Behavioral Finance Applied to High-Net-Worth Investors: A Study on Optimism Bias andOverconfidence in Private Portfolios
Behavioral Finance Applied to High-Net-Worth Investors: A Study on Optimism Bias andOverconfidence in Private Portfolios
DOI:
https://doi.org/10.51473/rcmos.v1i8.2021.1232Keywords:
Behavioral Finance, Optimism Bias, Overconfidence, High-Net-Worth Investors, Private Portfolios.Abstract
This article analyzes the influence of optimism bias and overconfidence on the investment decisions of high-net-worth investors, focusing on private portfolios. The research is grounded in behavioral finance, exploring how psychological factors affect asset allocation and financial performance. Through a literature review, studies demonstrating the prevalence of these biases among sophisticated investors, as well as their implications in volatile market scenarios, are examined. The methodology includes secondary data analysis and case studies, with an emphasis on behaviors observed in emerging markets such as Brazil. The results indicate that overconfidence leads to insufficient diversification, while optimism bias results in risk underestimation. This work contributes to the literature by highlighting the need for strategies to mitigate these biases in high-value portfolios. It concludes that financial education and the use of specialized advice can reduce the negative impacts of these behaviors.
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Copyright (c) 2021 Fernando Ferreira Leite (Autor)
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