The Investor’s Guide to Classroom Bias: Exploring the effects of educational background on overconfidence, on the financial market in Vietnam

Abstract: Overconfident behaviour among investors has been marked as a substantial problem on financial markets. Consequently, many modellers and researchers have discussed the attributes of an overconfident trader, and the implications related to measuring such attributes. Since overconfidence literature can be interpreted to indicate an expectation for a relationship between educational background and overconfidence, this thesis set out to investigate this notion in the context of the Vietnamese market. First, we navigated through the controversies within the overconfidence literature to find accurate measurements. Then, an appropriate dataset was chosen, which included survey data, of measurements required, on Vietnamese investors, as well as their educational background. Last, we applied linear regression models, exploring the effect of education level, and choice of major, on the measurements chosen. We find some consistency in the results, with a few limitations. There are indications that the effect of education, on overconfidence, is influenced by the Vietnamese context as well as the nature of the measurement selected to represent overconfidence bias. There are also signs that the effect of education, on overconfidence, further depends on if the individual works within finance, or not.