 Never underestimate your opponent: Hindsight bias causes overplacement and overentry into competitionGames and Economic Behavior, 2020, vol. 124, issue C, 588-603 Abstract: This study investigates a source of comparative overconfidence, or overplacement, which occurs when people overestimate themselves relative to others. We present a simple application of information projection (Madarász, 2012) to show that hindsight bias can lead to overplacement and excessive willingness to compete. We run an experiment in which subjects choose between a competitive tournament and piece-rate compensation after observing some of their competitors' past performance. We exogenously manipulate whether subjects have ex post information about their competitors' past tasks (hindsight) or not (no hindsight). We find that hindsight bias generates overplacement and increases subjects' valuation of tournament participation by 19%. In line with theory, the additional tournament entry in the hindsight setting is driven by low-performing participants who should not have entered the tournament. Keywords: Overconfidence; Tournament; Hindsight bias; Curse of knowledge; Information projection; Beliefs; Entrepreneurship (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:124:y:2020:i:c:p:588-603 DOI: 10.1016/j.geb.2020.10.001 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.