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

Lia Flores and Miguel Fonseca
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Lia Flores: School of Economics and Management, University of Porto

No 2103, Discussion Papers from University of Exeter, Department of Economics

Abstract: Psychologists have long identified the tendency of humans to overestimate their skill relative to their peers (overplacement). We investigate whether this phenomenon is 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. While group affiliation biases initial priors, such effect is unchanged when participants are asked to update their beliefs.

Keywords: overconfidence; belief updating; motivated beliefs; overplacement; social identity; political affiliation; competition (search for similar items in EconPapers)
JEL-codes: C9 D18 D91 Z1 (search for similar items in EconPapers)
Date: 2021-08-03
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp, nep-isf, nep-pol and nep-soc
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Working Paper: Do in-group biases lead to overconfidence in performance? Experimental evidence (2022)
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