"If you can meet with Triumph and Disaster, and treat those two strangers just the same"
Courtesy of Tim Arr, The Psy-Fi Blog
“Those told they failed attribute performance to such external factors as bad luck, task difficulty, or the interference of others, and those told they succeeded point to the causal significance of such internal factors as ability and effort.”
“In the US sample 93% believed themselves to be more skillful drivers than the median driver and 69% of the Swedish drivers shared this belief in relation to their comparison group. “
“After all, someone as nice as yourself deserves to be treated well.”
“The confidence of the investor in our model grows when public information is in agreement with his information, but it does not fall commensurately when public information contradicts his private information. The psychological evidence indicates that people tend to credit themselves for past success, and blame external factors for failure”.
“In times when aggregate success is greater than usual, overconfidence will be higher … In many markets returns will be a trader’s metric of success. Traders who attribute returns from general market increases to their own acumen will become overconfident and therefore trade more actively. Therefore we would predict that periods of market increases will tend to be followed by periods of increased aggregate trading.”
“Consistent with this argument, managers with more SAB [self-serving bias] are more likely to issue forward-looking statements and make earnings forecasts, the tone (e.g., positive versus negative) of their forward-looking discussions has smaller variation, and their earnings forecasts tend to be overly optimistic. Firms whose managers have more SAB have higher investment-cash flow sensitivity and experience more negative market reactions around acquisition announcements. These firms also tend to have higher leverage, rely more on long-term debt financing, are more likely to repurchase stocks, and are less likely to issue dividends.”