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on Neuroeconomics |
| By: | Ciril Bosch-Rosa; Bernhard Kassner; Steffen Ahrens |
| Abstract: | We study the relationship between overconfidence and the political and financial behavior of a nationally representative sample. Consistent with theoretical predictions, our findings indicate that excessive confidence in one's judgment is associated with lower portfolio diversification, greater stock price forecasting errors, and more extreme political views. We also find that overconfidence correlates with an increased likelihood of voting absenteeism. Importantly, our analysis bridges the gap between the financial and political literature by showing that overprecision-induced behavior in the financial domain is associated with overprecise behavior in the political domain, and vice versa. In a companion survey that elicits overconfidence across various knowledge domains, we further show that overconfidence is consistent within respondents and across knowledge domains. All of these findings suggest that overconfidence is a pervasive bias that permeates many aspects of people's lives. |
| Keywords: | Overconfidence, SOEP, Survey |
| JEL: | C83 D91 G41 |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0051 |
| By: | Sadegh S.M. Eshaghnia; James J. Heckman; Rasmus Landersø; Rafeh Qureshi |
| Abstract: | This paper studies intergenerational mobility—the transmission of family influence. We develop and estimate measures of lifetime resources motivated by economic theory that account for differences in life-cycle trajectories, and uncertainty about future income. We identify the effects of parents’ resources on child outcomes through policy shocks at different childhood ages that affect family investments. Parents’ expected lifetime resources are stronger predictors of child outcomes than the income measures traditionally used in the literature on social mobility. Moreover, while effects estimated through exogenous variation in parents’ expected lifetime resources are smaller in magnitude than their correlational counterparts, they are still sizable and largest in early childhood. The paper illustrates how integrating key insights from different literatures when studying intergenerational mobility allows for a better understanding of the importance of factors such as the family’s role, changes in individual life cycles across generations, and the expectations and trajectories individuals face across their lifetimes. |
| JEL: | D31 I24 I30 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33023 |