One-half Heuristic in Overconfidence Research

Vojtěch Zíka ()
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Vojtěch Zíka: Economic Science Institute, Chapman University and Jan Evangelista Purkyně University

Working Papers from Chapman University, Economic Science Institute

Abstract: This laboratory experiment (N=120) explored the possibility that overconfdence research concerning overestimation and overplacement may be afected by the one-half heuristic, a tendency of individuals to estimate quantities with unknown distributions at half of the maximum value. The data from multiple rounds of the computerized hand game Rock–Paper–Scissors provide convincing evidence that half of the maximum is the most popular estimate and that manipulating the game’s average score can afect the direction and magnitude of estimation, averaging, and placement levels. The resulting methodological proposal is that the score participants estimate should have an expected value equal to half of the maximum so that the hypothesized efect of the heuristic is accounted for. Additionally, this study introduces confdence levels, a standardized measure of overconfdence, allowing a direct comparison of results across studies.

Keywords: overconfdence; one-half heuristic; laboratory experiment; methodology (search for similar items in EconPapers)
JEL-codes: B40 C91 D01 D81 D83 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:24-08

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