Gender robustness of overconfidence and excess entry

Katarína Danková and Maroš Servátka

Journal of Economic Psychology, 2019, vol. 72, issue C, 179-199

Abstract: Camerer and Lovallo (1999; henceforth CL) present thought-provoking experimental evidence that overconfidence might lead to excess entry into markets. As their findings are based on the majority of sessions exclusively consisting of male participants, we conduct two experiments in an attempt to replicate their study while including both men and women in all of our sessions. Our Experiment 1 closely follows CL’s design whereas Experiment 2 employs a gender-neutral addition task and provides more control in assessing gender differences in overconfidence and excess entry. Using participants of both genders we are unable to replicate CL’s main finding that market entry decisions are driven by overconfidence. Contrary to CL, where self-selection increases the entry rate, in our Experiment 1 self-selection leads to less entry. This result is driven by self-selected females who rationally enter the market less often than self-selected males as their rank-determining performance on a sports and current events trivia quiz is weaker than the performance of self-selected males. In Experiment 2 we find no effect of self-selection on entry and no gender differences in entry rates or performance in the addition task. Our results point out that (i) the finding that overconfidence leads to excess entry is not robust to a population consisting of both genders; and (ii) the self-selection effect is sensitive to both gender and task that is used to determine the rank upon entry.

Keywords: Experiment; Gender; Market entry; Overconfidence; Real Effort; Replication; Robustness; Self-selection (search for similar items in EconPapers)
JEL-codes: C72 C9 D2 D47 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167487019300376
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Gender Robustness of Overconfidence and Excess Entry (2018)
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:eee:joepsy:v:72:y:2019:i:c:p:179-199

DOI: 10.1016/j.joep.2019.03.006

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().