Risk-tolerance estimation bias: Do married women and men differ?

A person’s estimation of their risk tolerance, defined as the willingness to engage in financial activity whose outcome is uncertain, plays an important role in nearly all household financial decisions (Duda, Bruhin, Epper, & Schubert, 2010). Fewer errors would be observed in financial situations if consumers were accurate in the evaluation of their risk tolerance. However, this is not the case (Shefrin, 2000). The economics and household finance literature is replete with tests of consumer biases. Three generalizations emerge from the literature. First, when people are overconfident they establish guesses about an outcome that are too high. Conversely, consumers who exhibit underconfidence tend to guess too low. Second, consumers often estimate with overconfidence when faced with general knowledge assessments (Lichtenstein, Fischhoff, & Phillips, 1999). Third, men tend to exhibit overconfidence in most household consumer decisions that involve risk. While a great deal has been writte