The Role of Overconfidence, Underdog Bias, and Risk Propensity in Investor Decision-Making

Abstract

This study has been carried out to measure the ability of investors to face the level of risk as investors go beyond the risk level or investors have ability to face the risk as overconfidence or underdog bias risk in relation to risk propensity. The study has utilized primary source of data collection from 184 investors who mostly invests in financial securities as: “Pension / Provident Fund Management, Private Wealth Investment Private Equity, Hedge Fund Management, Equity Trading, Fund of Funds, Bond Trading, Stock Broking, and Insurance.” This study has inquired respondents to specify their funds' present level of risk. 48% reported that they served in reasonable risk setting, 28% high-risk situation, 12% mixed risk perspective and 12% in conservative perspective.