Shane Carmody
FIN623
Mishra and Metilda Paper
2/28
This article starts off by introducing (reintroducing to our class) the definitions and examples of
biases that investors may come across including the overconfidence bias and the self attribution
bias. Quick refresher for everyone but overconfidence bias is unwarranted faith in ones own
intuitive reasoning, judgements or cognitive abilities. They then cite the Shefrin experiment
where they ask people to rate their driving abilities, in which 65 and 80% rated themselves as
above average drivers. Similarly they cite Montier’s experiment in which 74% of fund managers
believed that they had above average returns. The article then refreshes us on Self-Attribution
bias which is a cognitive phenomenon in which people will attribute their success to their own
abilities but will blame failures on outside circumstances.
