IRRATIONAL EXUBERANCE IN ONLINE INVESTING: AN EXAMINATION OF THE ROLE OF SELF-EFFICACY IN ONLINE INVESTOR OVERCONFIDENCE

Empirical evidence suggests that online investing can be hazardous to one's wealth. Through analyses of historical data acquired from a large online brokerage firm, Barber & Odean (2001) propose that a variety of forces lead to undesirable investment outcomes. Although these studies provide compelling correlational evidence linking factors such as overconfidence and attribution biases, little is understood about the causal agents underlying these relationships. The proposed program of study endeavors to fill this void. This research intends to build and test theory by utilizing a Web-based information system as a basis for controlled empirical study. The brokerage simulator, designed for versatility, allows researchers to reproduce realistic situations that online investors typically confront. By combining a socio-technical approach to theorization, a robust technology, and a free simulation experiment, causal influences can emerge that would otherwise remain undiscovered in archival data. With this understanding, we can better equip investors, prescribe technological designs to facilitate quality decision making, and influence public policy