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Investor overconfidence linked to selective memory
- throw0101a 5y agoPaper: > This paper makes several contributions to research in memory, overconfidence, and investment behavior. First, we find that investors’ memories for past performance are positively biased. They tend to recall returns as better than achieved and are more likely to recall winners than losers. No published paper has shown these effects with investors. Second, we find that these positive memory biases are associated with overconfidence and trading frequency. Third, we validated a new methodology for reducing overconfidence and trading frequency by exposing investors to their past returns. * https://www.pnas.org/content/118/36/e2026680118 https://www.pnas.org/content/118/36/e2026680118