Presenta: Fabiana Penas, Universidad Torcuato di Tella
Abstract: The contagious nature of overconfidence is well-known, and it can lead investors to make hasty and irrational decisions when evaluating ventures led by overconfident entrepreneurs. To combat this bias, we propose making it evident to investors by triggering a «think twice» mechanism before relying on autopilot overconfidence. In our preliminary experimental study, we compare the investment of a control group, who read a pitch by a neutral entrepreneur, to the investment of a treatment group, who read the pitch of an overconfident entrepreneur. Both pitches correspond to the same project. We hypothesize that the treatment group will invest more than the control group. Preliminary evidence supports this conjecture and points to both, financial literacy and risk aversion, as important moderators.
