Paper title: National Culture Dimension of Individualism and Overconfidence: Challenging the Prevailing Assumption
Authors: Pavlo Illiashenko - Department of Economics and Finance, TalTech

Abstract:

The paper examines the underexplored relationship between national culture, specifically the individualism dimension, and individual overconfidence, measured as overestimation and overplacement. While previous finance research has suggested a positive association between individualism and risk-taking, mediated by overconfidence, the direct empirical link between individualism and overconfidence remains largely unsubstantiated. The present study aims to fill this gap by using data from both the original and revised (Minkov and Kaasa, 2022) Hofstede model of national culture, combined with overconfidence data from 27 countries (Ruggeri et al., 2023). Contrary to the prevailing assumption, the findings reveal a negative association between the national culture dimension of individualism and overconfidence. These results challenge established views on the cultural drivers of financial behavior and call for a reevaluation of the mechanisms linking culture, overconfidence, and risk-taking in the behavioral finance and corporate finance literature.

The public research seminars of the Department of Economics and Finance (DEF) at Tallinn University of Technology  usually take place on the second and fourth Wednesdays of the month both in online  and onsite format, unless announced otherwise. The seminar will last one hour, presentation will last approximately 45 minutes followed by 15 minutes of discussion. The seminars are held in English. Questions about the seminar can be sent to the seminar coordinator Natalia Levenko: natalia.levenko@taltech.ee.