An Evolutionary Justification for Overconfidence

Kim Gannon () and Hanzhe Zhang ()
Additional contact information
Kim Gannon: Yale School of Public Health

Economics Bulletin, 2020, vol. 40, issue 3, 2494-2504

Abstract: This paper provides an evolutionary justification for overconfidence. Players are pairwise matched to compete for a resource, and there is uncertainty about who will win the resource if they choose to compete. Players have different confidence levels about their chance of winning, although in reality they have the same chance of winning. Each player may or may not know her opponent's confidence level. We characterize the evolutionarily stable equilibrium, represented by players' strategies and distribution of confidence levels. Under different informational environments, a majority of players are overconfident---i.e. they overestimate their chance of winning. We also characterize the evolutionary dynamics and the rate of convergence to the equilibrium.

Keywords: overconfidence; evolutionary game (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2020-09-24
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I3-P218.pdf (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:ebl:ecbull:eb-20-00315

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().