Question

what you would consider the main effects of Overconfidence in the investment decisions? In your answer, be sure to note three specific factors from the reading that you believe are the most important. As you consider your answer, pay particular attention to any differences between the personal investor and the institutional investor in how overconfidence may affect their decision.

Answer 1

Main effects of over confidence in the investment decisions is like loss of investment , loss of capital , project failure and dispute between investor.

While taking an investment decisions three specific factors should consider like understanding the project , analysing the project scope and developing a roadmap for investment.

Personal investor is person who are investing their own money and risk can be personal. Institutional investor who are from different institute and organizations . Risk are diversified and investments are not much and decisions are depending each organization. As personal investor decision, attitude, lack of support and their characteristic to investing understanding the project leads to failure. Institutional investor are always in much confidence because of the different experts organization involving in investment decisions and dependency each other's leads overconfidence in investment decisions.