The road not taken: a causal mediation analysis to explore gender differences in investor overconfidence

Abstract Overconfidence has been overwhelmingly associated with male decision-makers, both in research and beyond. However, there is a lack of causal evidence to assess why men are more confident than women even in very defined subpopulations, such as active investors. This research provides a possible explanation as to why men are more overconfident in the context of financial decision-making. Nationally representative investor data from 2000 US consumers are analyzed to show that gender differences in overconfidence can be explained by a greater tendency to consult others among women which, in turn, reduces their overconfidence. Without this mediating effect of advice, women and men would not significantly differ in their average overconfidence levels. This effect seems to be driven by a significant reduction in confidence rather than increases in knowledge among women who receive advice. The study offers practical implications for improving financial literacy programs and team decision-making in organizational settings.