Overconfidence Can Improve an Agent's Relative and Absolute Performance in Contests
Philipp Wichardt and
Discussion Papers in Economics from University of Munich, Department of Economics
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)
New Economics Papers: this item is included in nep-cbe and nep-neu
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Journal Article: Overconfidence can improve an agent's relative and absolute performance in contests (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:11885
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