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Overconfidence Can Improve an Agent's Relative and Absolute Performance in Contests

Sandra Ludwig, Philipp Wichardt and Hanke Wickhorst

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: This paper suggests a potential rationale for the recent empirical finding that overconfident agents tend to self-select into more competitive environments (e.g. Dohmen and Falk, forthcoming). In particular, it shows that moderate overconfidence in a contest can improve the agent's performance relative to an unbiased opponent and can even lead to an advantage for the overconfident agent in absolute terms.

Keywords: Overconfidence; Contests (search for similar items in EconPapers)
JEL-codes: D21 D44 D82 (search for similar items in EconPapers)
Date: 2010-07-05
New Economics Papers: this item is included in nep-cbe and nep-neu
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https://epub.ub.uni-muenchen.de/11885/1/contestsletter_ELR1a.pdf (application/pdf)

Related works:
Journal Article: Overconfidence can improve an agent's relative and absolute performance in contests (2011) Downloads
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