True overconfidence: The inability of rational information processing to account for apparent overconfidence
Christoph Merkle () and
Organizational Behavior and Human Decision Processes, 2011, vol. 116, issue 2, 262-271
The better-than-average effect describes the tendency of people to perceive their skills and virtues as being above average. We derive a new experimental paradigm to distinguish between two possible explanations for the effect, namely rational information processing and overconfidence. Experiment participants evaluate their relative position within the population by stating their complete belief distribution. This approach sidesteps recent methodology concerns associated with previous research. We find that people hold beliefs about their abilities in different domains and tasks which are inconsistent with rational information processing. Both on an aggregated and an individual level, they show considerable overplacement. We conclude that overconfidence is not only apparent overconfidence but rather the consequence of a psychological bias.
Keywords: Overconfidence; Better-than-average effect; Overplacement; Bayesian updating; Belief distribution (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jobhdp:v:116:y:2011:i:2:p:262-271
Access Statistics for this article
Organizational Behavior and Human Decision Processes is currently edited by John M. Schaubroeck
More articles in Organizational Behavior and Human Decision Processes from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().