An Insight into Overconfidence in the Forecasting Abilities of Financial Advisors

Van de Venter, G; Michayluk, D

An Insight into Overconfidence in the Forecasting Abilities of Financial Advisors

Van de Venter, G Michayluk, D

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Publication Type:: Journal Article
Citation:: Australian Journal of Management, 2008, 32 (3), pp. 545 - 557
Issue Date:: 2008-01-01

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Field	Value	Language
dc.contributor.author	Van de Venter, G	en_US
dc.contributor.author	Michayluk, D https://orcid.org/0000-0001-9020-0855	en_US
dc.date.issued	2008-01-01	en_US
dc.identifier.citation	Australian Journal of Management, 2008, 32 (3), pp. 545 - 557	en_US
dc.identifier.issn	0312-8962	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10119
dc.description.abstract	Financial market participants exercise judgment in decision making and psychological studies have shown that individuals are overconfident about their ability to evaluate financial securities. Range estimation calibration studies indicate that individuals tend to estimate narrow intervals in their estimation of unknown future quantities, suggesting overconfidence. Financial planners have an inherent duty of care and this may lead these individuals to behave differently in their estimation methodology and behaviour. From a survey of Australian financial planners, we find extensive overconfidence in respondents’ ability to make judgements under uncertainty as shown by a narrow range of forecasts and a substantial number of inaccurate predictions. The overconfidence is present both when comparing estimates to the ex-post outcome of a predicted quantity and to an interval based on historical return volatility. © 2008, SAGE Publications. All rights reserved.	en_US
dc.relation.ispartof	Australian Journal of Management	en_US
dc.relation.isbasedon	10.1177/031289620803200309	en_US
dc.title	An Insight into Overconfidence in the Forecasting Abilities of Financial Advisors	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	32	en_US
utslib.for	150205 Investment and Risk Management	en_US
utslib.for	15 Commerce, Management, Tourism and Services	en_US
dc.location.activity	ISI:000255016200009	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	closed_access
pubs.issue	3	en_US
pubs.publication-status	Published	en_US
pubs.volume	32	en_US

Abstract:

Financial market participants exercise judgment in decision making and psychological studies have shown that individuals are overconfident about their ability to evaluate financial securities. Range estimation calibration studies indicate that individuals tend to estimate narrow intervals in their estimation of unknown future quantities, suggesting overconfidence. Financial planners have an inherent duty of care and this may lead these individuals to behave differently in their estimation methodology and behaviour. From a survey of Australian financial planners, we find extensive overconfidence in respondents’ ability to make judgements under uncertainty as shown by a narrow range of forecasts and a substantial number of inaccurate predictions. The overconfidence is present both when comparing estimates to the ex-post outcome of a predicted quantity and to an interval based on historical return volatility. © 2008, SAGE Publications. All rights reserved.

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http://hdl.handle.net/10453/10119