A Failed Cognitive Brake? How overconfidence and self-control shape household portfolio choice.

This paper examines how overconfidence and self-control interact to shape household portfolio decisions within a dual-process framework. Using a nationally representative sample from the Spanish Survey of Financial Competences (ECF), we employ a double-hurdle approach to disentangle initial market participation from conditional portfolio complexity. We address endogeneity through an instrumental variables Probit model. Our findings indicate that the overconfidence gap acts as a behavioral catalyst, significantly increasing both the likelihood of market entry and subsequent portfolio complexity. Conversely, while self-control facilitates initial participation, we find no statistically significant evidence that it moderates the overconfidence-complexity relationship; this result should not be interpreted as evidence that deliberative regulation is absent or necessarily ineffective.