How Do Judgmental Overconfidence and Overoptimism Shape Innovative Activity?

Holger Herz, Daniel Schunk and Christian Zehnder

No 4084, CESifo Working Paper Series from CESifo

Abstract: Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism leads to an innovation enhancing effect, judgmental overconfidence inhibits innovation. Our results indicate that future research is well advised to take into account that the relationship between innovation and overconfidence may crucially depend on what type of overconfidence is most prevalent in a particular context.

Keywords: innovation; entrepreneurship; overconfidence; experiment (search for similar items in EconPapers)
JEL-codes: C92 D23 D83 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: How do judgmental overconfidence and overoptimism shape innovative activity? (2014)
Working Paper: How do judgmental overconfidence and overoptimism shape innovative activity? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4084

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