The role of thinking style on overconfidence bias

It is revealed that individuals do not always act rationally in decision-making processes under risk and uncertainty, and their mental processes produce some systematic errors and fallacies. These errors and fallacies can have simple consequences, but they can also cause serious problems. Some decisions that may have extremely serious consequences such as wars, strikes, bankruptcies, company mergers and acquisitions, excessive trading in the stock markets are associated with overconfidence, which is considered the most common and destructive cognitive bias that people are exposed to among all cognitive biases. In this respect, it is of great importance to investigate the extent to which individuals' thinking systems play a role as the determinant of overconfidence bias. Accordingly, the current study aims to examine the effects of thinking styles, which are based on two different information processing systems and measured by the dimensions of intuitive thinking and rational thinking, on overconfidence bias. The moderator role of individuals' risk attitude on the relationship between thinking styles and overconfidence was also examined. Last, the relationship between individuals' personality traits and overconfidence was mainly revealed. The research hypotheses were tested by applying structural equation modeling, hierarchical regression analysis, and correlation analysis. The findings of the study indicate that 60.5% of the variation in overconfidence bias was explained by thinking style, which is measured by intuitive and rational thinking. While a significant and positive relationship between intuitive thinking and overconfidence was revealed; a significant and negative relationship between rational thinking and overconfidence was found. In addition, risk attitude has a moderating role both in the relationship between intuitive thinking and overconfidence and in the relationship between rational thinking and overconfidence. Finally, as a result of examining the relationship between personality traits and overconfidence, while a negative relationship between overconfidence, extraversion, and openness to experience was mainly observed; a positive and significant relationship between overconfidence and consciousness was found.