Overconfidence Bias

Overconfidence Bias is when investors overestimate how much they understand about the world and to underestimate the role of chance in events. Overconfidence often leads to suboptimal outcomes. Overconfidence also triggers hindsight bias where investors believe past events are more predictable than they really are.

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Overconfidence Bias Explanation

Overconfidence bias

Overconfidence Bias is part of general social science known as Behavioral Finance.