Glossary

Glossary

Term Book Chapter Definition
Overconfidence Bias Behavioral Finance Chapter 2: Psychology and Finance A tendency for individuals to overestimate their knowledge, ability, or control over a situation. In finance, overconfidence can lead investors to trade excessively or take on too much risk.
Overconfidence Bias Certified Financial Planner (CFP) Exam Chapter 8: Client Communication and Behavior A concept in behavioral finance where individuals overestimate their knowledge, underestimating risks, leading to risky financial decisions.
Overconfidence Bias Corporate Finance Chapter 15: Behavioral Corporate Finance This occurs when managers overestimate their ability to predict outcomes, leading to excessive risk-taking or overestimation of project returns.