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The Leading Edge
October 2020

Overconfidence Bias

Confidence in oneself – or self-confidence – is defined as an individual’s trust in their abilities, capacities, judgment, or belief that they can successfully face day to day challenges and demands. While in many situations, confidence can often be viewed as a positive character trait, it can be harmful for investors to display excessive confidence in their ability to make investment decisions. Being overly confident when making decisions will often interfere with an investor's ability to implement good risk management. Behavioural Finance theorists refer to this tendency as an Overconfidence Biasi. This self-assertion or predisposition to overestimate one’s abilities and decision-making skills can originate from what psychologists call Self-Serving Bias and Illusory Superiorityii.


Gregory Fenerdjian, CIM®
Associate Investment Advisor
Tel.: 514.989.5803  •  Email
Richardson GMP Limited
1250 René-Lévesque Blvd. West
Suite 1500
Montréal, QC  H3B 4W8

Toll-free: 1.800.989.4803

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