Question

provide: 1. a general description of over confidence bias

2. give example of how over confidence bias could applied in a personal finance context

Answer 1

confidence bias is a misleading assessment of our own abilities and skills thats makes us think we are better than what we actually are

examples of overcofidence bias in personal finance context

1) over ranking investments ; this will lead to more risk taking as we are not aware of risks we are taking because of overconfidence bias

2)illusion about control ; some people think that they have control on their finances where they actually not. this also leads to over risk taking