Unpacking Overconfident Behavior When Betting on Oneself
Mohammed Abdellaoui,
Han Bleichrodt and
Cédric Gutierrez
Additional contact information
Mohammed Abdellaoui: HEC Paris - Ecole des Hautes Etudes Commerciales
Cédric Gutierrez: Università Bocconi
Post-Print from HAL
Abstract:
Overconfident behavior, the excessive willingness to bet on one's performance, may be driven by optimistic beliefs and/or ambiguity attitudes. Separating these factors is key for understanding and correcting overconfident behavior, as they call for different corrective actions. We present a method to do so, which we implement in two incentivized experiments. The first experiment shows the importance of ambiguity attitudes for overconfident behavior. Optimistic ambiguity attitudes (ambiguity seeking) counterbalanced the effect of pessimistic beliefs, leading to neither over- nor underconfident behavior. The second experiment applies our method in contexts where overconfident behavior is expected to vary: easy versus hard tasks. Our results showed that task difficulty affected both beliefs and ambiguity attitudes. However, although beliefs were more optimistic for relative performance (rank) and more pessimistic for absolute performance (score) on easy tasks compared with hard tasks, ambiguity attitudes were always more optimistic on easy tasks for both absolute and relative performance. Our findings show the subtle interplay between beliefs and ambiguity attitudes: they can reinforce or offset each other, depending on the context, increasing or lowering overconfident behavior. This paper was accepted by Yuval Rottenstreich, behavioral economics and decision analysis. Funding: This work was supported by HEC Paris research budget and Bocconi junior researchers' grants. Supplemental Material: The data and online appendix are available at https://doi.org/10.1287/mnsc.2021.00165 .
Date: 2023-12-06
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-exp, nep-neu, nep-spo and nep-upt
Note: View the original document on HAL open archive server: https://hal.science/hal-04383402
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Published in Management Science, 2023, ⟨10.1287/mnsc.2021.00165⟩
Downloads: (external link)
https://hal.science/hal-04383402/document (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04383402
DOI: 10.1287/mnsc.2021.00165
Access Statistics for this paper
More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).