# Public Information and Investor Overconfidence How does public information increase investor overconfidence? - **Source:** [Journal of Accounting Research](https://onlinelibrary.wiley.com/journal/1475679x) - **Published:** 2026-07-23 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/38384e40-f786-4b3f-b5b6-4d25502a528f ## Impact of Public Information New public information increases capital flows. Conventional explanations suggest this is a rational response to reduced risk. However, investors may be overconfident in their ability to benefit from this information. ## Role of Overconfidence Investors believe they can benefit more from public information than others. This 'better-than-average' mechanism increases capital flows. ## Horse Race Betting Example In horse race betting markets, public performance summaries increase capital flows. This means more wealth transfer from bettors to tracks. ## Laboratory Experiment A controlled lab experiment provides direct causal evidence of our proposed mechanism. The experiment shows how public information increases investor overconfidence. ## Implications for Regulation Our findings are important for regulators seeking to understand the consequences of expanding public information available to individual investors. ## Conclusion and Importance New public information increases capital flows due to investor overconfidence. This has significant implications for market dynamics and regulations. ## Sources covering this story - https://onlinelibrary.wiley.com/doi/10.1111/1475-679X.70031?af=R — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._