Thesis & Dissertations

Overconfidence Traits and Investment Decisions: The Case of Investors in Beirut Stock Exchange


The main goal of this study is to investigate the existence of overconfidence traits among individual investors in Beirut Stock Exchange and to examine the relationship between demographic factors and investor’s overconfidence traits during investment decision making process. The study begins with reviewing the Efficient Market Hypothesis (EMH) and the theory of Behavioral Finance. Theoretically, markets are efficient and investors are rational under EMH theory; however, it is found that many markets are not following the rules of EMH and a question whether people tend to behave logically and rationally has raised with the appearance of market anomalies. This is where the Behavioral Finance theories started to originate studying the psychological biases that affect decision making. Researchers have found that investors are irrational and overconfident about the precision of their skills and knowledge. Study hypotheses are proposed and then tested through questionnaires distributed to individual investors at Beirut Stock Exchange using quantitative method. The research methodology used a descriptive survey design. The target population was the individual investors at BSE in which a stratified sample of the target population was selected. The collected data are analyzed using SPSS. This study presents evidence that overconfidence exists among individual investors in which gender is the significant demographic factor among investors who show different levels of overconfidence. Keywords: Efficient Market Hypothesis, Behavioral Finance, Overconfidence, Demographic Factors, Investment Decision.


Souleika Omar Alaeddine


Prof. Nehale Farid Mostapha and Dr. Abdallah Nassereddine