – The purpose of this article is to investigate the overconfidence effect on investor attitude towards new ventures investment valuation as a function of the investor involvement in estimating the venture's success probability., – The method used was experimental; econometric analysis within a prospect theory framework., – Participants in the role of investors are more risk seeking when they are called upon to judge success probability relative to them being offered a (reliable) success probability even when their own judgement is based on a restricted data set. Further, that investor overconfidence is a consequence of changes in risk attitude, not probability weighting., – Opens up a number of issues relating to investor‐entrepreneur opportunity perception disparity and its impact on the “investment‐gap”. Considers factors that might be explored experimentally, including task confidence, investor‐entrepreneur information asymmetry and source credibility. Detailed comment made on future research directions., – Impacts on the management of communication between entrepreneurs and investors. Six management variables that might influence disparities in investor‐entrepreneur risk assessment considered in relation to findings.
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The influence of computerized feedback on overconfidence in knowledge
TL;DR: Overconfidence in knowledge was demonstrated under all conditions, however, feedback by a computerized system was effective in reducing the overconfidence level.
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The individual and contextual influences on the market behaviour of finance professionals
Nigel Nicholson,Paul Willman,James Dow,Mark Fenton-O'Creevy,Emma Soane +4 more
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TL;DR: The first year of the project was spent carrying out an extensive review of the relevant literature and conducting pilot studies as mentioned in this paper, which formed the basis for a research strategy enabling data to be gathered that would add to empirical knowledge about risk behaviour, contribute to theory in organisational science and be useful for the firms involved.
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Linguistic-Numeric Presentation Mode Effects on Risky Option Preferences
Richard Dusenbury,M.G. Fennema +1 more
TL;DR: The results suggest that theories of the effects of second order uncertainty on risky choice may be used to model decisions involving linguistic risk and suggest that the study of the perception of linguistic risk assessments can provide insight into the cognitive processing behind the weighting functions proposed to depict decision under risk and uncertainty.
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