Do in-group biases lead to overconfidence in performance? Experimental evidence

Lia Q. Flores () and Miguel Fonseca
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Lia Q. Flores: School of Economics and Management, University of Porto

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Is the phenomenon of people overestimating their skill relative to their peers (overplacement) exacerbated by group affiliation? Social identity theory predicts people evaluate in-group members more positively than out-group members, and we hypothesized that this differential treatment may result in greater overplacement when interacting with an out-group member. We tested this hypothesis with 301 US voters affiliated with either the Republican or Democratic party in the run-up to the 2020 Presidential election, a time when political identities were salient and highly polarized. We found there is a higher tendency for overplacement when faced with an out-group opponent than with an in-group opponent. Decomposition analysis suggests this difference is due to underestimating the opponent, as opposed to overestimating one's own performance to a higher degree. Moreover, any tendency to incur in overplacement is mitigated when faced with an opponent with the same political identity relative to one with a neutral one. Group affiliation biases initial priors, and that effect is unchanged when participants are asked to update their beliefs.

Keywords: Overconfidence; Belief updating; Motivated beliefs; Overplacement; Social identity; Political affiliation; Competition (search for similar items in EconPapers)
JEL-codes: E62 I31 I38 O30 (search for similar items in EconPapers)
Pages: 81 pages
Date: 2022-07
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp and nep-pol
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Working Paper: Do in-group biases lead to overconfidence in performance? Experimental evidence (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:por:cetedp:2202

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