Overconfident

Do You Put Your Money on It

Dados Bibliográficos

ID9716889
AutoresErik Hoelzl (0000-0002-5135-4728, University of Vienna), Aldo Rustichini (0000-0003-3232-351X, University of Minnesota)
Ano2005
Volume115
Fascículo503
Páginas305-318
Data de publicação2005-04-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Economic Journal (JOURNAL)
Identificadores do periódicoISSN: 0013-0133 • E-ISSN: 1468-0297
EditoraOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2005.00990.x
OpenAlexW2096444441
IdiomaEN
Citações recebidas18
Referências citadas28

A group exhibits overconfidence if significantly more than half the group members declare to be better than the median in some characteristic. Overconfidence was found in verbal reports for a variety of characteristics and settings but was less often studied for choice behaviour. In an experiment we tested how perceived relative skill influences verbal and choice behaviour. Treatments varied task difficulty and payment. Choice behaviour changes from overconfidence to underconfidence when the task changes from easy and familiar to non-familiar. This effect is significant when monetary payments are at stake and weak when they are not. People may be overconfident in many different ways: they may overestimate their abilities; they may perceive themselves more favourably than others perceive them; or finally, they may perceive themselves more favourably than they perceive others. An important example of the latter bias is the observation that a majority of people estimates their skills or abilities to be better than the median. This is the meaning of overconfidence that we adopt here. Clearly a widespread overconfidence would have important consequences in economic behaviour. In fact, the literature in economics and finance on theories, models, implications and practical effects of

Actuarial science · Economics · Management · Overconfidence effect · Payment · Statistics · Task (project management · Variety (cybernetics · Decision-Making and Behavioral Economics · Experimental Behavioral Economics Studies · Finance · Mathematics · Psychology · Psychology of Social Influence · Social Psychology