Does Overconfidence Affects Individual’s Risk Decision?

In the financial field,people’s decision-making often involves risks,whether individuals or groups,in uncertain circumstances,decision-making,risk selection is the core issue.Much of the literature on behavioral finance suggests that cognition affects decision-maker behavior(Mitchell et al.,2002).It is this difference in cognition that leads to differences in preferences(Gartner,1985).Previous studies have suggested that overconfidence leads to risk preference behavior of investors and managers,but the overconfidence variables selected by relevant empirical studies are mostly indirect variables of overconfidence,and their variables are not well described in terms of overconfidence The nature of the definition,which is also relevant to the above-mentioned scholars questioned the findings.It can be seen that there is still a lack of direct research on the effect of overconfidence on risk decision making.Therefore,this article chooses to use the experimental method,recruiting the real person as the subject,measuring the overconfidence level of the subject directly in the laboratory,and studying the risk choice behavior,the purpose is to validate the viewpoints of the former scholar.The significance of this paper is to study the impact of overconfidence on people’s risk decision-making,and to deduce the characteristics of investment behavior of this new group of investors.Some new investors have generally been overconfident,and most new investors will think that their investment decisions will get higher returns before entering the stock market.But the actual situation is that a large number of new investors enter the stock market Earnings significantly lower than the broader market trend or even loss,we can see the new investors for their own investment capacity and earnings expectations there is a clear overestimate phenomenon.In fact,the investors of each stock trading decision-making,its essence is a risk decision-making behavior,the face of vagaries of the stock market,the risk of control is the most central issue.The essence of this problem is reflected in the new investors is particularly evident,because the new investors do not have the experience of stock trading,not with professional knowledge and skills,its stock investment decisions are largely determined by their own risk attitudes.Therefore,for a new investor’s investment decision-making research,a specific research entry point is about the new investors in this special group of risk decision-making research.Furthermore,behavioral finance research shows that people’s external economic behavior will be affected by psychological factors,and people with similar psychological characteristics,their behavior decision-making tend to have the same characteristics tendencies.On the other hand,a great deal of research on behavioral finance and psychology also points out that overconfidence,as the most stable study of psychology,does affect people’s information processing and economic decision-making.Therefore,we can choose the common psychological characteristics of new investors from the perspective of common psychological characteristics of new investors,and further analyze the investment behavior of new investors with obvious overconfidence characteristics by studying the influence of overconfidence level on individual risk decision-making.And projections.In order to ensure the comprehensiveness of the study,this paper selects three kinds of overconfidence features to measure people’s overconfidence.The subjects are divided into two parts:individual decision-making and group decision making,and compare overconfidence and confidence,overconfidence group and confidence Whether the decision-making of the under-group is different.In the second stage,the task of individual risk decision-making is designed to study the effect of the degree of overconfidence on the decision-maker’s behavior at the level of single decision-making.The second part is to analyze the effect of the degree of self-Three-stage,the design team task of decision-making,multi-person decision-making level of over-confidence level of the impact of decision-making units.The focus of the whole experimental study is to analyze whether the overconfidence decision-makers and the under-confidence decision makers have different risk decision-making.The key and difficult point of this paper is the test method of overconfidence level and the design of risk decision task.In the process of overconfidence measurement,this paper refers to a great deal of classical psychology,experimental economics,behavioral finance literatures,with reference to past successful research methods,considering the real feasibility and cultural background of our country,designed a complete set of overconfidence survey Questionnaire.In the process of risk decision-making task design,this paper refers to the results of previous self-confidence experiment.Based on the former experiment model,this paper designs a new experiment task and combines with computer operation.The whole experiment is scientific and innovative in design.The results of this study show that the participants in the experiment there are significant differences in cognitive,more than half of the subjects showed excessive self-confidence,only a small number of subjects in the self-cognitive aspects of rational.In the process of experiment,the degree of overconfidence has no significant influence on people’s risk decision-making either in the individual decision-making stage or in the group decision-making stage.In the individual decision-making framework,in the face of the two-choice risk decision-making tasks,over-confident individuals did not show more obvious risk preference characteristics,while the face of a number of selective risk decision tasks,overconfident individuals Showing significant risk preference characteristics.Thus,there is no difference in risk decision between overconfidence individuals and individuals lacking confidence.On the individual side,overconfidence does not lead to people’s risk preference behavior.In the framework of multi-decision making,the decision-making mechanism of each team determines the decision-making results of each team is consistent,thus eliminating the difference between the individual decision-making within the group,and in the experimental results Is the decision-making phase of the team decision-making between the differences between the value of the group to be significantly lower than the individual decision-making stage.Specific experimental data show that overconfidence groups and lack of confidence in their risk decision-making group there is no significant difference,which once again proved that over-confidence does not lead to people’s risk-taking behavior.The reason of this result is that the overconfidence psychology is a manifestation of the cognition bias of the individual,and the risk decision is more influenced by the risk attitude.The risk attitude itself is a character expression,the cognitive deviation and the personality characteristic are not necessarily This indicates that some of the previous behavioral finance research ignores the problem of cognitive biases and personality-related research ideas and needs further discussion.In conclusion,on the one hand,the results of this paper are in accordance with the previous experimental economics,and on the other hand,it strongly refutes the conclusion that overconfidence is related to risk decision in previous empirical literatures.Psychology does not lead to people’s risk-taking behavior.For the stock market in real life,this study suggests that we can not blindly believe that over-confident new investors in the investment options will tend to buy high-risk stock assets,new investors into the stock market in the early stages of their investment skills and future Earnings are too high estimates,but the new investors will not be over-estimated because of self-positioning and affect their investment decisions.The factors that affect the behavior of new investors in venture capital should be attributed to their own personality and market information,transparency and other factors,and this conclusion is also the real life of investors in line with the real economic behavior.Therefore,the relevant stock market regulators in the prevention of market risk,do not need because the stock market in the influx of a large number of new investors worried that the market risk will increase.