The effects of overconfidence on the index of discrimination ability and the judgment criterion in investment decision An experiment based on signal detection theory

摘要

The paper examines the effects of overconfidence on the index of discrimination ability and the judgment criterion in investment decision-making by a scenario-simulated experiment based on signal detection theory. We perform the experiment with 55 undergraduates of business majors recruited freely, and adopt corporation investment decisions as experiment task to do our research. The result indicates: Overconfident is a conditional compound concept, the overconfidence measured by the overestimate of the investment outcomes has significant impact on the individual' discrimination ability and judgment criterion in investment decision-making. The overconfident participants have lower hit rate, lower correct rejection rate and weaker index of discrimination ability, as well as higher miss rate, higher false alarm rate and higher index of judgment criterion than the rational ones. Moreover, the indeterminate decision situation, the opportunity acceptance pattern, the low risk-low income pattern of decision condition as well as the medium/low risk - medium/low income patterns of decision objects may intensify the overconfident individual's irrationality.