Overconfidence in Currency Markets

This paper tests the influential hypothesis, typically attributed to Friedman (1953), that irrational traders will be driven out of financial markets by trading losses. The paper’s main finding is that overconfident currency dealers are not driven out of the market. Traders with extensive experience are neither more nor less overconfident than their inexperienced colleagues. We first provide evidence that currency dealers are indeed overconfident, which is notable since they get daily trading practice and face intense financial incentives to accuracy.Overconfidence, imperfect rationality, currency dealers, survival of imperfect rationality

Through Their Own Words: Towards a New Understanding of Leadership Through Metaphors

This paper suggests that metaphors are essential to understanding leadership. Metaphors can serve as underlying, organizing structures of leadership thinking and experience, and they can be mobilized in order to accomplish interpersonal goals. The literature on leadership abounds with metaphors, such as leadership as game, sport, art, or machine. The multitude of leadership metaphors used by authors and leaders alike appears determined by a complex interplay of personal, situational, and cultural factors. However, analysis of leadership interviews indicates that these metaphors center on experientially significant nuclei of meaning. By examining the entailments of leadership metaphors on such dimensions as highlighted and hidden leadership aspects, or the suggested relationship between leader and follower, metaphor analysis allows the exploration of leadership conceptualizations on an experiential level. An exploratory grid presents possible entailments of selected metaphors on important dimensions of leadership. We propose that the study of leadership metaphors can provide valuable lessons to leaders. For example, effective leadership may require a rich and situationally attuned metaphorical vocabulary. Leadership metaphors carry implicit suggestions about values—what is good, what should be done, and how—and may also allow for new insights into the ethics of leadership

What Drives Home Bias? Evidence from Fund Managers' Views

A survey of fund managers reveals home bias for these sophisticated investors in an unrestricted setting. Proximity, perceived informational advantage and higher expected returns are confirmed as accompanying factors. In addition, the home bias of equity managers is also related to institutional, informational and behavioral characteristics. The perceived informational advantage does not seem to be valid. Multivariate analyses indicate that home bias is mainly related to relative return optimism, non-fundamental information and peculiar behavior towards risk. We interpret these as characteristics of less than fully rational behavior. It is consistently found that this pattern does not apply to bond managers.Eine Befragung von Fondsmanagern offenbart die Heimatverzerrung (sog. Home Bias) dieser erfahrenen Investoren in unbegrenzten Rahmenbedingungen. Nähe, empfundene Informationsvorteile und höhere erwartete Renditen werden als Begleitumstände bestätigt. Zusätzlich ist der Home Bias von Aktienfondsmanagern mit institutionellen und informatorischen Gegebenheiten sowie mit bestimmten Verhaltensmustern verbunden. Der empfundene Informationsvorteil scheint sich jedoch nicht zu bewahrheiten. Multivariate Analysen zeigen, dass der Home Bias hauptsächlich mit relativem Renditeoptimismus, der Nutzung nicht-fundamentaler Informationen und besonderem Risikoverhalten verbunden ist. Wir interpretieren diese Eigenschaften als unvollkommen rationales Verhalten. Konsistent zeigt sich, dass dieses Muster nicht für Rentenfondsmanager gilt

Through Their Own Words: Towards a New Understanding of Leadership through Metaphors

This article suggests that metaphors are essential to understanding leadership. Metaphors can serve as underlying organizing structures of leadership thinking and experience, and they can be mobilized in order to accomplish interpersonal goals. The literature on leadership abounds with metaphors such as leadership as game, sports, art or machine. While the multitude of leadership metaphors used by authors and leaders alike appears determined by a complex interplay of personal, situational, and cultural factors, the analysis of a leadership interview indicates that these metaphors center around experientially significant nuclei of meaning. By examining the entailments of leadership metaphors on such dimensions as highlighted and hidden leadership aspects or the suggested relationship between leader and followers, metaphor analysis allows the exploration of leadership conceptualizations on an experiential level. An exploratory grid presents possible entailments of selected metaphors on important dimensions of leadership. We propose that the study of leadership metaphors can provide valuable lessons to leaders. For example, effective leadership may require a rich and situationally attuned metaphorical vocabulary. Because leadership metaphors carry implicit suggestions about values (e.g., what is good, what should be done, and how), they may also allow for new insights into the ethics of leadership.