Previous research has shown that overconfidence is associated with a decrease in the quality of decision making and, therefore, decision outcomes. However, less is known about the conditions or circumstances that reduce financial overconfidence. Using data from two national studies, this study was designed to provide insights into the dynamics of intrahousehold financial decision making by examining the role of shared decision making in reducing overconfidence bias. Findings suggest that a psychological sense of shared ownership of money is associated with lower levels of overconfidence. With regard to financial planning practice, these results suggest that married individuals who believe in shared ownership of household money tend to have lower levels of overconfidence.

Adaptive online platforms, powered by artificial intelligence, commonly referred to as robo-advice, steadily increase their market share. Yet these comparably new financial services are critically understudied. Little is known about why some investors adopt robo-advice for something as essential as asset allocation. The current paper tries to close this gap by shedding light on the causal effect of investor overconfidence on the propensity of using robo-advice. The study proposes a theoretical framework that combines the divergence of opinion hypothesis with consumer behavior insights and information technology diffusion research. The framework is empirically tested on the Investor Sample of the 2015 National Financial Capability Study, a subsample of 2000 US investors. The results from a series of generalized linear, structural, and semiparametric models show that in a pre-chasm market, overconfident investors have a significantly higher propensity of adopting robo-advice. While higher financial literacy seems to decrease robo-advice uptake, unjustified confidence in one’s knowledge causally increases it. Willingness to take financial risk cannot account for the significantly increased adoption of robo-advice among overconfident investors. The findings help managers to better position robo-advice by offering behavioral insights into their user base. In addition, the results outline a managerial tool to take demand-side actions to increase the likelihood of an end-user innovation crossing the chasm.

Bot detection in online studies and experiments Article (Accepted Version) http://sro.sussex.ac.uk Piehlmaier, Dominik M (2022) Bot detection in online studies and experiments. SAGE Research Methods.

Child development research on overconfidence suggests that the bias is present and persistent in preschoolers and kindergartners. However, little is known about what drives overconfidence among young decision-makers, how it changes over a large number of repetitions, and whether such changes differ by gender or age. The current experimental study analyzes data from 60 children, aged 4 years 0 months to 6 years 10 months, who played 60 turns of the Children's Gambling Task and provided regular estimates on their performance. A video intervention, designed to demonstrate the consequences of disadvantageous choices, was tested in a double-blind randomized controlled trial to assess its impact on overconfidence. The results show that every third participant remained overconfident even after 60 trials and constant feedback. Unlike previously reported, gender seems to be a determining factor in this process. Lastly, providing additional information through a video intervention appears to have no impact on participants' overconfidence levels. Overconfidence describes the tendency to overestimate one's skills and underestimate the impact of risk and ambiguity on a given outcome 1. The presence and influence of overconfidence on young decision-makers (4 years 0 months and older) has been consistently shown in a multitude of empirical studies over the course of several decades. The majority of these studies relied on memory tasks that compared children's predicted performance to their actual, observed outcome (e.g., performance on a picture recall task) 2-4. In all of these studies, the average participant significantly overestimated their own performance which resulted in a substantial discrepancy between prediction and actual recall. Additionally, there is evidence that overconfidence in early childhood and primary education slightly decreases with age 3,5,6. For instance, preschoolers and kindergartners seem to be more likely to overstate their recall performance compared to third-graders. A possible explanation for this finding is superior metacognitive abilities among older children who have a greater capacity to accurately recall and evaluate their past performance and assess their own predictions 7. Younger decision-makers also exhibit more persistence in excessively confident predictions, even after repeating the task, recalling their past performance before providing an estimate for the repetition, or assessing the performance of another child 8. The former aspect suggests that children do not develop underconfidence with practice (UWP) at an early age. UWP describes the propensity to initially observe excessively confident behavior which shifts to underconfidence after a sufficiently large number of repetitions. However, the approximate age range may be disputable, as Finn and Metcalfe 9 found that even fifth-graders at a mean age of 10 years 0 months showed consistent overconfidence, while Lipko and colleagues 5 concluded that third-(mean age: 8 years 11 months) but not first-graders (mean age: 6; 11) exhibited ...