Looking at the Bright Side: The Motivation Value of Overconfidence

Si Chen () and Hannah Schildberg-Hörisch ()
Additional contact information
Si Chen: Bonn Graduate School of Economics
Hannah Schildberg-Hörisch: Max Planck Institute for Research on Collective Goods
Authors registered in the RePEc Author Service: Hannah Schildberg-Hoerisch ()

No 11564, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The motivation value of confidence postulates that individual effort provision is increasing in beliefs on one's own productivity. This relationship also holds for overconfident individuals who have exaggerated productivity beliefs (motivation value of overconfidence). We present first empirical evidence on the existence of a motivation value of absolute overconfidence that many microeconomic models build on. Moreover, we document that debiasing information increases the accuracy of productivity beliefs of overconfident individuals but comes at the cost of diminished effort provision – a result that is of obvious relevance for many contexts such as labor relations or learning at school. As a further conceptual contribution, we offer a novel strategy for identifying significant overconfidence at the individual level.

Keywords: laboratory experiment; effort provision; overconfidence (search for similar items in EconPapers)
JEL-codes: C91 D91 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2018-05
New Economics Papers: this item is included in nep-exp and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published - published in: European Economic Review, 2019, 120, 103302

Downloads: (external link)
https://docs.iza.org/dp11564.pdf (application/pdf)

Related works:
Working Paper: Looking at the bright side: The motivation value of overconfidence (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp11564

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().