How do risk attitudes affect measured confidence?

Zahra Murad, Chris Starmer and Martin Sefton

No 2014-05, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We examine confidence in own absolute performance using two elicitation procedures: self-reported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the "hard-easy effect" (overconfidence in easy tasks and underconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is somewhat reduced when we filter out the effects of risk attitudes. However, even after controlling for risk attitudes our incentivised procedure leads to significant underconfidence, and does not lead to better calibration between confidence and performance than non-incentivised self-reports. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting.

Keywords: Overconfidence; Underconfidence; Experiment; Risk Preferences (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Related works:
Journal Article: How do risk attitudes affect measured confidence? (2016)
Working Paper: How do risk attitudes affect measured confidence? (2015)
Working Paper: How do risk attitudes affect measured confidence? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2014-05

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