A model of rational bias in self-assessments

Jan Zabojnik

Economic Theory, 2004, vol. 23, issue 2, 259-282

Abstract: A body of empirical work documents that most people believe they are above average in a variety of skills and abilities. This paper argues that such evidence does not necessarily imply that people process information in an irrational way. I build a model in which people can learn about their abilities at a cost of foregone production. Individuals in this model keep testing their abilities until their self-assessments become favorable enough, at which point they stop. This way, a disproportionately large share of the population ends up with a high opinion about their abilities. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Bias in self-assessments; Overconfidence; Learning about ability. (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (17)

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DOI: 10.1007/s00199-003-0382-3

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