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Overconfidence and financial decision-making: a meta-analysis

Matúš Grežo (Institute of Experimental Psychology, Centre of Social and Psychological Sciences, Slovak Academy of Sciences, Bratislava, Slovakia)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 29 May 2020

Issue publication date: 1 July 2021




This meta-analysis reviews and summarizes the results of 34 studies to investigate the relationship between overconfidence and financial decision-making.


A correlation meta-analysis was conducted with three moderators of the relationship between overconfidence and financial decision-making examined: the type of overconfidence construct, the type of overconfidence measuring method and the type of financial decision-making.


It was found that the effect of overconfidence on financial decision-making was significant, but the magnitude of this effect was low. Additionally, indirect measures of overconfidence showed to have stronger effect than direct measures, and the overconfidence was mostly related to investment, followed by trading and innovativeness.


This was the first attempt to meta-analytically integrate results concerning the relationship between overconfidence and financial decision-making. Although overconfidence is described as a keystone for understanding financial decision-making, it was shown that it has rather limited effect on individuals' financial decisions. The findings suggest that indirect measures increase the overall effect and may cause the overvaluation of overconfidence in literature. The results call for more rigorous and consistent conceptualization of overconfidence in behavioral research.



This work was supported by the grant agency Vega under Grant no. 2/0035/20.


Grežo, M. (2021), "Overconfidence and financial decision-making: a meta-analysis", Review of Behavioral Finance, Vol. 13 No. 3, pp. 276-296.



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