Analysing of Differences in Terms of Exposure Level to Over-Confidence Bias Considering Socio-Economic Factors
Analysing of Differences in Terms of Exposure Level to Over-Confidence Bias Considering Socio-Economic Factors

Summary/Abstract: Over- confidence is a bias of that many entrepreneurs is under influence. There are several studies showing that entrepreneurs, who are under the influence of over- confidence bias, tend to trade inordinately, make more investments in risky financial instruments and less product diversification. This study aims to test over- confidence bias level of 100 entrepreneurs in terms of their trading volume and risky investments in their portfolio for the last three consecutive years. While previous studies mostly analyze the issue from theoretical perspectives, this study focuses on more verifiable facts such as transactions in BIST (Borsa Istanbul). This study shows that in terms of both trading volume and portfolio diversification, entrepreneurs’ professions, education levels, income levels, marital status and genders differ according to exposure level to overconfidence. The study reveals a difference in age profile of entrepreneurs in terms of exposure to overconfidence bias considering trading volume, but not in portfolio diversifications.

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