By Lian Bunny
Assignment News Editor
St. Bonaventure finance professors Colleen Asaad, Bryan McCannon and Mark Wilson received the Best Paper Award from The Academy of Financial Services at its 2014 annual conference.
The paper, titled “Financial Competence, Overconfidence, and Trusting Investments” analyzes experiments of investment games. The findings show that low levels of financial literacy and overconfidence in one’s knowledge cause much of what is attributed to social preferences. Subjects who scored low on financial competence tests but rated their financial knowledge as high made riskier, larger investments.
According to McCannon, the professors combined the techniques of experimental economics to study a finance-related question. Then they reversed the question to criticize behavioral economists.
The experiment was conducted on St. Bonaventure’s campus, using students as test subjects. There were five experiment sessions during the spring of 2014. Student volunteers provided background information and took financial literary assessments, said McCannon.
The Institutional Review Board then assessed the research.
After discovering that low levels of financial literacy and high levels of overconfidence affected the subjects’ investments, McCannon said the problem could be solved through further education.
“The mark of when higher education is really succeeding is when individuals are being challenged to think differently about the world; to acknowledge that they may not know the answer, that there are many perspectives on an issue, and that a responsible critical thinker may have to abandon preconceived ideas,” McCannon said. “Financial literacy can easily be taught. What makes me quite curious is that it is the overconfidence that is the important variable.”
