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

Lia Q. Flores and Miguel A. Fonseca

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2024, vol. 111, issue C

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, but not how they are updated.

Keywords: Overconfidence; Belief updating; Motivated beliefs; Overplacement; Social identity; Competition (search for similar items in EconPapers)
JEL-codes: C9 D8 D91 Z1 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:111:y:2024:i:c:s2214804324000557

DOI: 10.1016/j.socec.2024.102217

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