Goals and guesses as reference points: A field experiment on student performance

Gerardo Sabater-Grande (), Nikolaos Georgantzís () and Noemí Herranz-Zarzoso ()
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Gerardo Sabater-Grande: LEE and Department of Economics, Universitat Jaume I, Castellón, Spain
Noemí Herranz-Zarzoso: LEE, Universitat Jaume I, Castellón, and Department of Economic Analysis, Universitat de València, Spain

No 2021/14, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: In this paper, we study overconfidence and goal-setting in academic performance, with and without monetary incentives. Students enrolled in a Microeconomics course were offered the possibility of setting their own target grade before taking part in the final exam. They were also asked to guess their grade immediately after they had taken the exam (“post-diction”). In general, students overestimated their performance, both at the goal-setting and at the post-diction stages. Controlling for several sources of this bias (cognitive abilities, academic record, risk preferences and self-reported academic confidence), we find that the use of monetary rewards mitigates the overestimation of potential achievements and eliminates overestimation of actual achievements through the improvement of actual performance. Our results suggest that monetary incentives do not cause subjects to put more effort into correct guesses but makes them put more effort into academic performance. Using students’ academic records to measure overall skill, we find a strong Dunning-Kruger bias which is intensified in the presence of monetary rewards.

Keywords: overconfidence bias; reference points; self-chosen goals; post-dictions; monetary incentives; Dunning-Kruger cognitive bia (search for similar items in EconPapers)
JEL-codes: C93 D03 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2021
New Economics Papers: this item is included in nep-cbe, nep-edu, nep-exp and nep-hrm
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Journal Article: Goals and guesses as reference points: a field experiment on student performance (2023)
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