Opening the Black Box: From an Individual Bias to Portfolio Performance

  title={Opening the Black Box: From an Individual Bias to Portfolio Performance},
  author={Alen Nosic and Martin Weber and Markus Glaser},
  journal={Behavioral & Experimental Finance},
  • Alen Nosic, Martin Weber, Markus Glaser
  • Published 2011
  • Business
  • Behavioral & Experimental Finance
  • We suggest an experimental design that can help opening the black box of investor behavior by documenting a channel of how biases affect portfolio performance. We study two of the most important investor biases (overreaction and overconfidence), show how they are related, and analyze their consequences for portfolio choice and resulting portfolio performance in a controlled experimental setting with 104 participants. The main innovation of our study is that we go beyond just documenting a… CONTINUE READING
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