Overconfidence as a Cognitive Bias and its Implications for Insurance Industry
Overconfidence as a Cognitive Bias and its Implications for Insurance Industry

Author(s): Tomáš Ondruška
Subject(s): Business Economy / Management, Behaviorism, Socio-Economic Research
Published by: Masarykova univerzita nakladatelství
Keywords: bias; consumer; financial literacy; insurance; overconfidence;
Summary/Abstract: The behavior of individuals is influenced by many biases that cause their deviation from the rationality. One of them, discussed extensively in the financial industry is cognitive bias - overconfidence. It is a firmly established feature of an individual behavior in the psychological point of view. On the other hand in the economics it is extensively explained by inefficient market outcomes connected to a biased sense of self-confidence. In short, the bias is shown for numerous real-world situations and cause changes in consumers’ behavior.

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